CERB and CRB Overpayments
During the COVID-19 pandemic, the federal government introduced several temporary measures to provide income support to individuals who were out of work, or had reductions in their incomes due to COVID-19.
Between March 15, 2020 and September 26, 2020, the government issued the Canada Emergency Response Benefit (CERB). CERB provided a $500.00 weekly benefit for individuals who met eligibility criteria, including earning $5000.00 in employment or self-employment income in 2019 or the twelve months prior to their application for benefits (See eligibility information here).
CERB was issued through Service Canada (for those eligible for EI) and the Canada Revenue Agency (for those not eligible for employment insurance.
The Canada Recovery Benefit was available between September 27, 2020 and October 23, 2021. Applicants received either $1,000.00 or $600.00 per two-week period, depending on when they applied. Individuals were required to have a 50% reduction in average weekly income compared to the previous year, due to COVID-19. Claimants were also required to have earned at least $5,000.00 in income from eligible sources, including employment and net self-employment (See eligibility information here).
Denials and Overpayments
The CRA has engaged in the majority of validation for benefits after having issued them. This means that individuals who received benefits have been asked to justify their eligibility after the fact. The CRA has sent out thousands of notices indicating that those who received COVID-19 benefits are under review and/or have been found to be ineligible, and must now pay back the benefits they received.
The primary reason that we have seen for CRA overpayments has been because the CRA asserts that the individual did not earn at least $5000.00 during tax year 2019, 2020, or in the 12 months before the date of their first application.
Claimants who have been found to be ineligible for benefits may make a request for a Second Review of the CRA’s decision. The Second Review will be conducted by a different agent from the initial review.
Proof of $5000.00 Employment or Net Self-Employment Income
In order to prove eligibility, income reported on a tax return (T1) will not be sufficient. Instead, claimants will be required to provide underlying documentation to support their having earned the requisite income.
A CRA guideline document provides guidance for officers in assessing the eligibility of a claimant for benefits. Acceptable proof according to the guideline has included the following:
- Recent pay slips
- Employment verification letter, including salary, if accessible online
- Record of Employment
- Bank statements showing, name, address and payroll deposit
- Any other documentation that will substantiate $5,000.00 in employment income.
- Invoice for services rendered, for self employed individuals or sub contractors. For example an invoice for painting a house or a cleaning service etc. Must include the date of the service, who the service was for, and the applicant’s or company’s name.
- Documentation for receipt of payment for the service provided, e.g. statement of account, or bill of sale showing a payment and the remaining balance owed
- Documentation showing income is earned from carrying on a “trade or business” as a sole proprietor, an independent contractor, or some form of partnership
- A list of expenses to support the net result of earnings
- Any other documentation that will substantiate $5,000.00 in self employment income
Disputing a Decision of the CRA
A negative decision from the CRA on Second Review is reviewable at the Federal Court by way of an application for Judicial Review (see the process here). For additional information, claimants may contact the Federal Court Registry Office.
This is a new and evolving legal area. The Federal Court has already granted applications for judicial review, in favour of claimants, where decisions of the CRA were found to be unreasonable, and/or the claimant was denied procedural fairness in the process.
Individuals who believe that the overpayment is correct, or otherwise do not wish to dispute the decision, may contact the CRA to initiate a repayment plan. The CRA can be reached by phone at 1-833-253-7615, Monday to Friday 7 am to 8 pm (ET) (except public holidays).
This is legal information and not legal advice. If you need further information or need legal advice, please call our Intake Line at 416-441-1764 ext. 1 or complete our online Intake Form.