Feds cancel CERB clawbacks for self-employed recipients,

Recipients affected by confusion over eligibility no longer required to pay back benefit

The government will not be clawing back the Canada Emergency Response Benefit (CERB) from self-employed recipients who applied based on incorrect eligibility information, the government announced Tuesday.

For more than two months, self-employed Canadians and political leaders have been pressuring the government to allow these individuals to keep the benefit, after incorrect or unclear information about eligibility for self-employed applicants originally led them to believe they qualified.

In a Canada Revenue Agency (CRA) press release Tuesday, the Government of Canada announced that people who accessed CERB based on their gross self-employed income instead of net will not have to return those payments, as long as they meet the other criteria. Those who already repaid the benefit will have those payments returned to them.

“When we rolled out CERB last March, it was because people needed help,” said Prime Minister Justin Trudeau in Tues- day’s COVID-19 update.

Eligibility for CERB required having $5,000 in income during 2019, or the 12 months before applying. For self-employed people, that meant “net” income, or income after expenses — but that wasn’t made clear by the CRA, appli

cants said, after they received letters saying they may have to pay back up to $14,000. It also wasn’t made clear on the website or during the application, many said.

Up until Tuesday, Employment Minister Carla Qualtrough had said that the government was not considering forgiving CERB debts for these recipients.

In the same release, National Revenue Minister Diane Lebouthillier announced that the government is providing a year without interest on some 2020 tax debt, such as taxes on federal emergency benefits, Employment Insurance or provincial emergency benefits, for those who made up to $75,000 in taxable income in 2020. The CRA will also not apply tax credits such as the Canada Child Benefit to tax debt for the 2020 year.

The Green party welcomed the announcement in an emailed statement Tuesday.

“The Green Party was first to ring the alarm, as soon as we learned of the government’s plan to claw back the CERB from self-employed people who applied in good faith and were given incorrect income eligibility information,” said party leader Annamie Paul. “For months, we have persisted in our demand that the government own up to, and fix, a mistake which threw hundreds of thousands of Canadians into uncertainty in the middle of the second wave of the pandemic.”

The Green party recently presented a petition on the issue to the House of Commons, one of the latest examples of the pressure exerted by the other federal parties on the government to allow self-employed CERB recipients to keep the benefit. There was also a Change.org petition that drew more than 100,000 signatures.

There was even the threat of a class-action lawsuit coming from pensioners affected by the confusion.

In December, shortly after 441,000 “education letters” were sent out to CERB recipients for whom the CRA could not prove eligibility, the Star reported that CRA agents had given incorrect information to many self-employed Canadians, telling them that they were eligible based on their gross self-employed income instead of net.

The CRA later admitted to iPolitics that “communications on this topic were unclear” in the first days of the program, after the union that represents CRA agents confirmed that call-centre agents were given incorrect information.

“After months of anxiety for recipients, we are very gratified to see the prospect of a just result for the many people … who followed the rules, and were told they would have to make a full repayment,” said Paul. “Nevertheless, it should not have taken so much advocacy, and threats of a class action, for the government do the right thing and to reverse its position.

“Today’s announcement is also a testament to the courage of the Union of Taxation Employees who blew the whistle and the many tireless CERB advocates who continued to fight for fairness.”

However, NDP Leader Jagmeet Singh said the announcement came “months too late,” though he is glad to see it at all.

“The Liberal government should have never asked Canadians who did nothing wrong to repay CERB,” he said in an emailed statement. “They threatened people who received the wrong information to pay back up to $14,000 … This resulted in people thinking about selling their house and their car.”

Singh said the Liberals should also be waiving repayments for low-income people and youth aging out of care.

“Many people will sleep better tonight,” Peterborough accountant Kevin Dunn wrote in an email after hearing the news. “CRA did not create the problem. They were simply put in charge of handling a flawed program,” he said, adding that he believes the problem initially stemmed from the legislation enacting CERB.