What Happens When I Receive a CERB Repayment Letter From Canada Revenue Agency?
The COVID-19 pandemic brought about unprecedented challenges on a global scale. In Canada, many citizens experienced job loss or significant reduction in work hours. To provide financial support during these challenging times, the Canadian government launched the Canadian Emergency Response Benefit (CERB). This important initiative provided a financial lifeline to millions of Canadians, but it also led to some confusion, particularly around eligibility criteria. Today we dive deep into the topic for those who received a CERB repayment letter from the CRA (Canada Revenue Agency).
1. The CERB Initiative
In 2020, at the height of the pandemic, the Canadian government rolled out the CERB program. This initiative was aimed at supporting employed and self-employed Canadians who were directly affected by the COVID-19 measures. If you were eligible, you could receive up to $2,000 for a 4-week period (equivalent to $500 a week).
2. The Aftermath: CERB Repayment Letters
Fast forward to two years later, the CRA has begun sending Notice of Redetermination (NoRs) letters to Canadians who received these benefits. These letters indicate a debt established on their CRA accounts due to the CERB payments. If you’re among the Canadians who received such a letter, it means that the CRA believes you were not eligible for the benefits you received and you are required to pay them back.
3. Why Are Canadians Receiving CERB Repayment Letters?
The swift roll-out of the CERB program, although necessary at the time, led to some confusion about the eligibility of the benefits. Some Canadians mistakenly applied for the program, believing they were eligible. In other cases, individuals who applied for Employment Insurance (EI) were automatically switched over to CERB, leading to overpayments.
4. Reasons for CERB Repayment
If you received a CERB repayment letter from the CRA, it’s due to one of two reasons:
4.1 Income Eligibility
To qualify for CERB payments, you should have stopped working because of COVID-19 and had employment or self-employment income of at least $5,000 in 2019. However, due to the swift roll-out of the program, there was confusion around what kinds of income were considered for eligibility.
Certain types of payments were not considered as part of the eligibility criteria. This includes but is not limited to:
- Pension income;
- Disability benefits;
- Student loans and bursaries;
- Family support payments;
- Social assistance payments;
- Employment Insurance (EI) earnings;
- Canada Child Benefits (CCB) or Working Income Tax Benefit (WITB);
- Investment Income.
If your income in 2019 was less than $5,000 from employment or self-employment, you’ll have to repay the benefit amount received.
4.2 Multiple Payments
Another reason for repayment is the receipt of multiple payments. This may have happened if you applied for CERB through both the CRA and Service Canada, resulting in double payments. In this case, you’re required to pay back half the payment.
5. How to Make Your CERB Repayment?
If you received a CERB repayment letter from the CRA, you’re required to repay the CERB amount. The letter will indicate the date by which the full repayment is due. You should send the repayment back to the department where you applied for the benefit.
6. What If I Can’t Make My CERB Repayment?
If you’re unable to pay your CERB debt in full at once, the agency will send a monthly statement with a minimum monthly payment. If you make the minimum monthly payment by the due date, the CRA will not contact you to increase your payment.
However, if you are experiencing financial hardship and cannot afford the full repayment or the monthly payment, it’s best to contact the CRA right away. They may agree to a reduced regular payment that allows you to pay your debt in a more manageable way.
7. Other Ways the CRA Collects Debt
The CRA has stronger collection powers than banks, private lenders, and other collection agencies. They may keep all or a portion of any tax refunds or GST/HST credits until you repay your CERB debt. Additionally, if you are receiving EI benefits, repayment of your CERB debt from Service Canada will be recovered automatically at 50% of your EI benefit rate.
8. Dealing with Debt and COVID-19
If you received CERB and now have to repay it, it can cause significant financial hardship, especially if you are already struggling with other types of debt. Remember, you are not alone in this. There are debt solutions available.
9. Tips for When You Receive a CERB Repayment Letter
If you receive a CERB repayment letter, here are some tips to help you handle the situation:
- Collect all your financial records related to the CERB application process.
- Print out bank account records from the pandemic timeframe and highlight any CERB or CRB deposits.
- Create a simple budget with your income and fixed expenses listed.
10. Conclusion
Receiving a CERB repayment letter from the CRA can be a stressful experience, but it’s crucial to take immediate action. Remember that there’s help available to you, and you’re not alone in this.
If you’re struggling with debt, don’t hesitate to reach out to credit counselling services. They can help you find the best solution to manage your debt and set you up for a better financial future.
