Some ineligible self-employed CERB recipients won't be forced to repay, government says
TORONTO -- The federal government says some ineligible self-employed Canadians who received the Canada Emergency Response Benefit (CERB) won't be forced to repay the money due to the Canadian Revenue Agency's unclear messaging in the application.
Employment Minister Carla Qualtrough's office said Tuesday in a press release that self-employed Canadians who applied and received up to $14,000 in CERB payments despite not meeting the net income eligibility criteria will no longer have to repay the sum, as long as they meet all other requirements.
For those who may have already voluntarily repaid the CERB, the press release said, the CRA and Service Canada will return any repaid amounts to these individuals, with additional details available in the coming weeks. The federal government could not give an exact number of how many Canadians would be impacted by this decision.
"We made the CERB's eligibility criteria as broad and inclusive as possible so that workers who needed support could get it. This announcement is giving certainty to self-employed Canadians who applied for the CERB in good faith, while also protecting their financial well-being," Qualtrough said in the release.
"We have gone to great lengths to support workers during this pandemic, and will continue to do so as we build back better together," she added.
Speaking from Rideau Cottage on Tuesday, Prime Minister Justin Trudeau reiterated that those who collected the benefit based on gross income instead of net will not have to return their CERB payments.
"When we rolled out CERB last March, it was because people needed help in the face of a global, once-in-a-generation crisis. Well, the pandemic isn’t over. So neither is our support," Trudeau said.
Trudeau said government financial aid continues to be available for those Canadians still needing support including the Canada Recovery Benefit, enhanced Employment Insurance, and the Canada Recovery Sickness Benefit, among others.
The news comes after the federal government said in January that it would not waive repayments for ineligible CERB recipients despite the CRA’s internal mix-up leading to weeks of misinformation.
As CTVNews.ca first reported, some Canadians were asked to repay up to $14,000 in CERB payments by Dec. 31, 2020 because they were never eligible for the benefit. To be eligible, self-employed Canadians had to have received more than $5,000 in income in 2019 or in the previous 12 months before applying.
Confusion arose as the CRA counts self-employment income only as net pre-tax income, despite the word "net" not being included on applications or on the "Who is eligible" page for CERB.
Marc Brière, president of the union that represents CRA call centre workers, previously told CTVNews.ca that its agents were provided written instructions in the first few weeks of the CERB’s rollout that incorrectly stated that gross income, not net, was how someone’s eligibility for CERB would be determined. He said that information was then passed along to callers seeking clarity.
It wasn’t until sometime after April 21, 2020 -- more than two weeks after applications opened --- that the CRA updated a Q&A page online to include specific language on net income.
The CRA admitted to CTVNews.ca in December that its messaging wasn't clear on the subject of net and gross income with its employees and the general public.
"We regret that this lack of consistent clarity led some self-employed individuals to mistakenly apply to the CERB despite being ineligible," CRA spokesperson Sylvie Branch said.
In December, the CRA sent 441,000 "educational" letters warning Canadians who received CERB that they may need to repay the funds by Dec. 31, 2020 because the agency was unable to confirm their eligibility. Those letters were sent for a variety of reasons beyond the net-gross mix-up.
Speaking during the ministers' briefing on Tuesday, Qualtrough said "many of these" individuals who received the letters have since filed their taxes and have been deemed eligible for the benefit.
"Ineligible or eligible, we're going to work with Canadians to make this as seamless as possible for them. There's no requirement for people to repay now if they're deemed ineligible," Qualtrough said.
In response to Tuesday's announcement, the Green Party of Canada issued a statement welcoming the change to what it called the federal government's "unfair and cruel Canada Emergency Response Benefit clawbacks."
"After months of anxiety for recipients, we are very gratified to see a just result for many people -- pensioners, artists, and caregivers among them -- who followed the rules and then were told they would have to make a full repayment," Green Party Leader Annamie Paul said in the statement.
"Nevertheless, it should not have taken so much advocacy, and threats of a class action, for the government to do the right thing and reverse its position," she added.
More than 8.9 million Canadians applied for CERB, and $81.6 billion was doled out through the program up until September. The government has since rolled out several other aid programs and revamped the employment insurance program to accommodate an estimated 2.1 million people who were receiving CERB.
The federal government also announced on Tuesday that it will be providing one year of "targeted interest relief" to Canadians who received COVID-related income support benefits.
In a press release, the Minister of National Revenue Diane Lebouthillier said individuals who file their 2020 income tax and benefit return will not be required to pay interest on any outstanding income tax debt from the last year until April 30, 2022.
To qualify, Canadians must have had a total taxable income of $75,000 or less in 2020 and have received income support through one or more of federal government's COVID-19 benefits including:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Recovery Sickness Benefit (CRSB)
- Employment Insurance benefits
- Or any similar provincial emergency benefits
According to the release, the CRA will automatically apply the interest relief measure for individuals who meet these criteria.
In addition, the federal government says any CRA-administered credits and benefits normally paid monthly or quarterly, such as the Canada Child Benefit and the GST/HST credit, will not be applied to reduce individuals' tax debt owing for the 2020 tax year.
The federal government estimates that the interest relief will give "4.5 million low- and middle-income Canadians" more time and flexibility to "feel confident about accessing the COVID-19 income support without facing additional stress at tax time."
Lebouthillier said the federal government will “continue to do whatever it takes, for however long it takes” to help Canadians get through the COVID-19 pandemic.
"Today's announcement demonstrates the Canada Revenue Agency's commitment to putting Canadians at the centre of everything it does. We will continue to provide support to Canadians as they tackle the many challenges of this pandemic until they are able to get back on their feet," Lebouthillier said in the release.
Trudeau acknowledged Tuesday that the past year has been "quite difficult" for those Canadians who have lost their jobs or had their work hours reduced.
"Right now, I don’t want you having to worry about what you may owe on taxes," Trudeau said, adding that the federal government will continue to help Canadians through the current health crisis.
"Our priority is ensuring that you and your family get through this pandemic and back on your feet," he said.
With files from CTVNews.ca's Graham Slaughter