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Licensed Insolvency & Bankruptcy Trustee

What to Do If You Face a CERB Audit?

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Many Canadian households that lost wages due to the coronavirus pandemic have received money from the government as part of the Canadian Emergency Response Benefit (CERB). But an inquiry filed in the House of Commons revealed that more than 800,000 people who weren’t eligible for CERB received $2,000 monthly cheques, costing taxpayers nearly $1.7 billion.

The Canada Revenue Agency (CRA) has stated that ineligible recipients might have to pay the benefit back, and politicians want to make sure that the agency gets the money back. One MP called for a “CERB audit”, so all benefit recipients, either eligible or not, should prepare for something like that to happen.

Two Types of Audits CERB Recipients Should Be Aware Of

CERB recipients could be targeted by two types of audits:

  1. A CRA audit of their taxes to reveal which recipients were eligible for the CERB payments and which weren’t.
  2. A government audit targeting the CERB program as a whole, which is something politicians are currently calling for.

The two audits are different, and they may affect CERB recipients differently. If the CRA starts auditing the recipients, some of them will be asked to pay back their benefits directly.

If the government calls for the CERB program to be audited, the audit will most likely be conducted by a government-appointed auditor. The external audit may spur the CRA to start more tax audits, which may result in demands to pay back the benefits.

How Could an Audit Affect CERB Recipients Financially

CERB recipients who are forced to pay back their benefits may do so at enormous financial costs. Recipients received weekly $500 cheques for up to 28 weeks. Every ineligible recipient would have to repay the entire sum they received. Those who received cheques for every eligibility period would have to pay back $14,000.

Double Payments

CERB allowed Canadian households affected by the pandemic to apply for benefits through the CRA or through Service Canada, but not both. Now, the CRA has issued clear collection notices demanding repayment from those who received payments through both portals.

Even though the CRA has the power to freeze bank accounts, it’s currently encouraging ineligible CERB recipients to pay back their benefits voluntarily. The CRA seems to understand that many recipients may have made honest mistakes when taking the money, so the Agency is waiving penalties and interest on overpayment for now.

What To Do When Undergoing a CERB Audit

There’s not much you can do to influence a CERB audit. If you weren’t eligible for the benefit, you may have to repay it. If you managed to save some of your CERB money, it would be better to pay it back as soon as possible.

If you can’t afford to pay back the money you received, or if you need more time to repay the full amount, you can talk to a CRA agent and arrange a repayment plan. Contact the CRA directly at 1-833-966-2099.

If you can’t afford to pay back the benefit money you received in full, you can talk to one of our Licensed Insolvency Trustees about your situation to determine if a consumer proposal or bankruptcy can help.

A bankruptcy or consumer proposal erases government debts if those debts didn’t arise due to fraud. The CRA may discharge your CERB debt in a bankruptcy or consumer proposal, depending on your individual circumstances.

Struggling to Repay Your CERB Benefits? We Can Help

Contact one of our Licensed Insolvency Trustees and learn how you can repay your benefit today. Book your free, no-obligation consultation and find out how to get out of debt.

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