As many Canadians know, there were several glitches in the Canada Emergency Relief Benefit (CERB) application process. One of the defects was that Canadians could apply twice for CERB through the Canada Revenue Agency (CRA) portal and through the My Service Canada portal. Now, the CRA is contacting individuals who received a double CERB payment and are asking them to repay the surplus.
“The CERB program is open both to Canadians who qualify for employment insurance (EI) and those who do not, as long as they have lost their income due to COVID-19. For those who became eligible for EI on March 15 or later, those EI claims were automatically transferred to CERB. This led to some clients, inadvertently applying for financial support at both Service Canada and the CRA in the first few days of the CERB program,” a CRA representative stated. In simpler terms, the majority of Canadians unintentionally received two CERB payments for a single period.
If you received a double CERB payment, expect to receive a letter from the CRA in the mail with details as to how much is owed. For individuals who have already sent their repayment of CERB to the CRA, disregard the letter.
The CRA started the process of collecting double CERB payments because tax season is coming up for the 2020 year. CERB benefits are considered taxable income which means that the CRA will be issuing T4 slips for all Canadians who received the benefit. The CRA communicated that if individuals repay the double payments by December 31, 2020, the surplus amount will not be reflected in your T4 slips. If surplus payments are not repaid by the end of 2020, the amount will be included on your T4 which means more tax will be owed.
“The CRA makes every effort to work with taxpayers to resolve their debt, but should we be unable to reach a mutually satisfactory payment arrangement, collections measures such as applying future credits and refunds to debts, or taking legal action such as garnishment may be required,” the CRA explained. To date, the CRA received 890,000 repayments through their online portal. CERB debt can also be repaid at your financial institution or by mail.
According to debt specialist Doug Hoyes from Hoyes, Michalos & Associates, many Canadians wanted to repay their double CERB payment sooner, but couldn’t get in touch with the CRA because of flooded phone lines. The majority of Canadians held onto their surplus payments until they received a letter from the CRA with the proper repayment information. Individuals who spent the surplus CERB amounts may face financial difficulty.
For more information on CERB overpayment collections, visit the CRA’s website.
What Should You Do If You Can’t Repay?
If you can’t afford to repay double CERB payments, your first step should be to communicate with the CRA. As mentioned by the CRA representative, they “work with taxpayers to resolve their debt”. If you do not communicate with them, the agency will have no other choice but to escalate their collection actions by using garnishments, freezing your bank accounts or putting tax refunds towards your debt.
Once you get in touch with the CRA, you should have arranged some sort of repayment plan. Your next step is to ensure that you stick to the plan which may require that you take out debt, find a secondary source of income or reduce your expenses. It’s important that you repay your debts to the CRA because they’re a powerful creditor that can cause a lot of financial problems if you do not cooperate with them.
In extreme circumstances, individuals may be eligible for undue hardship. An individual can claim undue hardship if their tax debt causes the person to be unable to afford basic necessities of life, such as food, accommodation, clothing or medical attention. If you are in this predicament, contact the CRA and request that your circumstances be reviewed for hardship.
In the future, be mindful of government benefits and the prerequisites associated with them. The CRA often does audits of paid out benefits, such as CERB and EI. If you notice an overpayment, keep the money aside in case it must be repaid.
Be Mindful of Scammers
According to the CRA, 5,242 Canadians reported COVID-19 fraud and 3,922 were victims of coronavirus scammers between March 6, 2020 and September 30, 2020. The cost of COVID-19 fraud is estimated to be $6.2 million.
Many scammers are taking advantage of the emotional turmoil and financial stress that the coronavirus pandemic has caused. As a result, Canadians have been receiving phone calls, emails or text messages from CRA impersonators to collect false tax debt. The CRA may call you if they are initiating legal action, but you will also receive a letter.
As a general rule of thumb, only respond to letters received by the CRA. If you’d like to ensure that letters are not fraudulent, contact the CRA by phone to confirm the information in the letter you received.
For more information on CRA scammers, visit the CRA’s website.
Veronica Ott attended Western University for accounting and obtained her CPA shortly after. Veronica owns and operates her own writing business with a specialization in personal finance, accounting and business related content.