The Canada Revenue Agency (CRA) played a monumental role in helping Canadians affected by COVID-19 during 2020. The government agency was tasked with providing Canadians who lost income due to the lockdown measures with $2,000 payments for four-week eligibility periods to help them meet expenses.
The Canada Emergency Response Benefit (CERB) program lasted 28 weeks, paying out $14,000 for each applicant that qualified for the entire program. Millions of Canadians benefited from the program.
Unfortunately, not everyone who received CERB money might be able to keep the entire amount. You might have to return some or all of the CERB money you received from the CRA.
Why the CRA can take that money back Here are some of the main reasons you might find yourself paying back some or all of your CERB money to the CRA:
- You did not earn at least $5,000 in 2019 or 12 months before applying for CERB.
- You might have received Employment Insurance (EI) benefits at the time.
- You earned more than $1,000 in the two weeks before applying for CERB.
- You were rehired under the Canada Emergency Wage Subsidy (CEWS) program.
Here are some other ways you can create passive income:
Tax-free passive income stream You can use your Tax-Free Savings Account (TFSA) as an investment vehicle to generate tax-free passive income through a portfolio of reliable dividend stocks like Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP).
Brookfield is a well-established green energy company that owns and operates a massive portfolio of globally distributed renewable assets. It relies on its hydroelectric facilities for most of its revenues but has a sizable share of assets in both solar and wind energy projects. The company is already ahead of most of its peers in the burgeoning sector that is set to boom with the decreasing reliance on fossil fuel for energy.
Government policies worldwide are increasingly emphasizing green energy projects. Brookfield’s valuation could boom as the demand for renewable energy grows further in the coming years. The stock is trading for $61.83 per share at writing, and pays its shareholders a meager 2.43% dividend yield.
Buying and holding the stock in your TFSA could allow you to benefit from its capital gains when it picks up the pace on the stock market. In the meantime, you can continue growing your account balance through its reliable dividends.
Foolish takeaway Even if the CRA doesn’t come to take back your CERB, you should remember that it is a taxable benefit. It means that the amount you received will count toward your taxable income for 2020.
Creating a dividend-income portfolio in your TFSA can let you generate passive income without any expiration date, and it will be completely tax-free. Brookfield could be an excellent addition to such a TFSA portfolio.
The post Alert: 4 Ways the CRA Can Take Back Your $14,000 CERB! appeared first on The Motley Fool Canada.
Fool contributor Adam Othman has no position in any of the stocks mentioned.
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