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 pan‐ demic 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 indi‐ viduals 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 bene‐ fit payments.

But many Canadians have disputed the government's assessment of their eligibility for those benefits and hun‐ dreds have even taken the government to court.

The CRA told CBC News that as of April, it has re‐ versed the debts of roughly 27,000 individuals who origi‐ nally had been deemed ineli‐ gible but later had their eligi‐ bility verified.

Those figures only include pandemic benefits that were administered by the CRA. A portion of the CERB program was administered by Employ‐ ment and Social Develop‐ ment Canada (ESDC); that de‐ partment told CBC News it doesn't track how many benefit debts it has reversed.

Cris Best, a Toronto tax lawyer, said he's not sur‐ prised 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 in‐ consistency," he said.

Canadians who have re‐ ceived a notice from the gov‐ ernment stating that their eli‐ gibility has been revoked are able to ask for two reviews of their case.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 deci‐ sion 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 tax‐ payer bears the burden to disprove those facts … It's not a very fair fight."

Some people frustrated by review process

Jason Harth said he experi‐ enced 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. resi‐ dent said his daughter ap‐ plied for CERB when she was laid off during the pandemic. She was able to find new em‐ ployment roughly nine mon‐ ths later.

But roughly a year later, Harth said his daughter started receiving notices say‐ ing her eligibility was under review. He helped his daugh‐ ter provide the proper docu‐ mentation 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 - Ja‐ son 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 eligi‐ ble 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 as‐ sessment.

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 tax‐ payer'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 ex‐ planation," 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 other‐ wise.

"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 num‐ bers on the two decision no‐ tices she received don't match the original case num‐ ber she was assigned.

A spokesperson for Minis‐ ter of National Revenue Mar‐ ie-Claude Bibeau said the de‐ partment believes the valida‐ tion 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 documenta‐ tion," Simon Lafortune, Bibeau's press secretary, said in an email.

"We are more than satis‐ fied 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 frustrat‐ ing because it's so strange and it just really kind of dam‐ ages 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 daugh‐ ter's issue was resolved in the end, Harth was equally unimpressed with how the tax agency handled the situa‐ tion.

"The whole review just left me questioning the integrity of the agency due to the in‐ appropriate handling of the situation," Harth said.

"They made it very diffi‐ cult."