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This week, the Canada Revenue Agency began sending out reinstatement notices, informing some Canadians who may have received COVID benefits payments for which they may not have been eligible, of debts created on their CRA accounts. This follows debt notices that the Department of Employment and Social Development Canada began sending in November 2021 to various benefit recipients who received an advance payment of $2,000 in Canada Emergency Response Benefits (CERB) in 2020.
You’ll recall that as part of its response to the pandemic, the government used a certificate-based process to provide income support to millions of Canadians, which relied on individuals deciding for themselves whether they qualify for benefits based on applicable criteria. However, it turns out that not everyone who applied was ultimately eligible for benefits, either due to an honest misunderstanding of the rules or, in some cases, simply applying for a CERB, or substitution for Canada Recovery Benefits (CRB), despite not having met Qualification criteria, with the hope that the government will not pursue this.
But now the government, in fact, is following up. If you receive a letter, but still believe you qualify for these payments, you should contact the Communications Regulatory Agency and provide any additional information required to validate your claim. If you need to repay benefits received, the CRA and ESDC have stated that their contact agents will work with individuals on a case-by-case basis to find solutions to your situation, including making flexible payment arrangements. No interest or penalties will be applied to any payments.
Meanwhile, we continue to see taxpayers go to federal court, to challenge the TRA’s decision to deny benefits related to the coronavirus. These cases have had mixed success. Last month, I shared the story of a Quebec taxi driver who went to court to challenge the CRA’s decision to deny him a CRB. This follows a case reported a month ago of a teacher who allegedly received $5,250 in cash income, and whose CERB claim was denied. There was also a case earlier this year in which another taxpayer was in court to challenge the CRA’s decision, which concluded that he was ineligible for a CRB in 2020 because he had not earned $5,000 in income the previous year.
A new reported case, released last month, involved a taxpayer who was challenging the Communications Regulatory Agency’s decision to deny him Canada Refund of Care (CRCB). CRCB has offered a taxable benefit of $500 per week, for up to 44 weeks, to someone who has had to miss work to care for a family member in certain circumstances due to COVID. It was available from September 27, 2020 and only expired last week, May 7, 2022.
To qualify for CRCB, you must be a Canadian resident, be located in Canada, and be at least 15 years old with a Social Security Number (SIN). You must have earned at least $5,000 in (self) employment income in 2019, 2020, 2021 or in the 12 months prior to the application date. In addition, you must have been unable to work for at least 50 percent 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 taken care of your child under the age of 12, or any other family member who needed supervised care, because their regular care was not available for reasons related to COVID-19.
In 2020, the taxpayer applied for the Child Rights Bank. He then applied for additional terms in 2020 and 2021. Following his request, the Telecommunications Regulatory Agency followed up with him on several occasions to request more information, particularly documents proving his earnings, his reduction in work and his caregiving duties.
According to the CRA officer’s notes, the taxpayer refused to submit the required documents and provided conflicting information over the course of half a dozen phone calls. In one call, the taxpayer claimed to be looking after his daughter while in another call he told the officer that he didn’t really have custody of his daughter. In another call, he claimed that he took care of his father due to a medical procedure prior to COVID and that his father lives with him 24 hours a day, while in another call the taxpayer mentioned that his father and mother live together. In another call, the taxpayer claimed that he worked and earned the minimum established income, while in another call he admitted that he had not worked since 2017. The taxpayer later argued that he got $28,150 in cash, but the cash was not deposited into his bank account, and the taxpayer did not It is stated in his tax return.
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In September 2021, the CRA rejected his benefits. The taxpayer then requested a review of the CRA decision that was made, with the TRA, again, in a letter dated October 2021 concluding that the taxpayer was simply ineligible.
In November 2021, the taxpayer filed an application with the Federal Court, requesting a judicial review to see if the CRA’s decision to reject the CRCB was “reasonable.” The Crown has applied to write off the taxpayer’s application.
The request for judicial review must specify the reasons to be discussed, meaning all the legal grounds and material facts necessary to support the required redress. The Federal Court of Appeals has previously set out practices and procedures for notifications of a request for judicial review, as well as petitions to disqualify any requests, saying that “the applicant must specify an ‘exact’ statement of the exemption sought and a ‘full statement’ and ‘summary’ of the reasons intended to be discussed.” Indeed, prior jurisprudence held that “simply saying, in a notice, that the (CRA) findings are wrong without explaining why or providing details, does not matter much, if any.”
Because the taxpayer court application did not include “any allegation that the TRA’s decision under review is unreasonable and does not contain material facts relating to the decision,” the judge used her judicial discretion to strike out the taxpayer’s application for judicial review, which means that the case will not be proceeded to trial. It also awarded costs to the crown.
Jamie Golumbeck, CPA, CA, CFP, CLU, TEP is Managing Director of Tax and Estate Planning with CIBC Private Wealth in Toronto.