$240 million in CERB payments forgiven due to ‘unclear’ information given to Canadians

The debt of self-employed Canadians who claimed an average of $8,000 in CERB overpayments will be forgiven, totaling $240 million. These claimants did not meet eligibility criteria due to confusion from government messages.

Around 6,500 had already reimbursed the government after receiving an "educational letter" from the Canadian Revenue Agency back in December that warned them they may not have been eligible. So long as those that sent in the money meet all other eligibility requirements, they will be reimbursed for CERB payments, totaling around $52 million.

CRA said that the process to apply for reimbursement will be released "soon."

According to the government's publication in the Canadian Gazette, the move is deemed necessary because it "would be unreasonable and unjust for the Crown to collect the debt."

The misinformation began last spring, when the CRA issued its eligibility requirements for the $2,000 per month emergency payment.

The CERB eligibility criteria stated at launch that recipients must be making at least $5,000 before taxes in either all of 2019 or the 12 months prior to filing.

Due to "unclear and incorrect" information, around 30,000 self employed Canadians took that to mean total income before deducting expenses, or gross income, rather than their net income after deductions, which is usually how self-employed income is calculated.

Adding to the confusion, CRA call center scripts originally stated that CERB eligibility was based on gross income. The script was changed a few weeks after the program was launched.

An "educational letter" from the CRA was sent out in December, saying that self-employed Canadians needed to provide proof that they made at least $5,000 in net income in 2019, or pay back the CERB money, causing Canadians to panic.

Employment Minister Carla Qualtrough announced in February that those applicants could keep the money.

"Given that the eligibility criteria with respect to self-employment income were initially unclear and that individuals applied on the basis of these criteria, these individuals may be facing hardship if required to repay these monies,” reads an official statement.

The objective set forth by the government in forgiving the debt is "to limit the financial hardship" of Canadians who applied to CERB after “receiving incorrect or inaccurate information” from the federal government on self-employment income eligibility criteria.

The notice from the government does note though that those self-employed Canadians who don't meet the other eligibility requirements set forth for CERB payments will still have to repay those amounts.