According to figures by Statistics Canada, unemployment recently dropped for the first time since April 2020 by 63,000. Part-time employment saw an almost 3% drop in the unemployment rate. The overall unemployment rate in Canada is 8.6%.
While it is significantly down from 13% in April 2020, the figures are alarmingly higher than the average 5.6% in 2019. The government is still seeking the creation of more employment opportunities. It needs to continue sustaining the unemployed population in Canada until it can provide them with a means of income.
Fortunately, the Canada Revenue Agency (CRA) has been hard at work throughout 2020, and it is continuing its efforts in 2021 to aid unemployed Canadians affected by COVID-19. Here are two emergency benefit payments you can still get in 2021 if you cannot find paid work, despite your best efforts.
Improved Employment Insurance
Employment Insurance (EI) benefits are the traditional method to facilitate Canadians who lose their income through no fault of their own. It exists to provide Canadians with temporary financial support while they are unemployed.
However, the CRA had to develop a different strategy to deal with the unemployment crisis during COVID-19 because the standard EI terms did not allow many Canadians to qualify for EI benefits. The Canada Emergency Response Benefit (CERB) program provided substantial financial support during the wave of unemployment and loss of business income due to the pandemic.
Now that CERB is over, the CRA changed the qualification terms for EI to make it accessible to a wider group of people. The changes included a one-time insurable-hours credit to allow more Canadians to qualify for EI.
Canada Recovery Benefit
The revised EI made it more convenient for people who lost their jobs to qualify for the benefit. However, gig economy workers, freelancers, and many others were still ineligible for the benefit. The CRA created the Canada Recovery Benefit (CRB) to accommodate people who cannot qualify for EI.
Although it is less convenient than CERB, the CRB program is helping a lot more people sustain themselves while they look for income opportunities. CRB is also a taxable benefit, and there is a 10% withholding tax when you receive the payment. The payment does not renew automatically, and you have to apply for all the two-week periods. You can apply for a total of 13 eligibility periods through CRB.
Creating your own emergency funds
Government support is something everyone can appreciate when they are waiting for an employment opportunity. However, the pandemic and its widespread impact have made it clear that there should be a better way to deal with being temporarily unemployed than relying on government funds.
Creating an emergency fund by investing in a stock like Fortis (TSX:FTS)(NYSE:FTS) might have prepared you better for the loss of income without relying on taxable government payments. Fortis is a no-brainer for investors seeking safe and reliable growth for their capital.
Investing in the stock and forgetting about it in your Tax-Free Savings Account (TFSA) can grow your account balance through its reliable and annually increasing dividends. Fortis is a Canadian Dividend Aristocrat with an almost 50-year dividend-growth streak. Fortis is a utility provider that can continue generating predictable and reliable cash flows, because it is an essential business.
It earns most of its income through highly regulated and contracted assets, allowing it to know how much it will earn at the beginning of the year. The company can use its predictable income to finance its expansion plans and growing shareholder payouts comfortably. A stock like this in your TFSA can grow your funds and provide you with significant emergency savings if you lose income in the future.
Foolish takeaway
The CRB and revised EI payments being available to Canadians without income is a blessing in 2021. However, it would be better to create passive and tax-free income to support you through rainy days and grow your retirement nest egg when the times are good. Fortis could be an excellent foundation for such a TFSA portfolio.
