COVID BENEFITS and REPAYMENT

Beginning in March 2020, when the COVID-19 pandemic led to job losses and reduced work hours due to lockdowns, the Canadian government introduced a series of benefit programs. These ran for about 26 months (March 2020 – May 2022) and provided financial support to affected individuals.

Canada Emergency Response Benefit (CERB):

• First program introduced (March – September 2020).
• Paid $500 per week in 4-week periods for a maximum of 28 weeks (maximum $14,000)
• Applicants had to:

• attest they stopped working or had reduced hours due to COVID;
• have earned at least $5,000 in 2019 or the 12 months previous to the date of application; and
• have earned less than $1,000 per month during the benefit period (if still working).

• Applications were made through an online portal.
• Most COVID benefits were administered by the CRA, but CERB was jointly administered by both the CRA and Service Canada, each with its own application portal.

Canada Recovery Benefit (CRB):

• Launched in October 2020 after CERB ended, and administered by the CRA only.
• Paid $500 per week to individuals who didn’t qualify for EI, including the self-employed.
• Eligibility required at least $5,000 in income from specified sources in 2019, 2020, or the 12 months previous to the date of application.
• Program ended October 2021.

Canada Worker Lockdown Benefit (CWLB):

• Introduced in October 2021 after CRB ended, closed in May 2022.

Other COVID Programs:

• CESB – Canada Emergency Student Benefit.
• CRCB – Canada Recovery Caregiving Benefit.
• CRSB – Canada Recovery Sickness Benefit.

Eligibility Issues and Repayments:

• Some people claimed benefits despite not meeting eligibility requirements.
• Some people received duplicate payments due to errors.
• From late 2020 onwards, the government started doing validation reviews and sending letters to persons they believed were not eligible.
• Repayments are deductible in the year repaid (Box 201 on T4A or Box 30 on T4E) and not retroactively.
• No interest is payable on amounts required to be repaid.

A key dispute arose with self-employed individuals. The CRA initially interpreted the $5,000 income test as net income (after expenses), not gross income. Many applicants had applied using gross income. After public pressure, in February 2021, the CRA clarified that if someone would have qualified based on gross income, they would not have to repay CERB.

Managing COVID Benefit Debt

If you owe money, you can contact the CRA or Service Canada to:

• Set up a payment arrangement.
• Request a deferral of payments.
• Explore other options for resolving the debt.

Who to call:

• If Service Canada issued the benefit → 1-866-864-5823
• If CRA issued the benefit → 1-833-253-7615

Will the CRA apply Canada Groceries and Essentials Benefits (formerly GST/HST credit) and Trillium benefits to Covid debt?

Should a client enquire, the best answer is “maybe”. It appears the CRA is applying a financial hardship test. If a person’s income is below a threshold, the CRA may pay the benefits rather than use them to set off Covid debt. The CRA does not publicly state their policies on this subject.

Challenging CRA’s decision (for benefits administered by CRA):

If the CRA suspects a person might have received a payment without meeting eligibility criteria, their first step is to send a letter advising they are reviewing the file to verify eligibility. The letter may request information and supporting documents. This is not a decision letter, but rather it is a letter informing the person that the eligibility is being reviewed.

If a person fails to respond to this first letter, the CRA will send an initial review decision and advise that the person has 30 days to request a second review.  

If instead the person does respond, the CRA will consider the response, and further communications may occur to address and resolve issues. Some communications may occur over the phone. At some point the CRA will issue an initial review decision letter which will advise that the person has 30 days to request a second review.

If a second review is requested it will be conducted by a different CRA officer and a second review decision will be issued. If the CRA agrees to proceed with a second review, the person may have further opportunity to explain their position and provide further supporting documentation.

If a request for a second review is made late, the CRA has the discretion to conduct the review despite the lateness of the request. The CRA will either advise that it is declining to conduct a second review because 30 days have passed, or else it will conduct a second review and issue a second review decision.

If (and only if) a second review was requested, the person will be informed of their right to challenge the CRA’s decision by bringing a court application to Federal Court for judicial review. The letter will advise that a person has 30 days to bring the application from the date of the letter.

If the 30 day deadline passes a judicial review application cannot be brought unless the court first decides, on a motion, to grant an extension of the 30 day deadline. Therefore a motion has to be made first, and only if successful can a judicial review application be made. To succeed on a motion the person must demonstrate a reasonable explanation for the delay, and show that an application for judicial review will have at least some merit.^[1] 

The role of the judge on a judicial review application is to determine if the CRA’s decision was reasonable and the process was fair. If unreasonable or unfair, the judge will direct the CRA to reassess the matter and issue a new decision. The CRA will have to take into account the judge’s reasons for determining that the decision was unreasonable or unfair. In rare cases, where it is very clear what the outcome should be, instead of ordering a re-assessment a judge can order that the CRA’s decision be reversed.

Many people have brought judicial review applications, but most have been unsuccessful. Many have been self-represented. Although legal representation is advisable, it is not a requirement and may not make sense since legal fees may result in a small net recovery, or an even greater loss if the judicial review application is unsuccessful. One option is to consult a community legal clinic.

Some people have reported success with contacting their local MP.

References:

• Canada Emergency Response Benefit Act (CERB)
• Canada Recovery Benefits Act (CRB)
• Canada Worker Lockdown Benefit Act (CWLB)
• CRA website - Validating your application
• Federal Courts Act, s.18 - judicial review
• CRA website - Repay COVID-19 benefits
• CLEO power point presentation (April 2023)
• Some example judicial review court decisions: Naqvi, Johnson, Mitchell, Sjogren.