Certain Emergency Response Benefits Remission Order: SI/2022-32

Canada Gazette, Part II, Volume 156, Number 13

Registration
SI/2022-32 June 22, 2022

FINANCIAL ADMINISTRATION ACT

P.C. 2022-617 June 2, 2022

Her Excellency the Governor General in Council, considering that the collection of certain amounts is unreasonable, on the recommendation of the Treasury Board and the Minister of Employment and Social Development, pursuant to subsection 23(2.1)footnote a of the Financial Administration Actfootnote b, makes the annexed Certain Emergency Response Benefits Remission Order.

Certain Emergency Response Benefits Remission Order

Remission — Canada emergency response benefit

1 (1) Remission of the amount determined under subsection (2) is granted to any person who meets the following conditions:

Amount remitted

(2) Subject to section 3, the amount to be remitted is equivalent to the amount of the income support payment received by the person for the four-week period referred to in paragraph (1)(a).

Remission — employment insurance emergency response benefit

2 (1) Remission of the amount determined under subsection (2) is granted to any person who meets the following conditions:

Amount remitted

(2) Subject to section 3, the amount to be remitted is equivalent to the amount of the employment insurance emergency response benefit that the person has repaid, is to repay, has returned or is to return for the weeks included in a four-week period referred to in paragraph (1)(b).

Maximum amount

3 The amount to be remitted to a person for a four-week period referred to in paragraph 1(1)(b) or 2(1)(b) must not exceed the amount of the Canada emergency student benefit that the person would have received for that period if they had applied for that benefit under section 5 of the Canada Emergency Student Benefit Act and had not received any income support payment or employment insurance emergency response benefit for any part of that period.

Coming into force

4 This Order comes into force on the day on which it is made.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

The Governor in Council, finding that it is unreasonable to collect the debt, approves the Certain Emergency Response Benefits Remission Order pursuant to subsection 23(2.1) of the Financial Administration Act (FAA).

The Order will allow, subject to certain conditions, for the partial remission of overpayments to students found to be ineligible for the Canada Emergency Response Benefit (CERB) or the Employment Insurance Emergency Response Benefit (EI-ERB), publicly communicated as one CERB, who may have otherwise been eligible for the Canada Emergency Student Benefit (CESB) had they applied. In such cases, individuals who demonstrate that they would have been eligible for the CESB will be remitted an amount equivalent to the benefit that they could have received under the CESB had they applied, not to exceed the amount of ineligible CERB or EI-ERB benefits received.

Objective

The objectives of the Order are

Background

As a result of the COVID-19 pandemic, many Canadians were unable to work, and many lost their employment. To mitigate the economic impact of the COVID-19 pandemic on workers in Canada, in March 2020, the Government of Canada introduced the CERB, an emergency income support program for individuals unable to work due to COVID-19, through the Canada Emergency Response Benefit Act (CERBA). The CERB was delivered through the Canada Revenue Agency (CRA). At the same time, the Government of Canada also introduced the EI-ERB, delivered through Service Canada (SC). The EI-ERB was intended for individuals with insurable income, whereas the CERB was intended for individuals whose income was not insurable, such as self-employed individuals.

While some eligibility criteria for the EI-ERB were different from the CERB, for simplicity of communication to the public, the two programs (CERB and EI-ERB) were communicated as one CERB. The objective was to ensure that Canadians applying for either income support under the CERBA or the Employment Insurance Act (EIA) were treated in a similar manner.

Each benefit program provided a flat-rate taxable benefit of $500 per week, for a maximum of 28 weeks between March 15, 2020, and October 3, 2020, to workers who had stopped working and were without employment or self-employment income for reasons related to COVID-19. To expedite the processing of payments, both the CERB and EI-ERB were attestation-based programs that required applicants to confirm they met the program eligibility criteria with verification to take place later. As such, Records of Employment (normally required by the EI program) were not a requirement under the CERBA or the EIA.

In April 2020, subsequent to the announcement of the CERB, the Government of Canada also introduced the CESB through the Canada Emergency Student Benefit Act (CESBA). The CESB provided financial support to post-secondary students, and recent post-secondary and high school graduates who were unable to find work due to COVID-19. Applicants received $1,250 for a 4-week period, for a maximum of 16 weeks between May 10 and August 29, 2020. Applicants were eligible for an extra $750 (for a total benefit amount of $2,000) for each 4-week period if they had a disability or dependants. Individuals were not eligible to receive more than one of CERB, EI-ERB and/or CESB for the same period.

The CERB, EI-ERB and the CESB were implemented as emergency benefit programs with their own set of eligibility criteria whereby applicants had to attest that they met the eligibility criteria for the program in question. For example, it was clearly noted in the CERBA and EIA that the benefit was for those who had ceased work due to COVID-19 while the CESB provided income support to students only if they were unable to work, seeking work but unable to find it, or working but unable to make more than $1,000 (before taxes) over the four-week period for which they were applying because of COVID-19. These emergency benefit programs were set up to enable claimants to attest specifically that they met all the eligibility criteria for the benefit for which they were applying.

The CRA estimates that up to 98 000 individuals who were ineligible for the CERB or EI-ERB they received may have been eligible for the CESB, had they applied in time. The CERB legislation requires applications to have been made before December 2, 2020, including for retroactive periods. The CESB legislation provides that no application could be made after September 30, 2020. This means that these estimated 98 000 individuals are outside the statutory limit to file a CESB application.

Students who applied for CERB or EI-ERB, and are found to be ineligible, may be faced with an overpayment of up to $14,000 depending on how many periods of benefits they received. There is no legal means to allow them recourse to the CESB now as the statutory deadlines for application have expired. In this context, even if they were eligible for the CESB, there is now no way for them to access those benefits.

To remedy this situation, this Order provides relief to those individuals who applied for the CERB or the EI ERB, but who could have been eligible for the CESB. The Order ensures that individuals with CERB or EI-ERB overpayments who can show that they would have met the eligibility criteria for the CESB, do not have to repay amounts equivalent to the benefits they could have received under CESB. In this manner, these individuals would only repay CERB/EI-ERB overpayments more than the CESB amounts that they could have received.

This approach is justified on compassionate grounds, given that the policy intent of all three programs was to ensure that claimants received the benefits for which they were eligible in a situation of financial uncertainty. In the early months of the pandemic, students reported feeling very worried about how the COVID-19 pandemic would affect their employment and may have applied for the CERB or EI-ERB and not the CESB because the CERB or EI-ERB was announced several weeks ahead of the CESB. The announcement for the CERB/EI-ERB occurred on March 25, 2020, while CESB was announced nearly a month later on April 22, 2020. Given these circumstances, it would be unreasonable to require these individuals to repay the amounts that they could have received, had they applied for CESB instead. Subsection 23(2.1) of the FAA provides that the Governor in Council can remit debts owed to the Crown where the collection of those debts would be unreasonable.

Further, significant CERB/EI-ERB debt may result in larger debt loads and affect students’ ability to finance their post-secondary education.

Implications

Individuals who meet the following conditions will have their debt remitted:

The Order would also apply to any individual who

To benefit from the Order, eligible individuals must proactively apply by filling out an application form which will be made available on the CRA’s website. Individuals can submit their application form and supporting documents online or by mail. The CRA will receive and review the information for Order eligibility. If eligible, a credit will be processed equal to the amount the client would have received under CESB. This amount will not exceed the amount received under CERB or EI-ERB.

The Order will significantly reduce the debt to the Crown owed by qualifying individuals. For a 4-week period, the CERB paid eligible claimants $2,000. In comparison, the CESB paid students $1,250 for a 4-week period. Under the Order, qualifying individuals will only be required to repay $750 for each 4-week period that they were ineligible for the CERB, rather than the full $2,000. Those who have a disability or dependants, and who would have been eligible for $2,000 for a 4-week period had they received CESB, will not be required to repay the CERB amounts they received for those weeks as these will be fully offset by the CESB they could have received and therefore the debt for that period will be fully remitted.

The debts subject to this Order are only remitted if the individual files an income tax return for 2019 and for 2020 on or before December 31, 2022. This requirement aims to ensure that individuals met the income and other requirements to qualify for CESB. If an individual fails to file a tax return for 2020 before the December 2022 deadline, that individual’s debt would not be covered by the remission and would remain payable to the Crown. The December 2022 deadline provides additional time for claimants under the Order to file their taxes as it is more than a full year beyond the normal income tax filing deadline for the 2020 tax returns.

Every individual seeking a remission of their debt must apply by submitting a form and supporting documentation to request that their debts to be reduced according to the Order. This includes CERB and EI-ERB recipients who have been found to be ineligible for the benefits they received, as part of pre- and post-payment validation measures. These recipients may submit a form and supporting documentation to request that their debts be adjusted according to the Order. The Order also applies to those individuals who were not selected for verification, but who proactively and in good faith repaid the CERB or EI-ERB amounts they received once they realized they might have been ineligible. Additionally, if an individual has repaid their ineligible CERB or EI-ERB benefits before seeking a remission, the individual who meets the requirements of the Order will be reimbursed an amount that represents the amount they could have received under the CESB, in an amount not exceeding the ineligible CERB or EI-ERB benefits.

The estimated cost of the Order is $67.9 million.

Consultation

Consultations with internal stakeholders have identified a need to act proactively to prevent students from facing financial hardship and avoid causing public confusion and anxiety surrounding emergency benefit repayment.

Contact

Steven Coté
Executive Director
Employment Insurance Policy
Skills and Employment Branch
Employment and Social Development Canada
Email: steven.f.cote@hrsdc-rhdcc.gc.ca