The Canada Revenue Agency has promised to ratchet up its efforts in retrieving money the agency overpaid to Canadians who were ineligible for emergency benefits during the COVID-19 lockdown.
Canadians who were overpaid by any of the COVID-19 relief benefits handed out under the Trudeau government during the pandemic may soon face legal action.
“Starting in July 2024, for individuals who have not responded or co-operated, and who have been determined to have the financial capacity to pay, legal warnings will be issued and legal measures could be taken to recover monies owed,” wrote the CRA in a statement released on Thursday.
According to the agency, only people who have already been contacted about repaying their debt are the ones who should be worried.
“Legal measures are only taken when there is no cooperation from an individual with ability to repay the debt,” reads the release.
However, all those deemed to be ineligible recipients of the Canada Emergency Response Benefit, the Canada Recovery Benefit and the Canada Worker Lockdown Benefit who have not yet repaid are now in the agency’s legal crosshairs.
Garnished wages and even removing money directly from bank accounts are now on the table.
Canadians who were overpaid but are unable to repay their debt are encouraged to contact the CRA to create a plan of repayment, the agency urged.
“The CRA remains committed to supporting Canadians who, for different reasons, are not able to repay their debts,” it said.
“If you cannot pay the total amount owing immediately, we encourage you to contact the CRA to develop suitable payment arrangements based on your ability to pay. Not contacting the CRA when receiving a legal warning will result in legal measures that could be avoided.”
Over $200 billion was doled out to businesses and individuals during the duration of these relief payment programs with little oversight, resulting in the CRA later deciding that some recipients were ineligible.
The agency is now demanding the repayment of $9.53 billion from certain individuals, $5.41 billion of which is from CERB alone.
Another $2.67 billion is from CRB and the remaining $1.25 billion is from the Canada Recovery Caregiving Benefit.
The CRA first began its recovery efforts in May 2022 via letters sent out to ineligible recipients, requesting a voluntary repayment.
However, the agency changed its tone last year when it sent out collection letters and began reaching individuals by phone.
Furthermore, the CRA began the practice of “offsetting,” meaning that it would automatically deduct money from tax refunds and certain benefits and apply it toward the person’s debt owed.
The Trudeau government’s efforts to retrieve the funds have led to over 1,000 Federal Court disputes between claimants and the CRA, as many have contested their charges.
The CRA has even had to fire 185 of its employees, due to staff members abusing the system. Another 600 staff members were under investigation as of last December.
National Revenue Minister Marie-Claude Bibeau praised the CRA for its “zero tolerance” approach to dealing with employees who took advantage of CERB when the agency first began firing employees last fall.
In one high-profile fraudulent case, a Toronto Uber driver received $4.5 million in pandemic funds, before having his bank account frozen.
Ontario Superior Court Justice Michael Penny ruled that Rabih George Barake accessed the funds under false pretences, ordering him to repay the bank with interest and costs, and imposing punitive damages totaling $1.5 million.
It’s worth noting, however, that the majority of pandemic funds that the CRA deemed to be unwarranted went to businesses, not individuals.