Canada Revenue Agency sending flood of letters asking people who received both EI and CERB to pay the extra back


Canadians who received concurrent payments from employment insurance and Canada Emergency Assistance in the early days of the pandemic may soon receive a letter from the government asking them to make the additional repayment.

But MPs, supporters and opposition pundits say workers who received extra money due to confusion should not be asked to pay back years later and warn it could lead to financial hardship.

At the very beginning of the COVID-19 pandemic, laid-off workers who qualified for EI applied for the benefit. But two things quickly became clear: the EI program couldn’t handle the sudden deluge of applicants; and many in gig work or in the restaurant industry, for example, did not qualify for EI and were left behind.

The Canada Emergency Response Benefit (CERB) was created to fill these gaps, paying out $2,000 every four weeks to laid-off workers, in most cases much faster than EI would have done. Within half a year, nearly $82 billion was paid out to 8.9 million people.

But because of its emergency nature, there were some hiccups along the way. For example, self-employed workers struggled with eligibility confusion that took almost a year to iron out. And in the early days, those who had started receiving EI from Service Canada were switched to CERB administered by the Canada Revenue Agency. But some of them received double payments when shuffling and were confused at the time as to how this discrepancy would be handled.

Some of these people are likely to be among the group who are now receiving refund notices from the government.

According to the CRA, the next letter phase began in August.

These letters are sent to people who have received benefits from EI and CERB at the same time. Most of them owe no more than $2,000, according to the CRA, and more than 100,000 such notices have been sent to date, although that stage is ongoing, a spokesman said.

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NDP finance critic Daniel Blaikie has urged the government to halt efforts to collect CERB debt from those who have filed a good faith claim.

“For most people, two thousand dollars is a lot of money,” Blaikie said. “They cause real financial distress and real psychological anxiety.”

Most people who received erroneous CERB payments or didn’t qualify for everything they received did so “in good faith,” said David Macdonald, senior economist at the Canadian Center for Policy Alternatives — and it’s more now than two years since the CERB program began being implemented.

“There should be a statute of limitations,” he said.

Businesses would have many more advantages in pandemics, he added, and with looser rules; Many beneficiaries nevertheless reported gains and paid dividends.

Blaikie agreed with Macdonald, saying there are more leniency built into programs for companies than for employees.

“Now we ask retrospectively for leniency for the little ones.”

These are not the first letters of this type to be sent.

In November 2021, Employment and Social Development Canada began mailing debt orders to Canadians who had received an upfront payment of $2,000 at the start of the CERB to be used for a later period, but did not stay in the program long enough for the two to reconcile . Approximately 1.7 million people should receive this notice.

In May 2022, the CRA began sending notifications to COVID-19 beneficiaries deemed ineligible for some or all of their benefits, informing them that the debt was officially added to their CRA accounts.

It is not clear how many people will receive notifications in total or how much money will be owed as the process of repaying these funds is a large undertaking; Earlier this year, Employment and Social Development Canada told the star the review will continue over the next four years.

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Ottawa pledged $260 million over four years beginning in 2021 to help the government address instances of CERB-related misrepresentation, abuse or fraud.

“We will work with all affected individuals to ensure that any questions they have about these letters are answered with a compassionate approach,” CRA spokesman Christopher Doody said in an email.

“The CRA has expanded provisions to help individuals meet their tax obligations during these trying times, including flexible payment arrangements.”

Blaikie called for more transparency from the government about how much money it is likely to get back so the scale of the effort and the expected return are clearer.

However, a spokeswoman for Federal Labor Secretary Carla Qualtrough said it was too early to say how much the government would recoup through the expected four-year process.

“Results will be reported as this work progresses. Once this work is complete, the total amounts owed and collected will become available. Because the review has been postponed to January 2022, there are limited results at this time regarding the volume and magnitude of CERB overpayments and recoveries,” said Tara Beauport, Qualtrough spokeswoman.

Beauport added that the government and the CRA are not seeking to impose undue hardship on Canadian workers.

“CRA remains committed to being compassionate, flexible and supportive and will work with affected individuals on a case-by-case basis to find a flexible repayment solution that best reflects their personal and financial circumstances.

“The first step is to call the CRA to discuss these options,” she wrote.

Most failed payments are likely due to confusion and the rushed nature of the program, not fraud, Macdonald said. It is “perfectly fair game” to prosecute scammers, he said, but he finds it “regrettable” that money is being spent chasing relatively small amounts of people who need the money received, even if they don’t sign up for everyone qualified of it.

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On Tuesday, Prime Minister Justin Trudeau unveiled the details of new financial assistance programs to help Canadians through this period of high inflation: doubling GST reimbursement payments for six months; the first phase of a national dental care program; and a one-time rental payment of $500 for low-income Canadians.

Two of those programs — dental care and housing — are attestation-based, similar to CERB, Macdonald said, meaning the money will run out much quicker, but eligibility checks will take place after the fact.

This type of rapid service program was “one of the real innovations of the pandemic,” he said, and he’s glad to see the government has learned from CERB and is adopting a similar model in the current period of uncertainty and inflation.

But he said it’s critical that Ottawa also learn from its mistakes and work to ensure these new benefits don’t create confusion that later leads to individual debt.

In just a few years, “you could imagine the exact same situation,” Macdonald said, as people began receiving letters asking them to pay back the money they received.

Blaikie said the NDP has urged the government to ensure similar mistakes are not made that later lead to clawbacks. One difference between CERB and the dental and housing benefits is that the new ones aren’t taxable, he said, and the NDP is working to get assurances that won’t change, as one thing that made CERB difficult was its tax liability .

“I find that positive. I think that’s real insurance against accidental recoveries,” Blaikie said.

According to Beauport, Employment and Social Development Canada is conducting an evaluation of the CERB program to see what has worked and what hasn’t.

“This will influence the design and delivery of future government emergency response and recovery services that could be used in a future emergency or crisis,” Beauport said.





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