CERB Updates and more FAQs
I want to thank all of you for your beautiful responses to my last newsletter. You sharing your questions, stories, & gratitude is really what keeps me lit-up to continue doing this work.
As many of you know, applications for the CERB opened this past Monday, April 6th and since then I've been hearing lots of stories & questions about the process. So before I move onto my next newsletter topic, hopefully coming your way tomorrow, I wanted to share some of that information with you.
CERB Updates
After much public feedback about the short-comings of the CERB, the federal government is proposing some changes which will hopefully benefit more workers in the coming days/weeks. These changes will address 3 main groups who were found to be ineligible for support under the current system:
Workers (including self-employed) who have lost a significant portion of their income, but not 100% of it. This would include employees with reduced hours or gig-workers with reduced income.
Workers who remain at work now but are earning less than they would if they were laid-off and received the $2,000 / month under CERB. In particular, folks in essential services like long-term care workers and grocery store workers.
Students who were relying on a summer job and are now entering a workforce with a remarkably high unemployment rate and can't find work
It seems the vast majority of people who have applied for the CERB found the system to be incredibly efficient, simple, & fast, both online and through the automated phone lines. A few folks posted about lag times or time-outs/freezes on the website & high call volume messages on the phone lines, but for the most part the experience has been painless and easy. For that, I want to give a huge shout-out to all the behind-the-scenes IT magicians & web developers who pulled this program together so quickly!
To further illustrate both how far-reaching this crisis is, and how incredible the work of these public servants has been, here are some numbers to wow you:
Almost 1 million applications for the CERB on the first day
3.6 million total EI & CERB applications from March 15 - April 6
Stats Canada reports 1 million jobs were lost in the month of March
Canadian unemployment rates have risen to 7.8%
FAQ
I lost my income partway through the first CERB period of March 15 - April 11. Can I still apply?
Yes! As long as you were without income for 14 consecutive days in the first period you apply, AND you expect to receive no income for the remainder of the period, you can apply for the CERB.
If I receive the benefit and am later found to be ineligible, what will happen?
CRA has made it clear that there will not be penalties or interest charged on benefits paid to someone who was ineligible. What they have to say is this, "If you are later found to be ineligible, you will be required to repay the benefit."
What it comes down to is they are too busy right now rolling out new programs, writing new legislation, and generally managing a crisis, to be reviewing everyone's application and engaging in a follow-up. Right now their priority is to get money into people's pockets. I imagine there will be review and/or follow-up at some point in the future, but I can't imagine that being anytime soon.
It is still unclear what the post-crisis review process will look like, but to be on the safe side if you earned any income during a period for which you also received the CERB, you should set some amount aside in case you eventually have to pay some of it back. The general rule is to set aside $500 / week during which you were "ineligible" (receiving income).
Again, there is no written rule about this. It's merely an educated guess and a guideline to follow. If you need all the cash right now to meet your immediate needs, that takes priority and hopefully, there will be a lot of flexibility and forgiveness when the time comes to sort through all of this.
How much of my $2,000 CERB should I set aside for taxes next year?
That depends on your total income for the year 2020. Canada has a progressive tax system, which means the higher your income the higher your tax rate. A very safe general guideline is to save 15 - 20% of your CERB for tax purposes.
Again, this is merely a guideline. If you need the cash now to meet your immediate needs, that is your priority. Just keep this in mind down the road when you start earning more regular income again.
I applied through the EI system after March 15th, but before the CERB applications opened. What now?
You do not need to apply again. Many people have already received their first CERB payment after applying for EI in March. If you feel your application is taking longer than expected and you still have not had funds arrive in your account, you can try calling 1-833-966-2099 to check on the status of your application.
I received two payments in my account already! Am I going to jail?
That's mostly a joke but some folks genuinely did ask me that question, and I also know there is very real fear attached to "getting it wrong" when it comes to matters of tax and government. The answer is no!
Many people who applied through the EI system have already received 2 deposits:
a full or partial payment for the March 15 - April 11 period (anywhere from $500 - $2,000)
another $2,000 which is designated for the 4-week period starting April 12th. Just make sure not to apply again for the April 12th period, and everything will be fine. Also, make sure not to spend those funds all upfront as they are meant to last until May 9th.
Do I have to re-apply every period? Will they send a reminder?
You do have to apply every period to re-attest that you are still without income and therefore still eligible to receive the benefit.
Periods are in set 4-week chunks starting March 15, April 12, May 10, etc.
I honestly doubt they will send a reminder. CRA tends to remind you when they are owed money and not the other way around. I recommend setting a reminder on your phone when your application day-of-the-week rolls around in the upcoming period. Set it to recur every 4 weeks, et voila!