CERB Explained—Emergency Response Benefit

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Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.

The government introduced the Canada Emergency Response Benefit (CERB) in March 2020 as part of a wider package to offer financial support to Canadians affected by the Coronavirus pandemic. CERB replaced the previously announced Emergency Care Benefit and Emergency Support Benefit and is intended to be simple and accessible to receive.

Effectively a replacement for Employment Insurance (EI), it also covers the self-employed, which have traditionally been left out of such safety nets.

Coronavirus originated in China in late 2019 and spread across the rest of the world. The World Health Organization officially declared Covid-19 a pandemic on March 11, 2020, which led to sweeping measures to contain and slow the spread of the virus. By April 2020 most provincial governments had ordered all citizens to work from home if possible, and all non-essential businesses to close. Only trade deemed essential, such as banks, grocery stores, public transit, and some manufacturing and agriculture businesses were allowed to operate as normal.

While not all economies shut down—Sweden and South Korea remained open for example—Canada followed the lead of most European countries and some American states. Canadian officials were especially concerned that the death toll would rise and overwhelm hospitals, as it had in Italy. Considering the serious lack of tests and personal protective equipment for front-line staff, much less the overall population, these fears were legitimate. But the economic cost is steep.

Over 1 million jobs were lost in March because of these measures. That makes March 2020 the worst month for job losses in Canadian history. The previous record was reached in January 2009, in the midst of the Great Recession, when 125,000 jobs were lost.

The unemployment rate jumped 2.2 percentage points to 7.8% in March, the largest one-month increase since Statistic Canada began keeping records in 1976.

2.1 million Canadians also saw their hours slashed and were working less than normal. Overall, the total number of Canadians who were affected by either job loss or reduced hours reached 3.1 million.

But the decision was made to put economic growth on the back burner as Canada desperately tries to stem the pandemic. The hope is that if we can starve the virus of hosts to infect then it will peter out.

Canadians in every industry have found themselves with reduced or no income whatsoever. Small retail businesses like restaurants, bars, yoga studios, coffee shops and boutiques have been crushed due to lack of customers. The airline industry is on the verge of collapse after most travel was banned, causing airlines to fire thousands of employees. Even lawyers are getting salaries slashed because their clients aren’t spending money right now. Commerce and consumption – the very engines that have kept our economy chugging along since World War II is, effectively, on pause.

The economic impact will likely last for months—the employment decline in March was larger than in any of the three significant recessions experienced since 1980. No one knows how long recovery will take.

Because of this the government stepped in to offer financial support to individual Canadians who lost their job due to the pandemic, along with a host of measures for small businesses

It agreed to boost child benefit payments by an extra $300 per child for 2019-2020 and plans to provide a one-time special payment of the Goods and Services Tax credit for low- and modest-income families worth $400 for single individuals and close to $600 for couples.

And for those Canadians who lost their job because of the pandemic, the government created CERB, a direct cash benefit for up to four months.

What is the Canada Emergency Response Benefit?

CERB provides a taxable benefit of $500 per week for a maximum of 24 weeks to both employed and self-employed workers who lost their income as a result of the pandemic after March 15, 2020.

Once you apply you can expect to see your benefit deposited in your bank account within a few days. If you don’t have direct deposit set-up with the CRA it may take up to 10 days to receive a cheque in the mail.

The application is now open and will stay open until December 2, 2020, to allow for backdating. While the program will be open for around six months to account for people’s circumstances changing you may only receive up to 24 weeks of benefits, or a total of $12,000.

CERB eligibility

CERB is intended for Canadians who have lost their income or are unable to work due to being sick, quarantined, or taking care of someone who has Covid-19. Since schools are closed, it’s also meant for parents who are forced to stop working in order to care for their children.

CERB is supposed to be a safety net specifically for those who lost their entire income because of the pandemic. It is not meant to substitute or replace EI that you were receiving before the pandemic.

For that reason, parents who are already on maternity or paternity leave and receiving benefits are not eligible. At the end of their leave if they find that work is not available they may then apply to CERB.

It’s also not meant to be a top-up for your current income, even if your income is lower than it was before the pandemic.

Even one shift a week will render you ineligible for the benefit, and so will taking on one client, or withdrawing a single dividend or salary from your business.

If you earn income from the following sources in any amount you are ineligible for CERB:

  • Employment income

  • Self-employment income

  • Ineligible dividends from a small Canadian Corporation

  • Parental leave benefits

Otherwise, you’re eligible for CERB if:

  • You didn’t quit your job voluntarily

  • You live in Canada

  • You are at least 15 years old

  • You earned at least $5,000 in the last 12 months or in 2019 from:

    • Employment

    • Self employment

    • Ineligible dividends from a small Canadian corporation

    • Parental benefits

(Note: The income does not have to be earned in Canada although you must reside here)

CERB is divided into four-week periods, and you must apply each period to get benefits. You're now also eligible if you earned $1,000 or less during an eligibility period, both when you're applying for the first time and for any subsequent period after that.

The four-week periods of eligibility are as follows:

1March 15, 2020 to April 11, 2020
2April 12, 2020 to May 9, 2020
3May 10, 2020 to June 6, 2020
4June 7, 2020 to July 4, 2020
5July 5, 2020 to August 1, 2020
6August 2, 2020 to August 29, 2020
7August 30, 2020 to September 26, 2020

In short, CERB is meant to support those whose wages were completely decimated because of the pandemic and who have no other means of making a living.

How to apply for CERB

It’s easy and seamless to apply for CERB. You simply call the CRA or apply through MyAccount. The application process guides you through a few questions to determine your eligibility.

At the end, you simply have to certify that you meet the eligibility requirements. You don’t have to provide any documentation at this time.

However, the CRA will follow up after the pandemic to make sure that you were, in fact, eligible. You will have to repay the money if found ineligible.

Keep all documentation, such as emails saying you were let go because of the pandemic, bank statements etc.,

CERB vs Employment Insurance

The $2,000 monthly CERB benefit is available to both the formerly employed and the self-employed, and the application portal is the same, as long as you lost your job after March 15, 2020, due to the pandemic. If that’s the case then any EI claim is folded into CERB—the EI rules prior to this date no longer apply.

If you lost your job before March 15, 2020, then you fall under the old EI rules and your claim will be processed as normal. Do not apply for CERB.

According to CERB, you get $2,000 a month, no matter if your EI benefit under the old system would have been less or more than that amount.

If your EI claim would have lasted for longer than the four months than CERB is available then you can still apply for normal EI after. In other words, the period for which you receive CERB does not shorten your EI entitlement.

And don’t forget:, CERB is taxable so you should put aside the amount equal to your estimated average tax rate so you’re not scrambling during next year’s tax time.

Last Updated June 17, 2020

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