Canadians told to pay back CERB say eligibility requirements were unclear

Some Canadians say they were shocked and alarmed to learn they may have to pay back thousands of dollars in pandemic benefits after receivingletters from the Canada Revenue Agency last week suggesting they may not have qualified for the Canada emergency response benefit in the first place.

The CRAisencouraging Canadianswho got the lettersto pay back the CERBby Dec.31 so it does not negatively affecttheir tax returns.

Recipients ofthe letters have told CBC News they are being targeted because they usedtheir gross income, including expenses. For a self-employed person that could include work-related cell phone bills or equipment needed to do their work.

Alison Griffiths says she was shocked to find that the CRA didn't count those expenses towards her overall income.

"I was completely taken aback, and I thought, OK,this is a typo," said Griffiths, an author of bookson personal finance and aformer Toronto Star financial columnist and CBC host.

"I immediately went back to the paperwork that I had copied and went back onto the internet. And I thought OK, this definitely is a mistake because I did not see the word 'net' anywhere."

Griffiths, who considers herselffinancially literate, applied for the CERB for herself, her husband and her daughter, who recently graduated from university and receivesdisability benefits.

She said that the government of Canada website stated that in order to qualify for the $2,000 monthly payment, eachperson in her family had to have earned at least $5,000 in self-employment and/or employment income over the previous 12 months.

She said that,after receiving the letter from the CRA and combingthrough several pages and menuson the government of Canada website, shewas able to find a mention of the net income measure.

The landing page detailing the eligibility requirements on Canada.ca still does not mention the word 'net' when referring to income.

Pedram Nasseh, a chartered professional accountant, said his office has been getting emails, text messages and phone calls from worried clients who have received the letters from the CRA telling them they do not qualify for the CERB they already havereceived.

"Panicked. People are panicked about that and they're really, really worried, because people have spent the money to live," he said. "They lost jobs and lost their business and they're really panicked."

Nasseh said many of those whoapplied for CERBassumed thatgross income could be used in the application because no clear distinction was made between net and gross income.

"It was not clear at the time of applying, at the very beginning of this pandemic, when CERB was introduced," he said.

'It seems like the rules were changed last minute'

Tony Carlucci, a musician who also received the CRA letter, told CBC News that his industry has been shut down since the beginning of the pandemic and he needed the CERB to survive right from the outset.

"My heart was pounding and I felt like someone just punched me in the stomach. But ever since then, I still can't wrap my head around the letter," he said. "I'm perplexed, to be honest with you, and very upset."

Unable to get a clear understanding from the government website, Carluccisought expert advice and was told that the benefit probably wouldcalculate his eligibility using the net income line from his previous tax return.

After receiving the CRA letter, Carluccisaid helearned that two of his sources of income a small unionpension and some rental income did not count towardhis net income calculation.

"It seems like the rules were changed last minute. To me, that's what it feels like," he said.

WATCH | Some Canadians told to repay CERB:

Some CERB recipients told they werent eligible, have to repay

4 years ago

Duration 2:00

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.

Nasseh said the timing of the letterscould not be worse; people have lost their jobs or have seen their incomessignificantly reducedbecause of the pandemic and Christmas is only a few weeks away. On top of that, accountants are busy preparing for the year's end.

He saidthe CRA should "wait for people to file their taxes" before sending the letters out. "At that time, if CRA is not happy, they could ask for the evidence," he said.

"We're in the middle of the pandemic and a lot of people are in need of the money and now they have to deal with this."

The CRA told CBC News that it is taking an "educational approach" with the letters, explaining who qualifies and who does not based on their income. The agency said the request to pay the money back by December 31is only a recommendation meant to avoid confusion on tax returns and should not be confused with a payment deadline.

Prime Minister Justin Trudeau told the House of Commons during question period Wednesday that the CERB and other emergency payments establishedswiftly in the early days of the pandemic are now being verified "on the back end," and that people who made "good-faith mistakes" with regard to net income will not be penalized.

"The rules did not change, but we indicated to Canadians that we will work with themif people made good-faith mistakes," he said.

It is notclear what Trudeau meant when he said Canadians who applied for the CERB using their gross income will not be penalized, but the CRA statement to CBC News suggests the benefit payments will have to be returned regardless.

"It is important to note that Canadians who applied for the CERB in good faith, and are later required to pay money back, will not be charged with penalties or interest," the statement said.

"The CRA is sympathetic to the fact that, for some individuals, repayment of these amounts may have financial implications. For this reason, payment arrangement parameters have been expanded to give Canadians more time and flexibility to repay based on their ability to pay."

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