The Government of Canada has released several income-support benefits over the past year to assist Canadians most impacted by the pandemic.
Last March, the Government of Canada introduced the Canadian Emergency Response Benefit, most commonly known as “CERB,” which provided qualifying individuals with a $2,000 benefit every four weeks, up to a maximum of sixteen weeks. To qualify for CERB, Canadians were required to:
- be at least fifteen years of age;
- not have voluntarily quit their job, but who have stopped or decreased work because of the COVID-19 pandemic; and
- have made at least $5,000 in 2019 or the twelve months immediately preceding their application for CERB.
The problem originated from calculating the income requirement of at least $5,000 in 2019 or over the last twelve months. The CRA insisted that self-employment income always refers to the net, pre-tax income or gross income minus expenses, but some Canadians confused the eligibility requirement as total income before deducing expenses. The CRA admitted that their centre agents informed callers that eligibility was based on gross income for about three weeks when the benefit first became available.
As you can imagine, it came as quite a shock to over 440,000 Canadians who received a letter in early November-December from the Canada Revenue Agency (“CRA”) stating that they did not meet the CERB eligibility requirements and would be forced to repay the benefit, some facing a request for repayment up to $14,000.
On February 9, 2021, the Employment Minister of Canada clarified that those self-employed Canadians who received CERB, despite being ineligible based on the income requirement, will not be forced to repay the benefit. As long as Canadians meet the $5,000 eligibility requirement based on gross income instead of net income, they will not be forced to repay provided that they meet all other qualifying criteria.
Many Canadians who received a letter from the CRA were encouraged to repay the amounts owed before December 31, 2020. The Government of Canada has confirmed that if you have already repaid some or all of the amount to the CRA, you may contact the agency to reclaim the amounts paid.
In addition, the Minister of National Revenue announced that qualifying Canadians who received COVID-19 related benefits in the 2020 year will not be required to pay interest on outstanding income tax debt until April 30, 2022.
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