CERB Overpayments and Penalties

The Canada Emergency Response Benefit (CERB) was a lifeline for many Canadians hit hard by the economic fallout of the COVID-19 pandemic. However, due to the urgency with which it was implemented, there were ambiguities in the eligibility requirements. Consequently, a significant number of individuals might have received overpayments. The recent letters from the Canada Revenue Agency (CRA) to these individuals for repayment has stirred concern and confusion. This article aims to dissect the complexities surrounding CERB Overpayments and Penalties and provide clarity on this matter.

Understanding CERB Overpayment

If you’ve received a letter from the CRA regarding repayment of CERB, it means there might be an overpayment issue. This could be due to a variety of reasons, such as:


  • Applying for CERB without meeting the eligibility criteria;
  • Earning more from your job than initially thought; or
  • Receiving duplicate payments of CERB from CRA and Service Canada.


Implications of CERB Overpayment

Just like any other creditor, the government expects the overpaid amount to be returned. If the overpaid money is still with you or you can afford to return it, it is advisable to do so promptly. This not only rectifies the error but also helps evade any potential legal consequences.

However, if you’re unable to repay, you could face certain repercussions. The government could withhold other benefits from you, like Employment Insurance, HST/GST cheques, and future CERB payments. That said, it’s worth noting that the Government of Canada has announced that the CRA will not withhold GST/HST credit cheques or the Child Tax Benefit from those who have income tax debt related to the CERB.

Potential Legal Risks

If it’s found that the overpayment occurred due to fraudulent practices, there could be legal implications. The government introduced Bill C-17, which proposes penalties such as fines or imprisonment for fraudulent practices related to CERB. These may include providing false or misleading information, knowingly failing to declare income, or knowingly receiving a payment one wasn’t eligible for. Although Bill C-17 hasn’t been passed yet, if you suspect having submitted false or misleading information, it’s advised to consult a lawyer or financial advisor.

CERB Overpayments for Self-Employed Individuals

Initially, the CRA stated that self-employed individuals needed to have at least $5,000 in income from the previous year to qualify for CERB. Later, they clarified that the $5,000 referred to “net income”. This caused confusion, leading many self-employed individuals to receive CERB erroneously. However, the CRA announced in February 2021 that those who applied for CERB based on their gross income and meet all other eligibility requirements won’t have to repay the overpayments.

Impact of CERB Benefits on 2020 Income Tax Returns

CERB amounts form part of your taxable income for 2020 even though taxes weren’t deducted initially. If you’re not self-employed and received CERB, you must claim the CERB as income in 2020. The CRA also announced targeted interest relief for recipients of CERB and other pandemic-related income support benefits. This means that if you qualify for the program and have filed your 2020 income tax and benefit return, you won’t have to pay interest on any outstanding income tax debt, including CERB overpayments, for the 2020 tax year until April 30, 2022.

CERB Overpayment Implications for Non-Self-Employed Individuals

If you received CERB payments when you weren’t eligible and made a repayment before December 31, 2020, the repaid amount will appear as a deduction on your 2020 T4A or T4E slip. Any repayments received by the CRA after December 31, 2020, will be reported on a 2021 T4A slip issued in 2022 and will be a deduction on your 2021 personal tax return.

Dealing with Fraudulent Communications

Always be cautious of fraudulent emails, texts, or callers claiming to be from the CRA. If you receive such communication, do not respond and initiate contact yourself. The CRA website provides advice on how to protect yourself against fraud. Always verify the source before sharing personal information or making any payments.

CERB Overpayment and Bankruptcy

As of now, the government hasn’t indicated that these overpayments will be treated differently from any other debt. Therefore, if you’re considering bankruptcy or a consumer proposal to deal with your CERB overpayment, it will be included in the insolvency proceeding. You can reach out to a debt solution professional for advice on managing your debt and financial commitments.

In conclusion, it’s essential to understand the implications of CERB Overpayments and Penalties and navigate this complex issue wisely. If you’re unsure about anything, don’t hesitate to consult a financial advisor or a lawyer. Being proactive can save you from potential legal consequences and financial hardship.

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