Ottawa is under pressure to recover billions of dollars in pandemic benefits it sent to ineligible people and businesses, and is fending off accusations of carelessness with taxpayers’ money
told Canadians on March 11, 2020, the day the World Health Organization declared the virus outbreak a pandemic.
Ottawa is largely going about the collection of pandemic debts “as if it’s business as usual,” said Elizabeth Mulholland, chief executive of Prosper Canada, a national anti-poverty charity. But the after-effects of the massive pandemic-era income supports and of a nearly three-year hiatus in some CRA debt collection activities have been “totally unusual,” she said.
The CERB, and later the CRB, provided taxable payments of $500 a week. The CCB, which is linked to household income, pays up to $583 a month per child for families with young kids. Yvonne Spicer owes $21,730 in EI benefits, which she began receiving through the CERB program when she lost her job at the beginning of the pandemic.In London, Ont., Yvonne Spicer, 45, who has a learning impairment and lives on social assistance, has an annual income of around $20,800 but owes $21,730 in Employment Insurance benefits.
What’s especially troubling about the government’s hubris in chasing pandemic debts from Canadians on social assistance is that social-security workers often told them to go on the CERB and, later, the CRB, said Mr. Stapleton. That was the case for Ms. Spicer: When she lost her job in the spring of 2020, her case worker suggested she apply for the CERB, she said.Marina McSherry , a volunteer at the Parkdale Community Foodbank in Toronto, organizes boxes of food to be delivered.
At West Scarborough Community Legal Services in Toronto, lawyer Carol Drumm said she has assisted several clients on social assistance with pandemic debts of over $10,000 set up repayment plans for as little as $5 a month. A legislated six-year limit on the collection of most COVID-19 benefits means Canadians such as Ms. Drumm’s clients will be free of those repayments in a few years in most cases.
The CRA sent individual notices to people with outstanding government debts, including child benefit overpayments. In some cases, though, the notification of a debt outstanding came months before the benefit offsets restarted, and it was easy to miss. The CRA also said it announced the resumption of offsets on a few Government of Canada web pages, on the login portal where Canadians can access their online CRA accounts and in social-media posts, among others.
An early warning would have given low-income Canadians a chance to plan ahead and to reach out to the CRA to set up repayment plans that may have resulted in smaller benefit clawbacks, said Prof. Robson. Canadians such as Ms. Tougas, who do not meet the low-income threshold, also have a the option of setting up a repayment plan if they’re struggling financially. But in an e-mail discussing child benefit offsets, the CRA told The Globe it targets a default timeline of 12 months to recoup the full amount of overpayments.
Canadians who owe money because of a mistake by the CRA may also find there are few relief options for them. Other Canadians in a similar situation are having no such luck. In a recent Federal Court case, for example, a taxpayer named Jonathan Bellerose Bastien was told he’d have to repay CERB payments he’d received at the start of the pandemic, even though his mistake stemmed from unclear phrasing in the CRA’s web communication.
Canadians facing pandemic-related tax quandaries such as Mr. Bastien’s can request relief through a so-called remission order, which can provide full or partial relief from taxes owed. In the fall of 2021, the government declared it would provide up to $742-million to repay seniors who’d seen their Guaranteed Income Supplement payments reduced or stopped because the pandemic benefits had temporarily boosted their income. The government also introduced amendments that ensured the pandemic support program would be excluded from the income test for GIS entitlements.
Such after-the-fact adjustments were the right thing to do in the exceptional circumstances of the pandemic, said Mr. Stapleton. Critics of that idea argue large repayment forgiveness measures could undermine Canadians’ confidence in the fairness of the tax system and their trust in the government’s ability to manage the money collected through it.
But Mr. Robson worries a lot more about the psychological impact of a large amnesty, which could cause “potentially millions of people to say, ‘Hey, I, who paid my taxes and played by the rules, am now a chump,’ ” he said. “And that’s what you really need to avoid.”
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