Jobs Minister Carla Qualtrough today said she felt ‘bad’ for Canadians who applied for the Canada Emergency Response Benefit thinking they met the minimum income requirement, only for learn that they may now have to repay thousands of dollars.
But while the minister told CBC News that “nothing is on the table”, the government is not considering letting everyone who applied in good faith off the hook, as suggested by the NDP and the Green Party.
“There’s no conversation going on right now where we would forgive people, where we wouldn’t require people who weren’t eligible to pay it back. No,” she said.
Communications could have been clearer, minister says
In recent weeks, some 441,000 Canadians have received “education letters” from the Canada Revenue Agency asking for more information to determine if they meet the income eligibility criteria for CERB payments that they received.
Many of those facing the prospect of a refund have argued the government has been unclear about how it defines ‘income’.
The CERB app asks Canadians to certify that they have earned “a minimum of $5,000 (before taxes) in the last 12 months, or in 2019…”
Some self-employed Canadians say they thought that meant all income, since there was no mention of expenses. The CRA insists that self-employment income always refers to “net income before tax” or gross income less expenses.
For a self-employed person, these expenses could include the cost of materials needed to run their business or work-related cell phone bills.
The CRA has provided a question and answer page on Canada.ca that explains the income requirements; an agency spokesperson said those requirements had been in place “from the start” of the CERB program. But this page seems to have been launched about two weeks after the opening of applications.
Others point out that the Canada Emergency Response Benefit Act itself only refers to “total income”.
Qualtrough said the government had updated some of its communications as questions arose, but there was no change in government policy. She points out that benefits like the GST credit or the Canada child benefit are based on the same definition of income.
“I thought myself that I had been pretty clear in my communications,” she said. “But obviously, if people have misunderstood, it’s up to us. It’s up to us to communicate these programs, however complex they may be.”
The minister said she hopes many Canadians who have received letters from the CRA will eventually find they don’t have to repay. She said she felt bad for those who did.
‘We all feel bad’: Qualtrough
“Of course I feel bad. We all feel bad,” Qualtrough said, noting that the CERB program in particular was designed to help those who find themselves in “horribly difficult and uncertain circumstances” because of the pandemic. .
She suggested the government could find ways to lessen the financial impact of benefit clawbacks.
“As I said earlier, we haven’t made a decision on forgiveness. That’s certainly not – at the moment – the plan. But … there are already many programs that we can can -be strengthened to help Canadians forgive interest or refund options.We are really digging.
It’s unclear when debt collection could start again
While CRA letters advise those who owe money to repay it by December 31, the agency said this was for tax filing purposes and should not be a date. reimbursement limit.
Delaying repayment could inflate a taxpayer’s income in 2020 and affect entitlement to credits and benefits, Qualtrough warned.
The ARC has not collected any new debts since the start of the pandemic. The agency said it would resume collection activities “when it is responsible to do so.”
It’s too early to tell when that will be, Qualtrough said.
“We don’t really know when we’ll get to a point where it’s right to do that,” she said, pointing to the lingering uncertainty caused by the pandemic.
MP suggests taxfilers could transfer qualifying expenditure
At least one Liberal MP, Sean Casey, has spoken to his constituents about a possible solution to this CERB income threshold.
He said he told people to contact their filers to discuss changing their 2019 returns by transferring certain qualifying expenses to another tax year — or simply not claiming them.
It could increase their reported net income and “make them retroactively eligible” for CERB, he told CBC News last week.
“I’ll let Mr. Casey speak for himself,” Qualtrough said when asked about Wednesday’s comments. “I certainly won’t give that advice to my constituents.”
She encouraged people to rely on the advice of tax experts.
“I don’t think it’s appropriate for me as a minister, in particular, to give tax advice,” she said.