OVERPAID BENEFITS TARGET OF CRA

Legal warnings for those who don't respond

• The Canada Revenue Agency is ramping up efforts to recover overpayments of pandemic-related benefits.

Starting in July, the agency said Thursday, it will begin issuing legal warnings and could start to take steps to recover overpayments of all COVID-19 programs such as the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit (CRB) and the Canada Worker Lockdown Benefit.

Actions may include taking payments from wages or bank accounts.

The agency said it will only be taking legal action against those who have not responded or co-operated and who it has been determined have the financial capacity to pay.

“Our primary goal is to encourage individuals to contact us so we can work together to find the best way to resolve their debt, ensuring a fair and manageable process for everyone,” spokeswoman Sylvie Branch said in an email.

The agency said it remains committed to supporting Canadians who are not able to repay their debt and encouraged those individuals to contact them to figure out a plan.

CERB was designed early in the pandemic to pay $500 per week to Canadians who lost their job because of lockdowns. Out-of-work Canadians who made a minimum of $5,000 in 2020 or the previous year were eligible to apply.

Launched at the height of the first COVID-19 lockdown in 2020, it was designed with an unusually simple application process to get money out the door quickly. The program waived the usual prepayment verifications designed to prevent fraudulent or illegitimate payments.

The rollout of the pandemic relief payments saw more than $200 billion doled out to individuals and businesses on a pay-nowask-questions-later basis.

The CRA has since decided many people were ineligible for the payments and has been working to get the money back.

It said it's still trying to get about $9.53 billion paid back from individuals including $5.41 billion from CERB, $2.67 billion from CRB and $1.25 billion from the Canada Recovery Caregiving Benefit.

The agency began efforts in May 2022 to recover payments deemed ineligible by sending out letters encouraging voluntary payments.

Last year, it sent out collection letters and made efforts to reach people by phone. It also started using a process it calls “offsetting,” which means that it automatically uses money from tax refunds and some benefits to settle a person's debt with the government.

The government's efforts to recover funds has led to more than 1,000 battles in Federal Court between claimants and the Canada Revenue Agency as people contest the charges.

The bulk of pandemic handouts deemed unwarranted went to businesses, however, not individuals.

Earlier this year, two federal departments charged with doling out COVID-19 benefits also fired 286 employees who “wrongly” received CERB while still working for the government.

In March, the Canada Revenue Agency said that 232 employees had either resigned or been fired after it was discovered they had “inappropriately” received the $2,000-per-month CERB.

The agency said last year it was investigating 600 workers it suspected of having claimed a COVID-19 emergency benefit while working for CRA.

As of March, Branch said 133 were found to have been eligible.

The other department charged with doling out COVID-19 benefits, Employment and Social Development Canada (ESDC) and its Service Canada arm, reported that it had revoked the security clearance of 54 employees — effectively firing them — because they had illegitimately received a COVID-19 benefit as of November.

ESDC (and its Service Canada arm) is the department charged with giving out the bulk of federal government benefits such as Employment Insurance, Old Age Security and various disability assistance programs.

In a report published last year, Auditor General Karen Hogan found that a “minimum” of $27.4 billion in suspicious COVID-19 benefit payments need to be investigated because ESDC and CRA did not manage the aid programs efficiently, and they will likely fail to recover “significant” amounts in overpayments.