Why You Shouldn’t Expect CRA’s CERB Payments of $2,000/Month to Continue

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Why You Shouldn’t Expect CRA’s CERB Payments of $2,000/Month to Continue's Profile


The Canada Emergency Response Benefit (CERB) isn’t likely to see another extension. While the $2,000/month payments are helping Canadians who are out of work due to the pandemic, there are also many problems, including people receiving CERB payments who shouldn’t be.

In June, the Canada Revenue Agency (CRA) said that 190,000 Canadians already paid back the CERB. Even on the webpage to apply for CERB there’s a link you can click on that will give you details as to how you can pay it back.

The conservatives believe the CERB system isn’t as effective as it could be and there needs to be a better incentive to get people back to work. And a recent Ipsos poll indicates that half of Canadians polled aren’t in support of CERB, either. Indeed, 52% of Canadians polled believe that “CERB should be discontinued at the earliest opportunity.”

The poll found that older people were more likely to be in favour of discontinuing it, as only 43% of those polled in the 18-34 age group thought the CERB should be discontinued.

Canadians are also echoing many of the same concerns that CERB opponents are. A strong majority (72%) of people believe CERB’s prevented people from going back to work even though they should. And 63% believe that CERB is being misused.

CERB recently extended until October 3

Prime Minister Justin Trudeau announced in June that the federal government would be extending CERB by an additional two months. Eligible Canadians can now receive coverage for six months, which means their CERB payments could total $12,000.

And while the government would like to transition people off CERB, there’s been no official announcement regarding whether CERB is definitely over at that point. However, Canadians shouldn’t expect to see another extension, as that may only exacerbate the existing problems and challenges surrounding CERB.

Use a TFSA to keep the recurring income coming

CERB isn’t a reliable source of income over the long term. But one thing that can generate recurring, tax-free income for you is your Tax-Free Savings Account (TFSA). Take a stock like Emera Incorporated (TSX:EMA) as an example. The utility company is a safe investment when the economy is in a recession and also when it’s doing well.

Shares of Emera are hardly volatile, averaging a beta of around 0.20 over the past five years. And the stock normally outperforms the TSX.

Perhaps its best feature is that the stock pays a quarterly dividend of $0.6125 that on an annual basis yields around 4.5%. That’s a solid payout that on a $10,000 investment could net you $450 in income every year.

Inside of a TFSA, those earnings wouldn’t be taxable, unlike the CERB, and you would receive a quarterly payment of $112.50 every three months just for holding on to your investment. And the longer that you hold the stock in your portfolio, the larger your dividend payments could get.

Three years ago, Emera was paying investors $0.5225 every quarter. The company’s increased the dividend payments by more than 17% since then, averaging an annual increase of 5.4% during that time. At that rate, your dividend payment would double at around the 13-year mark.

Holding a dividend stock like Emera inside your TFSA can be a reliable way to generate long-term recurring income without worrying about the CRA taxing it.

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