Gen Z: They Need Tax and Financial Services, Too

Evelyn Jacks

Gen Zs are a very special cohort, and tax and financial who are future-focused will want to pay special attention to their tax and financial needs.  Age 18-34, these individuals are facing massive changes in their lifetime, at a time when life should be filled with the joy of embarking on the road to independence.  No surprise: this generation is filled with financial anxiety. Worse still, many of them already have CRA problems. 

Who is Gen Z?   This is now one of five generations in the workforce: The Baby Boomers, Gen X, Millennials, Gen Z, and Alpha Gen. The latter being the children of the Millennials who already are consumers – they receive allowances for jobs at home, or part time jobs like babysitting or yard care. 

GenZ, however, is a different kind of future worker: they are a mentor to the Alphas Gen, they are also future investors and significant economic influencers.  This is well articulated in a paper by New York Times Bestselling Author & Managing Partner Dan Schawbel, who writes:

“Gen Z accounts for an entire third of the global population and are the most educated, diverse, and technologically adept generation we've ever seen. And yes, this is true about every subsequent generation so expect Gen Alpha to be a heightened version of Gen Z. 

Gen Z's biggest impact on the workplace will be them forcing all institutions to focus on a societal purpose . . it's our responsibility collectively to support this generation now so that they can be the future leaders we will need to survive as a species.”

GenZ is filled with financial anxiety.  A large majority of this cohort -  67% compared to 53% of general population - feared they could not feed their families at the start of 2023, and 62% vs. 42% feared they would lose their job if economy doesn’t improve.  Many at the younger end did in fact lose their jobs - many in the service sectors. Others were burdened with student debt and have credit card balances, car loans and mortgage debt.  As the cost of inflation and interest rate hikes bear down even harder, the need for tax and financial advice is growing.

They may have tax problems already. This will have happened if indebted to CRA or Service Canada because of CERB repayments.  An additional fall-out as a result is this is a heightened distrust of institutions like the CRA, government agencies and large institutions in general. This may affect the claiming benefits owed to this generation in the future.  

Regarding the CRA issue, recall that the maximum CERB benefits were $500 a week for 28 weeks; a total of $14,000. Recipients might be required to repay their benefits if they:

• Returned to work earlier than expected
• Received retroactive pay from their employer
• Applied for the CERB but later were not eligible
• Received a CERB payment from both Service Canada and the CRA for the same period

Consequences for failure to repay started already in 2022. CRA has the power to offset other amounts owing to the recipient including:

• Tax refunds - CRA can keep all or a portion of tax refunds or GST/HST credits until the amount is repaid. This is a nasty surprise if those refunds were earmarked for another purpose.  And yes, that could mean the much-touted Grocery Rebate too, as it’s part of the GST/HST credit system.
• Reduced EI benefits - repayment of your CERB debt from Service Canada will be recovered automatically at 50% of EI benefit rate. But be sure to let these folks know they can contact the CRA  to discuss an automatic recovery at a lower rate.

The only good news for those who have to repay their benefits is that interest or penalties will not be charged to the debt. But a repayment schedule must be followed.  Also, there are opportunities to plead hardship – that the recipient can’t pay for the basic necessities of life – including accommodation, food, clothing, medical attention, and public utilities.  But the outcome of that negotiation is based on ability to pay and this needs to be calculated according to CRA’s suggested worksheets – all somewhat overwhelming for laypeople who are cash-strapped and confused about why they may have to repay in the first place.

Bottom line:  It may cost some money for professional help, but this could be a financial education for the future that’s well worth the cost.   Some proactivity on the part of elders – parents, and the professionals in the tax and financial services - to help with the cost of fees and build trusted relationships early in the lives of this next Great Generation - will help them on their road to financial health.  Having an advocate like a tax specialist or financial advisor is really important and worth an investment on both sides.