The COVID-19 pandemic has a challenging time for a lot of people. Many Canadians lost their jobs or had their work hours reduced.

If your income or wages were affected by the pandemic, you might be one of the 8.9 million people who applied for the Canadian Emergency Response Benefit (CERB).

CERB was a helpful way for many people to bridge the gap between their wages and living expenses. However, if you received CERB but later found you did not meet the eligibility criteria, you would have to pay back the benefit.

You might have even received a collection letter from CRA about the repayment of CERB.

Reasons for CERB Repayment

When the CERB program first launched, the government wanted those who needed benefits to complete the application fast and get paid quickly.

Even though the CRA sent the benefits relatively quickly, it, unfortunately, did cause some confusion about the eligibility of the benefits.

Now, the CRA wants to make sure that only those who were eligible based on the government’s criteria received the CERB payments. If you received CERB payments but did not meet the requirements, you should return the payments.

If you received a collection letter from the CRA for the debt, it likely was due to one of two reasons either:

• you didn’t meet the income eligibility criteria, or
• you received multiple payments.

Income Eligibility

To be eligible for CERB payments, you must have stopped working due to COVID-19 and had employment or self-employment income of at least $5,000 in 2019.

Unfortunately, due to the roll-out speed, there was confusion around what sources of income would be considered part of the eligibility.

The following types of payments were not eligible income to qualify for CERB, as they were not income from employment or self-employment income:

• 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 you received CERB, but your income in 2019 was less than $5,000 from employment or self-employment, you will have to pay back the benefit amount received.

Multiple Payments

Both the CRA and Service Canada were accepting applications related to CERB. Due to confusion early on, some people may have applied to both and received payments from both agencies.

The CRA and Service Canada have now had a chance to review the applicants that they have received, they found that some received payments from both during the same benefit cycle, and in this case you would have to pay back half the payment.

How to make your CERB repayment?

f you received CERB payment but did not meet the requirements, you might receive a notice of debt or a collection letter from the CRA asking you to repay the CERB amount.

You should send the payment back to the department where you applied for the benefit, and if you are not sure, you should contact the CRA.

The letter you receive from the CRA or Service Canada will indicate the date by which full repayment is due.

What happens if I can’t make my CERB repayment?

It is difficult to pay back the benefits you thought you were eligible to receive.

Monthly Minimum Payments

If you cannot 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.

Payment Arrangement with the CRA

If you are having financial hardship and cannot afford the full repayment or the monthly payment as expected, it is best to contact the CRA right away.

Once you contact the CRA, you can make arrangements to pay your debt over time in a way that fits your financial needs. They may agree to a reduced regular payment that will allow you to pay your debt in a more manageable way.

Other ways the CRA collects debt

The CRA has stronger collection powers than banks, private lenders and other collection agencies.

Like other tax debts, the CRA may keep all or a portion of any tax refunds or GST/HST credits until you repay your CERB debt.

In addition, 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.

It is important to note that the CRA is still authorized to take amounts from any credits you receive to pay your debt, even if you have made a payment arrangement.

Dealing with debt and COVID-19

If you received CERB and have to repay it, it can cause undue financial hardship, especially if you already struggle with other debt.

Many Canadians saw their work and lives change dramatically during the pandemic. The pandemic may have made it more difficult for you to manage your finances, especially if you struggle with other types of debt.

If you have debt due to COVID-19, know that you are not alone. Struggling with debt can be stressful and overwhelming.  There are debt solutions available.

To get out of debt,  speak with a credit counsellor at EmpireOne Credit who is here to help.

Our team can help you find the best solution to get you out of debt and set you up for a better financial future. Contact us for a Free Consultation.