Canada Revenue Agency sending flood of letters asking people who received both EI and CERB to pay the extra back

Canadians who received simultaneous payments from Employment Insurance and the Canada Emergency Response Benefit in the early days of the pandemic might soon get a letter from the government asking them to pay the extra back.

But opposition MPs, advocates and experts say workers who received extra money due to confusion shouldn't be asked to repay it years later, warning it could cause financial distress.

In the very beginning of the COVID-19 pandemic, laid-off workers who qualified for EI applied for the benefit. But two things quickly became clear: the EI program couldn't handle the sudden flood of applicants; and many in gig work or the restaurant industry, for example, did not qualify for EI and were being left behind.

The Canada Emergency Response Benefit, or CERB, was launched to help fill those gaps, paying out $2,000 every four weeks to laid-off workers, in most cases much more quickly than EI would have. Over half a year, it paid out almost $82 billion to 8.9 million people.

But because of its emergency nature, there were some hiccups along the way. For instance, self-employed people dealt with confusion over eligibility, which took almost a year to iron out. And in the early days, those who had begun receiving EI from Service Canada were switched over to CERB, which was administered through the Canada Revenue Agency. But some of them received double payments in the shuffle and, at the time, were confused over how that discrepancy would be handled.

Some of those people are likely among the group now receiving notices of repayment from the government.

In August, the next phase of letters started going out, according to the CRA.

These letters are being sent to people who received benefits from EI and CERB at the same time. Most of them owe $2,000 or less, according to the CRA, and to date, more than 100,000 such notices have been sent, though this phase is not yet finished, a spokesperson said.

NDP finance critic Daniel Blaikie has been pushing for the government to cease its efforts to recoup CERB debt from people who applied in good faith.

For most people, two thousand bucks is a lot of money," said Blaikie. They're causing real financial strain and real psychological anxiety."

Most people who received erroneous CERB payments or who didn't qualify for everything they received did so in good faith," said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives - and it's now more than two years since the CERB program began.

There should be some statute of limitations," he said.

Businesses got much more in pandemic benefits, he added, and with looser rules; many benefit recipients still reported profits and paid out dividends.

Blaikie agreed with Macdonald, saying there was more leniency built into programs for businesses than for workers.

Now we're asking for some leniency retroactively for the little guys."

These aren't the first such letters to be sent out.

In November 2021, Employment and Social Development Canada began sending out notices of debt to Canadians who received an advance payment of $2,000 at the beginning of CERB, intended to be applied against a later period, but who didn't remain on the program long enough to reconcile the two. Approximately 1.7 million people were to receive that notice.

In May 2022, the CRA began sending notices to COVID-19 benefit recipients who had been deemed ineligible for some or all of what they received, and informing them the debts had officially been added to their CRA accounts.

It's not clear how many people will receive notices overall or how much money is owed, as the process of recouping these funds is a major undertaking; earlier this year, Employment and Social Development Canada told the Star that verification will continue over the next four years.

Ottawa promised $260 million over four years beginning in 2021 to help the government address cases of misrepresentation, abuse or fraud relating to CERB.

We will work with all impacted individuals to ensure that any questions they may have about these letters are answered with a compassionate approach," said CRA spokesperson Christopher Doody in an email.

The CRA has expanded provisions to help individuals meet their tax obligations during these difficult times, including flexible payment arrangements."

Blaikie called for more transparency from the government regarding how much money it expects to recoup so that the scale of the efforts and expected return are more clear.

But a spokesperson for federal Employment Minister Carla Qualtrough said it's too early to tell how much the government will recoup through the expected four-year process.

Results will be reported as this work unfolds. Once this work is complete, the total amounts owed and recovered will become available. Since post-verification was delayed to January 2022, there are limited results to report on at this time with respect to the volume and amount of CERB overpayments and recoveries," said Qualtrough spokesperson Tara Beauport.

Beauport added that the government and the CRA aren't trying to impose any undue hardship on Canadian workers.

The CRA remains committed to being compassionate, flexible and supportive, and will work with affected individuals, on a case-by-case basis, to find a flexible repayment solution that best reflects their personal and financial circumstances.

The first step is to call the CRA to discuss those options," she wrote.

Most of the erroneous payments are likely due to confusion and the rushed nature of the program, not fraud, said Macdonald. It's absolutely fair game" to go after fraudsters, he said, but he thinks it's unfortunate" that money is being spent to chase down relatively small amounts from individuals who needed the money they received, even if they didn't qualify for all of it.

On Tuesday, Prime Minister Justin Trudeau unveiled the details of new financial aid programs to help Canadians through this period of high inflation: doubling GST rebate payments for six months; the first phase of a national dental care program; and a one-time $500 rental payment for low-income Canadians.

Two of those programs - dental care and housing - are attestation-based, much like CERB was, said Macdonald, which means the money will go out a lot faster, but the eligibility checks will happen after the fact.

This kind of quick-serve program was one of the real innovations of the pandemic," he said, and he's glad to see the government learned from CERB and is applying a similar model during the current period of uncertainty and inflation.

However, he said it's crucial that Ottawa also learns from its mistakes and works to ensure that these new benefits don't sow confusion that later results in individual debt.

In just a few years, you could imagine the exact same situation playing out," said Macdonald, with people getting letters asking them to repay the money they received.

Blaikie said the NDP has been urging the government to ensure similar mistakes aren't made that result in clawbacks later. One difference between CERB and the dental and housing benefits is that the new ones aren't taxable, he said, and the NDP is working to get assurances that won't change, as one thing that complicated CERB was its taxability.

I think that's a positive thing. I think that's real insurance against unintended clawbacks," said Blaikie.

Beauport said Employment and Social Development Canada is doing an assessment of the CERB program to see what worked and what didn't.

This will inform the design and delivery of future government emergency response and recovery benefits, which could be leveraged in a future urgency or crisis," said Beauport.