How long before I need to pay back COVID benefit overpayments?
At the start of the COVID-19 global pandemic, Prime Minister Justin Trudeau unveiled a plan to inject the economy with a $27-billion cash stimulus.
Many businesses were given grants to help them stay afloat, and most Canadians received payments issued directly to their bank accounts.
But some of those individuals and businesses were overpaid.Today, I’ll explain how long taxpayers have to pay the Canada Revenue Agency back and what you need to do to avoid any consequences.
CRA COVID-19 overpayments
Throughout the COVID-19 pandemic, the government of Canada worked with the CRA to issue direct payments and benefits to individuals and businesses impacted by the health crisis. These included:
- Canada Emergency Response Benefit (CERB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Worker Lockdown Benefit (CWLB)
Some of these benefits were issued to taxpayers automatically based on the information obtained from their previous year’s tax returns. Others required taxpayers to complete a brief application. After the pandemic, though, the CRA began auditing the payments they issued, looking for any mistakes, overpayments, or cases of direct taxpayer fraud.
How long do I have to pay CRA COVID-19 overpayment back?
At the start of 2022, the CRA began issuing letters and notices to taxpayers who claimed or received more than they were due.
If you’ve received a notice from the CRA claiming that you owe money back from an overpayment of your COVID-19 benefits, it can be unclear just how much time you have to pay it back.
Currently, there is no set date by which you have to pay the CRA back.
- Repaying CERB that you've already been taxed on? Here are your options
However, you are encouraged to pay the amount you owe back as soon as possible. Alternatively, you can also arrange a payment plan, which allows you to pay back your debt over time.
If you are not able to pay back the debt right away, it is highly recommended to give the CRA a call at 1-833-253-7615 to see what your other options are.
Ideally, you should make payment arrangements with the CRA before you file your 2022 tax returns. If you owe the CRA money and have not paid, the amount you owe may be deducted from your tax returns or any GST/HST tax credits that you would otherwise be paid.
How do I know if the CRA overpaid my COVID-19 benefit?
The CRA maintains detailed records of all Canadian taxpayers, along with data on how much they owe and any COVID-19 tax payments that were issued to them.
If you’re required to pay a portion of your CRA COVID-19 payments back, you should receive a letter in the mail.
This letter will detail the exact amount that you owe back to the CRA and, most importantly, why you’re required to pay the amount back. If you’ve registered your online CRA My Account, then you may have also received an online notice as well.
How do I pay the CRA back?
The CRA offers three ways for taxpayers to pay their COVID payment debt back to the CRA:
1. Pay online with your CRA My Account
Paying online is, by far, the easiest way to pay the CRA. You’ll be able to see exactly what you owe and pay by using your online bank account. Best of all, your payment will be posted instantly (although it may take a few days to process), which should prevent the CRA from sending any more threatening letters.
To pay your balance online, simply log into your CRA My Account For Individuals, and you can make a payment through the portal. Note that if CERB debt was from ESDC (EI), it cannot be paid through the CRA My Account feature.
2. Pay by mail
You can also pay your CRA balance by mailing a cheque or money order (do not send cash) to the “Receiver General of Canada.” The cheque or money order should also have your SIN number along with the memo, “repayment of CERB” (or whatever your applicable benefit is, such as CRB or CRSB) written on the back to make sure it’s applied to the correct account.
You can mail your payment to the following address:
Revenue Processing – Repayment of emergency and recovery benefits
Sudbury Tax Centre
1050 Notre Dame Avenue
Sudbury ON P3A 0C3
3. Pay in person
Alternatively, you can pay the CRA back by going through your bank or credit union. To do this, you’ll need to visit your branch in person and speak with a banker. Your bank will then arrange for a direct transfer from your account to the CRA.
Setting up a payment plan
If you’re unable to pay the amount you owe in full, then you can work with the CRA to set up a payment plan. To do this, you’ll need to contact the CRA directly and speak with an agent. Given the high call volume, you may have to wait in line for a while.
Christopher Liew is a CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers on his Wealth Awesome website.
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