Canadian self-employed workers who obtained ECPs on the basis of gross income will not have to repay



Self-employed Canadians who have obtained the Canada Emergency Benefit (CEP) based on their gross income will have nothing to reimburse, Prime Minister Justin Trudeau said on Tuesday.

The news will come as a relief to many who applied for the benefit in good faith, but were later told they had to pay it back.

“For people who accessed CERB based on their gross income, instead of their net income, as long as you meet the other eligibility criteria, you won’t have to return those CERB payments,” Trudeau told the reporters outside Rideau Cottage.

Many self-employed Canadians who applied for a PKU last year mistakenly believed that gross income was used to calculate eligibility, even though it was actually net income.

In several cases, information was inaccurately or not clearly communicated to applicants, leading some to apply even though they were not eligible.

READ MORE: CRA appeals officers misinformed about CERB eligibility, union leader says

The Canada Revenue Agency (CRA) gave call center workers incorrect information about ECP eligibility at the start of the program in April 2020, Marc Brière, president of the Union of Employees of Canada, told iPolitics. tax, last December.

As a result, some applicants were told by the agency that gross income, not net income, was used to determine their eligibility.

After the report was released, the ARC issued a statement admitting that “communications on this topic were unclear in the early days after CERB launched.” The agency said it was sorry for “the lack of consistent clarity which has led some self-employed workers to mistakenly apply to CERB despite their ineligibility.”

The Star and other media had also reported that the information on eligibility for the ECP on the CRA website during the first few weeks of the program did not explicitly state that net income was used to calculate eligibility. .

Many independent claimants only learned that net income – gross income minus expenses – was being used when they received “educational” letters from the CRA late last year asking them to verify their eligibility. .

The decision not to force some beneficiaries to repay the PCU marks a turnaround on the part of the Liberal government, which had previously said these workers should repay more flexibly and without penalty.

Some of these people should have paid back $ 14,000, the maximum amount that could have been collected.

From now on, ECPs beneficiaries who had gross income of $ 5,000 or more in 2019 or in the 12 months prior to their application, will have nothing to reimburse.

It is not yet clear how many Canadians will benefit from this change, although the government will have a better idea once Canadians file their taxes this year, Employment Minister Carla Qualtrough said on Tuesday.

Today’s announcement was the “fairest and most reasonable way to move forward,” she said.

For Canadians who did not apply for the PKU because they were specifically told the net income was being used – and will not receive the benefit, despite Tuesday’s announcement – Qualtrough said it recognizes their frustration , but the changes are meant to help those who relied on incorrect information.

The CRA said Tuesday that independent beneficiaries who have already voluntarily repaid PCU amounts will receive those amounts in return.

READ MORE: Solving CERB eligibility issue may force government to swallow pride

“After months of anxiety for the beneficiaries, we are very happy to see a fair result for many people – retirees, artists and caregivers among them,” Green Party leader Annamie Paul said in a statement. “Nonetheless, it would not have taken so much advocacy and threats of class action (lawsuits) for the government to do the right thing and reverse its position.”

Briere told iPolitics on Tuesday he was happy to see the situation resolved ahead of what is expected to be a very busy tax season.

“Some taxpayers were still calling to inquire about this and were worried about it, so I’m happy this is fixed,” he said.

The policy reversal is “a direct result of the muddled communications of CERB by the Trudeau Liberals,” Conservative employment critic Peter Kent said in a statement.

The government has also announced that most people who received government income support last year and file a tax return for 2020 will not have to pay interest on any tax debt incurred in 2020 before the April 30, 2022.

To be eligible, individuals must have had a total taxable income of $ 75,000 or less in 2020 and received income support under one of the five federal emergency programs, Employment Insurance, or similar provincial emergency benefits.

They include the ECP, the Canada Student Emergency Benefit, the Canada Recovery Benefit, the Canada Caregiver Recovery Benefit, and the Canada Illness Recovery Benefit.

Any credits and benefits administered by the CRA and paid monthly or quarterly, such as the Canada Child Benefit and the GST / HST Tax Credit, will also not be applied to reduce personal tax debts from of the 2020 tax year.

The CRA automatically applies the interest relief to eligible individuals who file their income tax returns. The government estimates that the measures will help 4.5 million low and middle income Canadians.

This story has been edited after publication.

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