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CRA reversed $246M in pandemic benefit debts after thousands contested eligibility status

The government has had to cancel at least $246 million in debts for thousands of Canadians it initially claimed had received pandemic benefits for which they weren’t eligible.

Since 2022, the Canada Revenue Agency (CRA) has been collecting money from Canadians the government says received benefits — such as the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB) — in error.

The government has been withholding tax refunds and other benefits in an effort to recoup money sent to individuals it says were ineligible for the funds they received. The CRA told CBC News that at the end of last year, it had collected roughly $1.8 billion in erroneous pandemic benefit payments.

But many Canadians have disputed the government’s assessment of their eligibility for those benefits and hundreds have even taken the government to court.

The CRA told CBC News that as of April, it has reversed the debts of roughly 27,000 individuals who originally had been deemed ineligible but later had their eligibility verified.

Those figures only include pandemic benefits that were administered by the CRA. A portion of the CERB program was administered by Employment and Social Development Canada (ESDC); that department told CBC News it doesn’t track how many benefit debts it has reversed.

A sign outside the Canada Revenue Agency is seen Monday May 10, 2021 in Ottawa.
The CRA told CBC News that as of April of this year it has reversed the debts of roughly 27,000 individuals who had originally been deemed ineligible but later had their eligibility verified. (Adrian Wyld/The Canadian Press)

Cris Best, a Toronto tax lawyer, said he’s not surprised by the number of debt cancellations that have been issued. He said he’s heard from several Canadians who believe they’ve been unfairly targeted by eligibility reviews.

“There’s no doubt in my mind that there’s a lot of inconsistency,” he said.

Canadians who have received a notice from the government stating that their eligibility has been revoked are able to ask for two reviews of their case. After that point, their only recourse is through the courts.

Best said it’s extremely difficult to argue a case with the CRA once an initial decision has been made because there is “a reverse onus in tax law.”

“You’re essentially guilty before innocent,” he said.

“The CRA can essentially assume facts, which is what they do, and then the taxpayer bears the burden to disprove those facts … It’s not a very fair fight.”

Some people frustrated by review process

Jason Harth said he experienced the difficulty of dealing with the CRA when trying to help his daughter argue her case.

“It was a muck,” he said of the process.

The Cambridge, Ont. resident said his daughter applied for CERB when she was laid off during the pandemic. She was able to find new employment roughly nine months later.

But roughly a year later, Harth said his daughter started receiving notices saying her eligibility was under review. He helped his daughter provide the proper documentation to prove that she was eligible.

Harth said that after working with the CRA, they found that his daughter had received a few extra CERB payments, which they agreed to repay.

I don’t understand how something so simple could go so wrong– Jason Harth, Cambridge, Ont.

But when a final notice came a few weeks later, he said, the eligibility assessment said the complete opposite. It indicated that she was eligible for the extra payments she received, but not the money she was given for the time she had been laid off.

“I’m thinking, ‘Somebody didn’t read this right,'” Harth said, recalling the final assessment.

Harth said he and his daughter contacted the agency a number of times but were told there was nothing to be done and that she would need to repay $16,000.

The issue wasn’t resolved until Harth contacted the taxpayer’s ombudsperson, who he said reached out to him and the CRA directly.

“[The CRA] finally got off their butt and called us and said that, ‘Yes, we see that there’s been … a mistake.’ But they didn’t provide an explanation,” Harth said.

“I don’t understand how something so simple could go so wrong.”

Kelly Stewart of Ottawa said the CRA also deemed her ineligible for the benefits she received, despite her providing the agency with documents to prove otherwise.

“I just feel that my case from the very beginning has been handled very poorly,” she said.

Stewart said she had to send her documentation twice because the CRA said her first submission was lost in the agency’s mail room. She also said the case numbers on the two decision notices she received don’t match the original case number she was assigned.

A woman in a pink and purple patterned blouse gestures with her hands as she speaks in the House of Commons.
National Revenue Minister Marie-Claude Bibeau rises during Question Period in the House of Commons on Parliament Hill, in Ottawa, Thursday, April 18, 2024. (Patrick Doyle/The Canadian Press)

A spokesperson for Minister of National Revenue Marie-Claude Bibeau said the department believes the validation process is going well.

“After the CRA sent out notices of redetermination to some individuals that were deemed to be ineligible, many Canadians were able to demonstrate their eligibility with the proper documentation,” Simon Lafortune, Bibeau’s press secretary, said in an email.

“We are more than satisfied with the CRA’s validation process on this matter and will continue to ensure that all eligible Canadians receive the benefits they are entitled to.”

But Stewart said she is less than satisfied with how the process has gone so far.

“[It’s] incredibly frustrating because it’s so strange and it just really kind of damages whatever confidence I had left in this process,” she said.

Stewart said she intends to seek a judicial review of the CRA’s decision on her case.

Even though his daughter’s issue was resolved in the end, Harth was equally unimpressed with how the tax agency handled the situation.

“The whole review just left me questioning the integrity of the agency due to the inappropriate handling of the situation,” Harth said.

“They made it very difficult.”

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