CERB (Canada Emergency Response Benefit) provided much needed relief to working Canadians hard-hit by the Covid-19 pandemic. Eligible recipients could receive $2,000 per four week period. Unfortunately, the government later concluded that some people received overpayments or should never have received the benefit in the first place for various reasons.
The Canada Revenue Agency (CRA) then set out to recover as much of these funds as they could. Those who could afford to simply repay had no problem, but many are still struggling.
Who qualified? Only employment or self-employment income qualified for CERB assistance. CERB eligibility for self-employed individuals was based on their gross income, not their after tax income, although there was some initial confusion surrounding this issue.
Anyone who relied on alternative forms of income did not qualify. These included:
- Social assistance
- Disability benefits
- Family support
- Student loans
- Student bursaries
- Employment insurance
- Income from investments
- Child benefits
- Working income tax benefits
The government acknowledged that CERB claims by people who did not qualify may have been genuine mistakes, and did not penalize ineligible claims with interest or late fees. Instead, voluntary repayment was encouraged.
Taxes on CERB
As CERB payments counted as taxable income for the self-employed, overpayments had to be included in the following year’s tax return. But this could lead to accumulating tax debt for individuals with ongoing financial issues, as well as the loss of any rebates to which they might have been entitled.
I can’t repay my CERB – what should I do?
So, you have received a collection call, or a letter from CRA requesting repayment; what if you can’t repay the CERB you received? What are your options?
The very first thing to do if you receive a CERB repayment letter is to ensure that the payments you received really were erroneous. Check the eligibility criteria and your own financial records. Then phone the local CRA office and discuss your situation with an agent if you need clarity.
If repayment in full is not possible, a second option is to arrange a CERB repayment plan, with monthly payments made over a specified period of time. This is similar to repayment plans for tax debt.
CERB debt can be included in a Bankruptcy or Consumer Proposal. Both options can only be done through a Licensed Insolvency Trustee (LIT), who are licensed by the federal government to provide professional advice and support across all areas of insolvency.
CERB debt does qualify as dischargeable debt under the Bankruptcy and Insolvency Act. The only circumstance in which it could outlast the Bankruptcy process is proof that the original payments were obtained directly through fraud.
Expert help from a Licensed Insolvency Trustee
If you are worried about insolvency due to CERB repayment issues or other financial pressures, the place to turn is your local Licensed Insolvency Trustee (LIT). These federally regulated financial professionals provide a full range of credit counselling services to help you reset and reorganize your finances.
Allan Marshall & Associates is a well-respected team of Licensed Insolvency Trustees, with offices in five separate provinces: British Columbia, Alberta, New Brunswick, Prince Edward Island and Nova Scotia.
Get in touch today and begin your journey towards a brighter financial future.