CRA sent 441,000 'education letters' to Canadians who may have to repay CERB benefits

The Canada Revenue Agency says it has sent out 441,000 letters warning individuals that they may not be eligible for the Canada Emergency Response Benefits they received.

Described as "education letters" by a CRA spokesperson, the letters were sent to those for whom the agency said it was "unable to confirm ... employment and/or self-employment income of at least $5,000 in 2019, or in the 12 months prior to the date of their application" — one of the key criteria for the CERB program.

In the past several weeks, many Canadians have reported they received such letters and now fear they'll have to repay thousands of dollars in benefits. 

The new figure provided by CRA suggests how broad the problem might be. According to federal figures, 8.9 million Canadians applied for CERB. That means nearly 5 per cent of applicants have received letters saying they may not be eligible and could be forced to repay benefits.

Many of those affected have argued that the federal government never clearly defined how the $5,000 amount would be calculated. Some point to the CERB application, which asks if the person received "a minimum of $5,000 (before taxes) in the last 12 months, or in 2019 …" but makes no explicit mention of expense deductions.

In emails to CBC News, the CRA says it has been clear about how it defines income.

"The CRA considers self-employment income as the net pre-tax income (gross income less expenses). This is consistent with how self-employment income is calculated when dealing with the CRA. To be clear, there has been no change to this position during the lifecycle of the CERB," a CRA spokesperson told CBC News earlier this month.

The CRA also said the employment income requirement has been publicized on Canada.ca "since the beginning" on a Q&A page for self-employed and independent workers.

However, a CBC News search of archived internet pages shows that information was added sometime after April 21 — about two weeks after the program opened for applications.

WATCH: Repaying CERB benefits

What you need to know about repaying CERB

4 years ago

Duration 6:54

Some Canadians are getting letters from the Canada Revenue Agency, suggesting they could have to repay thousands of dollars in CERB money because they may not have been eligible to receive it in the first place.

The CRA says that not everyone who receives a letter will be required to repay their CERB benefits. Recipients are encouraged to complete their 2020 tax returns to help the CRA correctly identify the benefits and credits to which they are entitled.

The letter says that those who do owe CERB money are encouraged to repay by Dec. 31. A CRA spokesperson said this is for tax filing purposes, not a repayment deadline.

A promise of 'flexibility'

"If you are unable to immediately repay the amount," reads a sample of the warning letter provided to CBC News, "we can make an arrangement to give you more time and flexibility based on your ability to pay."

In fact, the CRA has suspended collection activity on new debt during the pandemic. The agency has said it will resume collecting on debts, including CERB payments, "when it is responsible to do so."

Some of those who received letters from the CRA say they spent their CERB benefits on basic needs such as groceries and rent. They say they fear they would not be able to repay the money if asked.

Asked about the situation in question period last week, Prime Minister Justin Trudeau suggested the government had been clear from the beginning about the pandemic supports it has offered Canadians.

"The rules did not change, but we indicated to Canadians that we will work with them if people made good-faith mistakes," he told the House of Commons.

CRA's most recent run of warning letters is in addition to the 213,000 letters the agency sent out in November. Those letters were addressed to Canadians who applied for CERB through both Service Canada and the CRA, and warned them that repayment may be required.

The CRA says it's possible that some Canadians received both letters.