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This week, the Canada Revenue Agency began sending out Notices of Redetermination, advising some Canadians who may have received COVID benefit payments for which they may have not qualified, of debts that have been established on their CRA accounts. This follows the Notices of Debt that Employment and Social Development Canada began sending out in November 2021 to various benefit recipients who received an advance payment of $2,000 of the Canada Emergency Response Benefit (CERB) in 2020.
You’ll recall that as part of its response to the pandemic, the government used an attestation-based process to provide income support to millions of Canadians, which relied on individuals determining for themselves if they were eligible for benefits based on the established criteria. But, it turns out that not all who applied were ultimately eligible to receive benefits, either due to an honest misunderstanding of the rules, or, in some cases, simply applying for CERB, or its replacement the Canada Recovery Benefit (CRB), despite not meeting the qualification criteria, while hoping the government never followed up.
But now the government is, indeed, following up. If you received a letter, but still believe that you’re eligible for these payments, you should contact the CRA and provide any additional information required to validate your claim. If you do need to repay back benefits received, the CRA and ESDC have stated that their call agents will work with individuals on a case-by-case basis to find solutions to your situation, including making flexible payment arrangements. There will be no interest or penalties applied to any repayments.
Meanwhile, we continue to see taxpayers going to Federal Court, challenging the CRA’s decision to deny COVID-related benefits. These cases have had mixed success. Last month, I shared the story of the Quebec taxi driver who went to court to challenge the CRA’s decision to deny him the CRB. This follows a reported case a month earlier of the tutor who allegedly earned $5,250 of income, in cash, and was denied his claim for the CERB. There was also a case earlier this year in which yet another taxpayer was in court challenging the CRA’s decision, which concluded he was ineligible for the CRB in 2020 because he didn’t earn $5,000 of income in the prior year.
A new reported case, just out last month, involved a taxpayer who was challenging the CRA’s decision to deny him the Canada Recovery Caregiving Benefit (CRCB). The CRCB provided a $500-per-week taxable benefit, for up to 44 weeks, for someone who had to miss work to care for a family member in certain circumstances due to COVID. It was available starting Sept. 27, 2020 and ended just last week, on May 7, 2022.
To qualify for the CRCB, you had to be a Canadian resident, present in Canada, and at least 15 years of age with a valid SIN. You must have earned at least $5,000 of (self-) employment income in 2019, 2020, 2021, or in the 12-month period prior to the application date. In addition, you must have been unable to work for at least 50 per cent of your normally scheduled work week because you had to take care of a family member for various reasons due to COVID-19. For example, you may have cared for your child under 12 years old, or another family member who required supervised care, because their regular care was unavailable for reasons related to COVID-19.
In 2020, the taxpayer applied for the CRCB. He subsequently applied for additional periods in 2020 and 2021. Following his application, the CRA followed up with him on numerous occasions requesting further information, notably documentation evidencing his revenue, his reduction in work and his caregiving duties.
According to the CRA officer’s notes, the taxpayer refused to provide the requested documents and provided conflicting information over the course of half a dozen phone calls. In one call, the taxpayer claimed to care for his daughter while in another he informed the officer that he didn’t actually have custody of his daughter. In another call, he claimed that he cared for his father due to a pre-COVID medical procedure and that his father lives with him 24 hours a day, while in another call the taxpayer stated his father and mother live together. In yet another call, the taxpayer claimed to have worked and earned the prescribed minimum income, while in another call he admitted to having not worked since 2017. The taxpayer later argued that he was paid $28,150 in cash, but the cash was not deposited in his bank account, nor was it declared on his tax return.
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In September 2021, the CRA denied his benefits. The taxpayer then requested a review of the CRA decision which was conducted, with the CRA concluding, once again, in an October 2021 letter that the taxpayer simply didn’t qualify.
In November 2021, the taxpayer applied to the Federal Court, asking for a judicial review as to whether the CRA’s decision to deny the CRCB was “reasonable.” The Crown brought a motion to strike the taxpayer’s application.
An application for judicial review must set out the grounds to be argued, meaning all the legal bases and material facts necessary to support the relief sought. The Federal Court of Appeal has previously set out the practice and procedures for notices of application for judicial review, as well as motions to strike any applications, saying that “an applicant must set out a ‘precise’ statement of the relief sought and a ‘complete’ and ‘concise’ statement of the grounds intended to be argued.” Indeed, prior jurisprudence has determined that “simply stating, in a notice, that (the CRA’s) findings are erroneous without explaining why or offering particulars, counts for very little, if anything.”
Given that the taxpayer’s court application included “no allegation as to how the CRA decision under review is unreasonable and that it contains no material facts pertaining to the decision,” the judge used her judicial discretion to strike the taxpayer’s application for judicial review, meaning the case will not be proceeding to trial. She also awarded costs to the Crown.
Jamie Golombek, CPA, CA, CFP, CLU, TEP is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto.