The Stimulus Check in Canada: Everything You Need to Know

In a world that’s been hard-hit by the COVID-19 pandemic, it might be difficult for both individuals and businesses to manage their funds. The economic fluctuation has certainly brought about financial challenges on all fronts, making Canadians struggle to make ends meet.

Luckily, the government was able to introduce the stimulus check in Canada to help weather the storm. Let’s do a deep dive into what that is and how it may assist you.

What’s a Stimulus Check?

The Canadian stimulus check was first introduced in 2009 in response to the global financial crisis, providing financial assistance to people and businesses. At the time, the government provided a one-time payment of $600 to individuals and up to $2000 for families.

Today, the Canada Emergency Response Benefit (CERB) is mainly targeted towards people and businesses that are struggling financially because of the financial downturn of the COVID-19 pandemic.

The program’s goal is to provide economic relief to Canadians who have been affected by the financial crisis. The stimulus check is worth up to $1600 for individuals and $2400 for families during a 4-week period.

Since the pandemic has put most areas of human life on pause, the stimulus payment is an effort to try and ease people back into their old routines and keep businesses afloat. Some experts have been critical of the checks, saying that they are not nearly enough to make a real difference, whereas others have welcomed them as a much-needed boost.

It’s worth noting that the stimulus check is retroactive pay. This means that Canadians who have already lost their jobs or had to reduce their hours due to the COVID-19 outbreak may be able to receive a check. 

What Are the CERB Eligibility Requirements?

In order to submit a CERB application, you must meet the following criteria:

– You must be a Canadian citizen or a permanent resident of Canada.

– You must be 18 years or older.

– You must have lived in Canada for at least one year in the past five years.

– You must have earned at least $1,500 in the past year.

– You have not quit your job voluntarily.

– You have not received a stimulus check in the past.

Ultimately, if you don’t meet any of the CERB eligibility requirements, you may still be able to receive a stimulus check. You can contact your local government to find out more about your options.

Who Can Receive a Stimulus Check in Canada?

There CERB benefit is available to several different Canada-based groups of people, including:

People and families

Individuals and families who have lost their jobs or had to reduce their work hours as a result of the COVID-19 pandemic may receive a stimulus check.

Millions of Canadians were laid off in wake of the most recent financial crisis, which is why the government is trying to temporary financial support to help them weather the storm. This refers to all individuals that don’t have an existing Employment Insurance (EI) plan.

CERB benefits are also applicable to parents and caregivers of children under 18. Since care centers and schools may be closed down if there’s a surge in COVID-19 cases, those individuals will be forced to remain home to take care of their children. The same goes for pregnant women who are unable to go about their daily tasks as they normally would.

In any case, the Canada Revenue Agency (CRA) grants stimulus checks to families whose total household income is less than $30.000 per year. 

Businesses

In order to claim a stimulus check, businesses are expected to meet the following CERB qualifications:

– Have an annual payroll of less than $50,000;

– Be a Canadian-controlled private corporation;

– Be a sole proprietor;

– Be a non-profit organization.

If your company meets these criteria, you’ll receive a one-time payment according to the size of your business. Those that are facing bankruptcy, may receive payments of up to $10.000. 

Moreover, the stimulus check may include wage and hiring support. In other words, you may receive funds that will help you pay off part of your employee wages, re-hire past workers and prevent future job losses.

Sectors

The Canada Emergency Response Benefit is available to certain sectors that have an annual payroll lower than $500.000. Among the examples of stimulus checks, the Tourism Relief Fund is supposed to help promote Canada as a safe destination for domestic and international travel. 

To do this, the Fund will encourage tourism businesses to create new or improve existing travel experiences. In this way, tourists will feel more inclined towards travelling to Canada and boosting its economy.

Additionally, the Major Festivals and Events Support Initiative is made up of a $200 million national fund to help promote Canadian festivals during a two-year time span.

Communities

Stimulus checks are also allocated to address the immediate needs of the Indigenous communities, including the elders and vulnerable community members. This involves providing educational and other support for children as well as mental health assistance for those that are struggling.

Additional Stimulus Check Benefits

The economic impact payments program comes with a range of additional benefits, such as:

Taxpayer Flexibility

The CRA will allow you to defer personal income tax payments and temporarily suspend audit interaction in order to lessen the economic blow. This can be helpful if you are experiencing financial difficulty and are unable to make payments by the end of the tax due dates in Canada, effectively preventing high interest rates and increased debts.

Mortgage Management

If you are struggling to pay off your mortgage rates, you may be able to use the stimulus check to cover part or all of your monthly payments.

Mortgage issuers offer a range of tools to help homeowners cover their costs, including payment deferral, loan re-amortization, capitalization of eligible expenses and special payoff arrangements. This gives individuals greater flexibility when paying back their debts.

Business Credit Availability

The stimulus check can be used by small business owners to assist them in securing a loan from their bank of choice. These steps may provide interest-free loans of up to $40.000 for small or mid-sized businesses and non-profit organizations. 

Thanks to the stimulus check, businesses have increased access to credit, which puts them in a favourable position to survive the COVID-19 pandemic and its repercussions. This is because the funds can be used to cover the basic costs, such as rent, payroll and other operating expenses.

Financial Market Liquidity

Receiving a stimulus check helps improve financial market liquidity by providing more money to consumers and businesses. This, in turn, stimulates economic activity and creates jobs, contributing to the overall stability of the financial market.

Conclusion

The stimulus check in Canada is a great way to provide financial assistance during the trying times of the COVID-19 pandemic. If you are eligible, be sure to take advantage of the benefits it offers, such as tax flexibility, mortgage management and business credit availability. This will imminently improve your financial situation and stimulate the Canadian economy.