The CRA encourages Canadians who have received the letters to reimburse the CERB by December 31 so that it does not negatively affect their tax returns. The recipients of the letters told CBC News they were being targeted because they were using their gross income instead of their net income to apply for the benefit, and said the government website did not make it clear that the income net should be used.
“I was completely taken aback and thought it was a typo,” said Alison Griffiths, personal finance author and former Toronto Star financial columnist and CBC host.
“I immediately went back to the paperwork I had copied and went back to the Internet. And I thought okay, this is definitely a mistake because I haven’t seen the word ‘net’ anywhere. ”
Griffiths, who considers herself financially literate, has applied for CERB for herself, her husband and her daughter, who recently graduated from college and is receiving disability benefits.
She said the Government of Canada website states that to be eligible for the monthly payment of $ 2,000, each member of their family must have earned at least $ 5,000 in self-employment and / or employment income in the 12 previous months.
She said that after receiving the letter from the CRA and going through several pages and menus on the Government of Canada website, she was 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 receives emails, text messages and phone calls from concerned clients who have received letters from the CRA telling them that they are not CERB eligible they have already received.
” Panic. People are freaked out about it and they are really, really worried because people have spent money to live, ”he said. “They’ve lost their jobs and their business and they’re really in a panic. ”
Nasseh said that many of those who asked for CERB assumed that gross income could be used in the request because no clear distinction was made between net income and gross income.
“It was not clear at the time of the application, at the very beginning of this pandemic, when the CERB was introduced,” he said.
“It seems that the rules were changed at the last minute”
Tony Carlucci, a musician who also received the letter from the CRA, told CBC News his industry has been shut down since the start of the pandemic and he needed CERB to survive from the start.
“My heart was pounding and I felt like someone had just punched me in the stomach. But since then, I still can’t wrap my head around the letter, ”he says. “I’m stumped, to be honest with you, and very upset. ”
Unable to get a clear understanding of the government website, Carlucci sought expert advice and was told the benefit would likely calculate her eligibility using the net income line from her previous tax return.
After receiving the letter from the CRA, Carlucci said he learned that two of his sources of income – a small union pension and rental income – did not count in calculating his net income.
“It looks like the rules were changed at the last minute. For me, that’s what it feels like, ”he said.
WATCH | Some Canadians have said to reimburse CERB:
Nasseh said the timing of the letters couldn’t be worse; people have lost their jobs or have seen their incomes drastically reduced due to the pandemic and Christmas is only a few weeks away. On top of that, accountants are busy preparing for the end of the year.
He said the CRA should “wait until people file their tax returns” before sending the letters. “At that point, if the CRA is not satisfied, they could ask for evidence,” he said.
“We are in the middle of the pandemic and a lot of people need the money and now they have to face it. ”
The CRA told CBC News it takes an “educational approach” with the letters, explaining who qualifies and who doesn’t based on income. The agency said the refund request by Dec.31 is only a recommendation to avoid confusion over tax returns and should not be confused with a payment deadline.
Prime Minister Justin Trudeau told the House of Commons during Question Period on Wednesday that CERB and other emergency payments established quickly in the early days of the pandemic are now being verified ‘downstream’, and people who made “good faith mistakes” with respect to net income will not be penalized.
“The rules have not changed, but we have indicated to Canadians that we will work with them if people make good faith mistakes,” he said.
It’s unclear what Trudeau meant when he said that Canadians who applied for CERB using their gross income will not be penalized, but the CRA’s statement to CBC News suggests that benefit payments will still have to be returned.
“It is important to note that Canadians who have applied for CERB in good faith, and who are then required to repay, will not be charged with penalties or interest,” the statement said.
“The CRA is sensitive to the fact that, for some people, repaying these amounts can have financial implications. For this reason, the payment terms parameters have been expanded to give Canadians more time and flexibility to repay according to their ability to pay.