Is it better to get a job in Canada or just stay home and collect CESB?
The Canada Emergency Student Benefit (CESB) is now accepting applications, but there are fears that the benefit might be an incentive for students not to work — so here's a closer look at whether those fears are founded.
The CESB provides eligible students with $1,250 each month from May to August 2020. It applies to post-secondary students and recent graduates, but does not include international students.
#CESB provides income support, from May to August 2020, to post-secondary students and new graduates who are facing a different job market this summer due to #COVID19.— Canada Revenue Agency (@CanRevAgency) May 19, 2020
➡️Find out how you can get your benefit today:https://t.co/fk9O8x4bZj #CdnTax pic.twitter.com/8VmVLRsqnA
Students may be asked to submit a daily report of their job search, but the government is relying on an honour system, where students volunteer information on how their search is going.
But does it make sense for all students to want a job?
Let's say that you're an Ontario student working a part-time job at a fast-food chain in Canada. You're making minimum wage — $14 every hour — and working 25 hours each week. That amounts to a salary of $1,400 every month.
Chances are that your salary will be taxed at the source, which means that you'll only receive about $1,270 of that $1,400, if you fall into Ontario's lowest tax bracket.
The government will likely give you a refund later, but you'll be out $130 each month for the time being.
The CESB, on the other hand, will provide you $1,250 upfront for doing no work at all. You may have to pay tax on that later, but it probably won't be until April 2021.
So if you're a Canadian student making minimum wage and working 20-30 hours each week, the CESB does seem like a sensible alternative to working, assuming you have the means to pay the tax on it next April.
The CESB is $1250/month. Even if I offer $10/hr and am willing to employ a student for 35 hours a week, the most s/he can earn is $1400 every 4 weeks (ie only $150 more than sitting at home & collecting the CESB). Which do you think most students would choose?— Peter Remedios (@remedios_peter) April 26, 2020
However, if you're a Canadian student working a full-time job or paid internship over the summer and making more than minimum wage, then there's no incentive to apply to the CESB; you'll likely be making significantly more at your job than $1,250 each month.
Of course, making fraudulent claims is never a good idea, and the Canadian government says that it will perform checks on each application, such as flagging duplicate social insurance numbers (SINs).
Students that aren't eligible for the CESB will have to repay the amount in full, although the government says that there won't be any penalties or interest on it.
Finances aside, the CESB is an important tool for students that are unable to work during the pandemic due to health conditions — and there's no question that many Canadian students are genuinely in dire need of funding since the job market has taken a turn for the worse in recent months.
Happy to say I applied successfully to get CESB today. Super quick and easy! Disappointed to not be working at the @CanRevAgency this summer like the past 4 but I understand given COVID. Hoping to find a job because I would much rather be working this summer! #CESB— Bryce Saulnier (@SaulnierBryce) May 15, 2020
Hopefully, as more provinces slowly reopen their economies, more job opportunities will become available in the summer.
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