University Students: Eligibility For Cerb Benefits

The COVID-19 pandemic has brought about unprecedented challenges for students in Canada, who have had to navigate sudden unemployment, ballooning debt, and expenses related to working from home. During this time, the Canadian government introduced two financial aid programs to support students: the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB). However, students cannot apply for both at the same time and must choose one or the other. So, what are the key differences between these programs, and which one should university students apply for?

Eligibility for CERB and CESB

The Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) are two financial aid programs introduced by the Canadian government to help citizens cope with the economic fallout of the COVID-19 pandemic. While both programs aim to provide financial support, they have distinct eligibility criteria and benefits.

CERB Eligibility

To be eligible for the CERB, applicants must meet the following requirements:

• Be at least 15 years of age
• Reside in Canada
• Have stopped working due to reasons related to COVID-19
• Have earned a minimum of $5,000 from employment and/or self-employment in 2019 or the 12 months preceding their application
• Not have voluntarily quit their job

It is important to note that international students may be eligible for CERB if they meet the requirements. Additionally, applicants must have been unable to work due to specific COVID-19-related reasons, such as self-isolation, illness, caring for dependents, or loss of employment.

CESB Eligibility

On the other hand, the CESB is specifically designed for students and recent graduates who are unable to find employment or are working reduced hours due to the pandemic. To be eligible for the CESB, applicants must:

• Be a Canadian citizen or permanent resident
• Be enrolled in a post-secondary institution or have completed their post-secondary studies in December 2019 or later, or expect to complete high school in 2020 and have applied to a post-secondary institution starting before February 2021
• Be unable to find work or currently working but earning less than $1,000 per month before taxes due to COVID-19

Differences in Benefits

While there is overlap in eligibility between the two programs, applicants cannot receive both CERB and CESB simultaneously. If eligible for both, individuals must choose one. CERB provides a higher monthly benefit of $2,000, compared to $1,250 for CESB. However, students with disabilities or caring for someone with a disability under CESB can receive up to $2,000 per month.

Tax Implications

It is important to remember that both CERB and CESB are taxable. While taxes are not deducted at the source, recipients may need to repay a portion of the benefit depending on their income for the year. Students earning less than $12,000 annually are typically exempt from repaying the benefit, as they fall below the income tax threshold. However, those expecting to earn more may need to set aside funds to meet their tax obligations in April of the following year.

Choosing between CERB and CESB

The ongoing COVID-19 pandemic has brought about unprecedented challenges for students in Canada. To help students navigate these challenging times, the Canadian government introduced two emergency benefits: the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB). While both programs aim to provide financial assistance to students, there are important differences between them that students should consider when deciding which benefit to apply for. Here are some key factors to keep in mind when choosing between CERB and CESB:

Eligibility Criteria:

Before deciding which benefit to apply for, students should carefully review the eligibility criteria for both CERB and CESB. To be eligible for CERB, an individual must meet certain requirements such as being at least 15 years of age, residing in Canada, having earned a minimum of $5,000 in the previous year, and having stopped working due to reasons related to COVID-19. It is important to note that CERB is not limited to students and is available to a wider range of applicants. On the other hand, CESB is specifically designed for students. To be eligible for CESB, an individual must be a Canadian citizen or permanent resident, enrolled in a post-secondary institution or a recent graduate, and unable to find work or earning less than $1,000 per month due to COVID-19. International students are not eligible for CESB but may qualify for CERB if they meet the other requirements.

Benefit Amount:

One significant difference between CERB and CESB is the amount of financial assistance provided. CERB offers a higher benefit amount, providing eligible individuals with $2,000 per month for a period of four months. In contrast, CESB provides a benefit of $1,250 per month for four months to eligible students. However, students with disabilities or those caring for someone with a disability can receive up to $2,000 per month through CESB, making it equivalent to CERB in terms of benefit amount.

Tax Implications:

It is important to note that both CERB and CESB are taxable benefits. While recipients will receive the full benefit amount initially, they may be required to pay back a portion of it when filing their tax returns. The amount to be repaid will depend on the individual's total income for the year. Students earning less than $12,000 annually may not need to worry about repaying any of the benefits, as they fall below the income tax threshold. However, those expecting to earn more than $12,000 may need to set aside a portion of the benefit to cover potential tax liabilities.

Application Process and Timing:

The application process and timing differ between CERB and CESB. Students should consider their immediate financial needs when deciding which benefit to apply for. While CERB applications were already being accepted, CESB applications were set to begin on May 15, 2020. The timing of benefit payments may be a crucial factor for students facing immediate financial challenges.

Legitimate Qualification:

When choosing between CERB and CESB, it is essential to consider the likelihood of legitimately qualifying for each benefit. As CESB is specifically designed for students, students may have a higher chance of meeting its eligibility criteria compared to CERB. Applying for CERB as an unemployed student may result in receiving the benefit quickly, but there is a risk of being investigated for fraud if the application is found to be misleading. The Canada Revenue Agency (CRA) has implemented measures to detect and penalize suspected CERB fraud, so it is crucial for applicants to provide accurate and honest information.

Alternative Options:

Lastly, it is worth considering that neither CERB nor CESB may be the best option for all students. The CRA is seeking repayment from individuals who received these benefits in error or who no longer meet the eligibility criteria. If a student has sufficient savings or alternative sources of income, they may choose to forego applying for these benefits to avoid potential repayment obligations. Instead, they could explore other options, such as investing in dividend-paying stocks or applying for other government assistance programs tailored to their specific circumstances.

Drawbacks of CERB and CESB

While the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) have been successful in supporting household incomes during the COVID-19 crisis, there are some drawbacks to these programs.

One drawback of CERB is that it may disincentivize work for certain workers. Unlike Employment Insurance, a CERB recipient is not obligated to remain available for work or actively look for a job. This means that for minimum-wage workers, it can be more financially advantageous to stop working and receive the CERB for 16 weeks instead of keeping their job. To counter this, Quebec introduced an additional benefit to top up the incomes of essential sector workers.

The CESB also interferes with students' work incentives. A post-secondary student who is not working will be better off than a student working at a minimum wage job. This is counterproductive to provincial work incentive programs designed to attract young people. For example, a student benefiting from the CESB and working part-time for less than $1,000 per month will only give up $28 for eight weeks of work compared to agricultural work of 35 hours per week.

Another drawback of CERB is that it does not take into account fairness considerations for those who have not lost their jobs. Adjustments to CERB and CESB eligibility requirements will need to be made to ensure these programs do not slow down the economic recovery.

Finally, international students are not eligible for CESB, which may impact their financial situation during the pandemic.

Application process for CERB and CESB

The application process for the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) is outlined below.

CERB

To apply for the CERB, you must meet the following eligibility criteria:

• Be at least 15 years of age
• Reside in Canada
• Have stopped working due to reasons related to COVID-19
• Have earned a minimum of $5,000 from employment and/or self-employment in 2019 or in the 12 months preceding your application
• Not have quit your job voluntarily

If you meet these criteria, you can find instructions on how to apply for the CERB on the official government website.

CESB

To be eligible for the CESB, you must meet the following requirements:

• Be a Canadian citizen or permanent resident
• Be enrolled in a post-secondary institution, have completed your post-secondary studies in December 2019 or later, or expect to complete high school in 2020 and have applied for a post-secondary institution with a start date before February 2021
• Be unable to find employment or currently employed but earning less than $1,000 per month before taxes due to COVID-19

International students are not eligible for the CESB but may qualify for the CERB if they meet the requirements.

The application process for the CESB began on May 15, 2020, and you can find more information about how to apply on the official government website.

It is important to note that you cannot apply for both the CERB and the CESB. Therefore, if you are eligible for both, you must choose which benefit to apply for. Additionally, both benefits are taxable, and you may have to pay back a portion of the benefit depending on your income for the year.

Tax implications of CERB and CESB

The Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) are considered income by the CRA (Canada Revenue Agency). This means that, like regular income, you will need to pay taxes on the benefits you received. However, unlike regular income, these payments were issued without tax withholding, so you will need to pay the taxes when you file your tax return.

To determine how much extra tax you will owe, you can use an online tax calculator. This will help you estimate the taxes you owe on your income, both with and without the government benefits. The difference between the two amounts is how much extra you should set aside for the tax year.

The government will send you a T4A form, which will show how much you were paid and whether any money was already withheld, similar to a T4 form from an employer.

It is important to note that you will not owe interest on CERB repayment right away. The government announced that Canadians using COVID income relief benefits, including CERB and CESB, would not be required to pay interest on related tax debt until April 30, 2022. However, to be eligible for this, you must have made no more than $75,000 in 2020 and filed your 2020 tax forms by April 30, 2021. Late filers will be subject to a penalty of 5% of the total balance owed, plus an additional 1% for every full month past the deadline that the return is submitted, up to a maximum of 12 months.

In addition to the CERB and CESB, there are other COVID-19 benefits that may have tax implications. For example, the Canada Recovery Benefit, the Canada Recovery Caregiving Benefit, and the Canada Recovery Sickness Benefit all include a 10% tax withholding, but additional taxes may be owed depending on your final income and tax bracket for the year. If you are unsure about your specific situation, it is recommended to consult a tax professional.

Frequently asked questions