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Problems with CERB

December 3, 2020

There are many problems with CERB from the roll out to the reel in, it is difficult to believe that the government ever had a “plan” for the distribution of this money in the first place.

Notionally, the benefit was supposed to help Canadians who had lost incomes because of the government lockdown.  The funds were to be distributed as quickly as possible circumventing any waiting periods.  All of which sounds very noble, but after that things got messy, really messy.

The Government had two separate modes of delivery (which surprisingly, apparently, failed to communicate with each other) Service Canada and the CRA were both taking applications and distributing funds.  In some instances, people, double dippers, applied to and received funds from both agencies.

There were a myriad of other problems too, in Ontario ODSP, as well as other benefits, administrators were advising clients to apply for CERB money, even when they ought to have known the client did not or should qualify.  Apparently, they missed the memo on who qualifies.

By June the Federal Government realized that people were getting funds who should not have, to cure the problem they introduced Bill C-17 that would impose stiff penalties on “cheats”.  The initial Bill was, fortunately, defeated on first reading.  The Bill had called for very stiff penalties, including paying back three times the amount received and a $5,000 fine as well as imprisonment.  All of that on top of paying taxes in addition to interest and penalties for the amounts received.

As at this writing, as far as we can determine, there are no prohibitions on filing a bankruptcy to eliminate the overpayments as well as the tax implications.  While some people may have deliberately collected amounts they should not have had, the majority most likely did so inadvertently and in some cases were following the advice provided by other government agencies.  In any event this situation is still evolving, and the government is trying to cover its tracks for the mistakes made earlier on.

It seems that over 800,000 people, mostly very low income, received benefits they shouldn’t have.  The cost of pursuing repayments will far outweigh the benefits.  We have heard of instances of Disability Benefit recipients having a pittance clawed back from their ongoing benefits to pay for overpayments.  Imagine, someone earning $1,100 a month on Disability having to repay $16,000 by $100 per month claw backs.  And being assessed with a massive income tax bill.

It seems logical that at some level, aside from the most severe instances of fraud, the government must face the errors of its ways and write these overpayments off entirely.  In the meantime, if you are now finding yourself overwhelmed by debt call us at 519-646-2222 for your free consultation.