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Last updated: August 20 2020
CERB to EI: The Stakes are High
Evelyn Jacks
The final CERB payment period will end on August 29, leaving millions of people at risk of receiving nothing more and wondering what will happen next. Now that Parliament has been prorogued to September 23, a very uncertain fall lies ahead of many of them. However, government sources confirm that more information is forth coming before the end of this month on on how the CERB program will transition to EI. Tax, bookkeeping and financial advisors can identify clients at financial risk to have more proactive discussions about their options, especially as tax bills come due on September 30 for the 2019 tax year. But how do you do so?
David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives, put together the analysis below on August 10, and concludes “the stakes are high in the switchover from the CERB to EI, which comes at a time when it is clear the pandemic and its related economic impacts are far from over. Without modifications, 82% of people receiving the CERB (2.9 million Canadians) will be worse off, receiving less from EI (than CERB) or nothing at all.”
The fate of CERB recipients
|
Count |
Count |
Count |
|||
|
People on CERB in mid-July |
3,526,000 |
Will roll to EI |
1,437,000 |
Get EI worth <$500/week |
811,000 |
|
Get EI worth >=$500/week |
626,000 |
||||
|
Won't roll to EI without rule changes |
2,089,000 |
No EI: Working making under $1000 a month |
972,000 |
||
|
No EI: Self-employed/Gig workers |
391,000 |
||||
|
No EI: Not enough hours for EI |
156,000 |
||||
|
No EI: Parents forced to cut hours/quit as kids not in school/child care |
18,000 |
Note: Assumes no EI rule changes (see methodology below for more details). Data is from the July LFS and will have changed by the end of August when the switchover happens.
Worse still, women will fare much worse than men according to Mr. Macdonald’s research:
- Of the 811,000 CERB recipients who will be worse off on EI, 492,000 of them are women and 299,000 of them are men.
- Among those at risk of not being eligible for EI at all, 57% are women and 43% are men.
- In other words, 1.2 million women are at risk of receiving nothing after the switchover compared to 908,000 men.
More details on the CERB to EI transition were expected to be announced before the end of August, but that was before Parliament was prorogued. The government
promised that no one will be left behind. However, there is now even more uncertainty. The Throne speech to be delivered on September 23 could trigger a non-confidence vote and an election.
Bear in mind that by September 30, many will also be making tax payments for the 2019 tax year, which was based on much higher, pre-pandemic income. The average balance owing for close to 6 million people is just over $6,000 as we outline in the article: “Mini Tax Rush Coming ”.
The coming financial fallout will be significant, especially for the millions of CERB recipients who now have only a very short window to think about how they will manage next month.
Bottom line: This is an incredibly important opportunity for tax, financial and bookkeeping advisors to add true value to their relationships with clients.
Knowledge Bureau will present a comprehensive overview of the Financial Fallout and options for advisors to put in front of Canadians at the Virtual CE Summit on September 30.
Check out the agenda and the expert instructors who will lead you through tax, audits and bankruptcy topics.
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