Some Self-Employed Canadians Need to Pay Back All Their CERB, Government Says

The government is asking for up to $14,000 back before December 31, due to poor wording on their part, in order for Canadians to avoid impacting their tax returns.
December 9, 2020, 7:16pm
Justin Trudeau, Canada's prime minister, listens during a news conference outside Rideau Cottage in Ottawa, Ontario, Canada, on Tuesday, Dec. 1, 2020.
Justin Trudeau, Canada's prime minister, listens during a news conference outside Rideau Cottage in Ottawa, Ontario, Canada, on Tuesday, Dec. 1, 2020.  Photographer: David Kawai/Bloomberg via Getty Images

Some self-employed Canadians may have to pay back as much as $14,000 received from the Canadian Emergency Response Benefit (CERB) due to a lack of clear wording on the requirements to qualify for the benefit, according to a new letter sent out by the CRA.

The letter, which was mailed out to at least 200,000 Canadians in the last month, is directed toward individuals who the CRA believes did not meet the requirement of having made at least $5,000 in net income in 2019 in order to qualify for the CERB.


The phrase “net income” was not previously mentioned on the CRA’s Q&A page (which still remains online) about who was eligible to receive the benefit. Rather, the original wording stated that Canadians needed to have “employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application.”

This means that self-employed Canadians—who took the benefit based on the assumption that having made at least $5,000 in gross income (before deductions) would qualify them to receive it but did not make $5,000 in net income (after deductions)—will be on the hook for thousands of dollars.

While receiving the letter is not a guarantee of non-qualification, the CRA recommends that Canadians who think they did not qualify for CERB payments to return the full amount received by December 31 in order to avoid impacting their taxes.

In an email to VICE World News, CRA spokesperson Charles Drouin defended the letters and said that the guidelines for requirements were clear, pointing to the self-employment section of the CERB Q&A that mentioned net income. Rather than being a punitive move, Drouin said the agency is taking an “educational approach with these letters” and says that people may have received it due to having not filed or improperly filed their 2019 taxes. 


He reiterated that even for those who didn’t make $5,000 net income in 2019, they can still qualify if they made $5,000 net income in the 12 months prior to the first CERB application, which would be sorted out in next year’s taxes.

“Individuals who have received this letter should not interpret it as a determination that they have definitely been deemed ineligible for the CERB,” Drouin said. “What the letter means is that the CRA does not yet have the information needed to confirm that they are in fact eligible for the benefit.”

Backlash to the letter has been swift. On Monday, Green Party Leader Annamie Paul said that the government was falling back on its promise to sort out the issues with repayment of wrongly-distributed benefits after the pandemic was finished, adding that the going after Canadians during the holiday season “is simply not in the spirit of this moment.”

“We want to remind our government that we are still in a second wave,” Paul said. 

“We are entering a very lonely holiday season for many people who have been isolated for months and months, and we certainly aren’t looking for anymore reasons to cause them stress or alarm.”

NDP MP Heather McPherson also raised the issue while in question period last week, highlighting the dismissal of a wealth tax by the Trudeau government while the CRA aggressively pursues repayment from Canadians living in the lowest income bracket as an example of its abandonment of its initial promises.

In an interview with VICE World News, McPherson hit back at the CRA’s claims that the requirement was made clear from the beginning, arguing that burying the information deep in a Q&A as opposed to prominently featuring it in the eligibility guidelines conflicted with Prime Minister Justin Trudeau’s initial messaging to Canadians during the beginning of the pandemic.


“The CRA made a mistake, and now people who applied in good faith, who thought they were eligible, are being told to pay it all back during a pandemic, and during the holidays,” she said. 

“If you have a program that was opaque, that was not obvious, you say it was obvious and call it a day. You don’t come back and dump that responsibility on low-income people.”

For Sophia Banks, the owner of a vegan food business in Vancouver, the letter came as a devastating blow on an already tough year. Having relocated from Montreal after transphobic harassment forced her to close her cafe last year, Banks accrued numerous expenses that dragged her net income below $5,000 for 2019 to $4,500.

When the pandemic hit, Banks took CERB under the belief that the nearly $8,000 she had raised on Kickstarter through the beginning of this year would qualify as income. In recent months, the CRA has told her that they do not recognize Kickstarter as a valid source of income, and denied her access to the CRB while simultaneously asking her to pay back the $10,000 she received from CERB.

“I’ve fallen through all the cracks in this process,” Banks said, mentioning that the distinction between net and gross income was not something that occurred to her when applying for CERB. 

“I’m not the best at this sort of stuff so it’s confusing to me, and I get that, but now I am having to sell my belongings off to pay this and to pay my bills. It feels wrong.”

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Correction: An earlier version of this story said interest payments would be charged on the CERB repayments. The CRA says that no interest will be charged but late payments may affect tax returns.