Self-employed Canadians who wrongly claimed the Canada Emergency Response Benefit (CERB) based on their gross income but met all other eligibility criteria will not need to repay the federal government the money they received.
Prime Minister Justin Trudeau made the announcement Tuesday at a press conference outside his Ottawa residence, where he conceded there were some “inaccuracies” in the information his government shared about the CERB’s eligibility rules that led to confusion and mistakes.
“For people who accessed CERB based on their gross income instead of their net income…. as long as you met the other eligibility criteria, you will not have to return those CERB payments,” he said.
“When we rolled out CERB last March, it was because people needed help in the face of a global, once-in-a-generation crisis. Well, the pandemic isn’t yet over. So neither is our support,” he added.
Watch: CERB fraudsters will be caught, Freeland says
In order to qualify for the CERB, the $2,000-per-month emergency payment launched last April in the early weeks of the COVID-19 pandemic, recipients had to have earned at least $5,000 in income in 2019 or the 12-month period prior to applying.
The Canada Revenue Agency (CRA) said that while that figure was interpreted as gross income for traditional employees, self-employed Canadians needed to have earned $5,000 in net income — gross income minus expenses.
However, many self-employed Canadians said that distinction was not at all clear, with government officials even having advised MPs over the summer that gross income was the measure to determine eligibility for self-employed Canadians.
The Union of Taxation Employees, which represents CRA workers, told iPolitics that call centre agents were given incorrect information about the CERB eligibility. The CRA’s website was quietly updated to spell out the net income threshold two weeks after applications opened in April, CTV News reports.
In November and December, the CRA sent letters to more than 440,000 Canadians inquiring about their eligibility and warning that they may need to repay up to $14,000 in CERB money. The letters sparked stories of anxiety and fear during the holiday season from those who said they applied in good faith and felt misled. Nearly nine million Canadians who lost work during the pandemic received the CERB.
Despite the mixed messaging, Employment Minister Carla Qualtrough said in December that self-employed Canadians who were ineligible for the CERB were still on the hook for repayments.
But days later, Trudeau told reporters his government didn’t provide support for Canadians just to claw them back at Christmas.
“So be reassured, any good faith mistakes will not be penalized, will not be pursued,” he said at the time. Trudeau also noted that roughly a million CERB repayments had been made from those who received the benefit “unjustly” or incorrectly, because Canadians “are fair and fair-minded and responsible.”
New Democrats and Greens both pushed the Liberal government to give up seeking repayments from Canadians who thought they were following the rules.
“Instead of going after those folks, there should be an immediate end to pursuing people that are self-employed that applied for CERB,” NDP Leader Jagmeet Singh said in December. “In fact, it’s more than just good faith. They applied with the information they had, and they did the right thing.”
In a press release Tuesday, Qualtrough said the CERB’s eligibility criteria was kept as broad as possible to help millions of Canadians pay for essentials, such as food and rent.
Announcement gives ‘certainty,’ employment minister says
“This announcement is giving certainty to self-employed Canadians who applied for the CERB in good faith, while also protecting their financial well-being,” she said. “We have gone to great lengths to support workers during this pandemic, and will continue to do so as we build back better together.”
Asked Tuesday if his government’s decision was fair to self-employed Canadians who understood the rules from the outset and didn’t apply for the CERB, Trudeau declined to weigh in. He responded by saying there would be no “retroactive measures” on those who made mistakes based on a “lack of clear instructions.”
Trudeau also announced Tuesday that the government will give Canadians with pandemic interest debt a break.
“If you received federal emergency benefits, like the CERB, and you made up to $75,000 in taxable income, you will not have to pay interest on 2020 tax debt until April of next year,” he said. “Our priority is ensuring you and your family get through this pandemic and back on your feet.”
With files from The Canadian Press