On this page

• Notice of meeting
• Opening Remarks
• Supporting Documentation
  • OAG Spring 2021 Report – Report 6
  • OAG Opening Statement to the News Conference (March 25, 2021)
  • Overview: Impact on CRA (from AERB)
  • News Release: ‘Government of Canada welcomes OAG report on the CERB’ (March 25, 2021)
  • Action Plan (to be shared with PACP)
• Issue Notes
  • How will CRA implement the OAG recommendations?
  • Why did the CRA not verify the $5,000 income threshold upfront?
  • What pre-payment controls did the CRA have in place for CERB?
  • Why weren’t more pre-payment controls put in place?
  • Does CRA have the capacity to effectively screen out CERB applicants that do not qualify?
  • How long will it take CRA to recoup amounts from ineligible claims?
  • What is the CRA doing to improve their security systems against identity theft and fraudsters?
  • What is the total loss to Government as a result of CERB fraud?
  • Can the CRA confirm how many fraudulent claims have been made since the emergency benefits have been introduced?
  • What is the CRA doing to help the victims of identity fraud?
  • How can Canadians better protect themselves from fraud?
  • Why did CRA seek repayment from self-employed individuals?
  • Update on the ‘net vs gross’ issue?
  • What is CRA doing for Canadians that had fraudulent CERB applications made in their name?
  • How long will it take CRA to complete its CERB verification and compliance activities?
  • How are CRA call centres managing call volumes around emergency benefits?
  • Has the CRB-EI application issue been resolved?
  • How is CRA handling so-called ‘double dippers’?
  • How will CRA ensure that firms don’t get CEWS in respect of employees that claimed CERB?
  • How much has the CRA spent on the CERB (including CERB data)?
• PACP Committee Information
  • Member Profiles
  • Relevant Committee Meeting Recap

Notice of meeting

Standing Committee on Public Accounts (PACP)
43rd Parliament, 2nd Session

Meeting 25
Thursday, April 15, 2021, 11:00 a.m. to 1:00 p.m.
Room 025-B, West Block
Televised

Report 6, Canada Emergency Response Benefit, of the 2021 Spring Reports of the Auditor General of Canada

Witnesses

Office of the Auditor General

• Karen Hogan, Auditor General of Canada
• Jo Ann Schwartz, Principal
• Steven Mariani, Director
• Robyn Roy, Director

Canada Revenue Agency

• Bob Hamilton, Commissioner of Revenue and Chief Executive Officer
• Maxime Guénette, Assistant Commissioner and Chief Privacy Officer, Public Affairs Branch
• Marc Lemieux, Assistant Commissioner, Collections and Verification Branch
• Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch

Department of Employment and Social Development

• Graham Flack, Deputy Minister, Employment and Social Development
• Lori MacDonald, Senior Associate Deputy Minister, Employment and Social Development and Chief Operating Officer for Service Canada
• Cliff C. Groen, Senior Assistant Deputy Minister, Benefits and Integrated Services Branch, Service Canada
• Elisha Ram, Associate Assistant Deputy Minister, Skills and Employment Branch

Department of Finance

• Michael J. Sabia, Deputy Minister
• Michelle Kovacevic, Assistant Deputy Minister, Federal-Provincial Relations and Social Policy Branch

Opening Remarks

Speaking notes for Mr. Bob Hamilton, Commissioner of the Canada Revenue Agency

Standing Committee on Public Accounts
Report 6—Canada Emergency Response Benefit

Ottawa, Ontario
April 15, 2021

Check against delivery.

Good morning.

Thank you Madam Chair, for the opportunity to appear before you to discuss the Canada Revenue Agency’s (the Agency) Action Plan on Report 6—Canada Emergency Response Benefit of the 2021 Reports of the Auditor General of Canada. I am accompanied by three of my colleagues from the Agency: Frank Vermaeten, Assistant Commissioner of the Assessment, Benefit and Service Branch; Marc Lemieux, Assistant Commissioner of the Collections and Verification Branch; and Maxime Guénette, Assistant Commissioner, Public Affairs Branch and Chief Privacy Officer.

In Report 6—Canada Emergency Response Benefit, the Auditor General of Canada noted that, despite challenging circumstances, the CRA and ESDC quickly designed and launched an emergency benefit to support workers who lost income due to the COVID‑19 pandemic. The Agency is proud of this accomplishment. When the Government called upon us, we met the challenge and delivered this important benefit to eligible workers as quickly as possible.

The OAG also acknowledged that once the benefit was launched, both ESDC and CRA introduced additional pre-payment controls to limit potential abuse of the benefit.

Within that context, the Auditor General of Canada made two recommendations to the Agency, which the Agency accepted.

Firstly, the Auditor General of Canada recommended that both organizations should finalize and implement their plans for the CERB post-payment verification work.

And secondly, the Auditor General of Canada recommended that both organizations conduct a formal assessment of the delivery of the CERB in order to apply the findings to the design and delivery of future Government emergency response and recovery benefits.

The Agency has agreed with both recommendations and has advanced a detailed action plan with timelines in order to implement them.

With respect to Recommendation 1, the Agency’s verification work will be largely supported by data and systems that will become available during the 2020 tax filing season. This will help avoid unnecessary reviews of recipients that may in fact have been eligible to receive a benefit payment, or who may have already voluntarily repaid monies owing.

The Agency will finalize and implement its post-payment verification plan in collaboration with ESDC. This strategy will consider the economic landscape and ongoing state of the COVID-19 pandemic in order to administer responsible and appropriate compliance measures, while maintaining the fairness and integrity of the CERB program and ensuring the sound stewardship of public funds.

As we indicated in our response, beginning in August 2021, the Agency will leverage 2020 tax filing data to risk assess CERB recipient population in order to select and prioritize cases for post-payment reviews.

With respect to Recommendation 2, the Agency will conduct a formal assessment of the delivery of the CERB. This will allow the Agency to identify best practices, lessons learned, and to determine if functionality and processes can be leveraged in a future urgency or crisis.

The findings from this exercise will be available by December 31, 2021. These findings will support the design and delivery of future Government emergency response and recovery programs.

In light of all of these measures included in the Agency’s action plan, I am pleased to report that the Agency is acting on the recommendations arising from the OAG’s Report 6—Canada Emergency Response Benefit.

In closing, I want to recognize the CRA employees who were given the daunting task to develop programs to quickly distribute emergency financial aid to millions of Canadians. Their rapid response helped Canadians put food on the table through the Canada Emergency Response Benefit. This was no small feat and I offer them my sincere thanks.

Thank you, Madam Chair, I am happy to now answer any questions you may have.

Supporting Documentation

OAG Spring 2021 Report – Report 6

2021 Reports of the Auditor General of Canada to the Parliament of Canada

Report 6—Canada Emergency Response Benefit

Auditor General of Canada’s Opening Statement to the News Conference (March 25, 2021)

Good afternoon. I am pleased to be here to discuss the first of many audits on the government’s response to the COVID 19 pandemic that my office will conduct. Today, I also provided Parliament with our report on the Investing in Canada Plan.

There is no doubt that the COVID 19 pandemic was an all-hands-on-deck emergency the world over. Governments had to mobilize quickly to respond to the public health, social, and economic effects of this pandemic. Canada was no exception.

While we found that the government was not as ready as it could have been for a pandemic of this magnitude, the public service mobilized, prioritized the needs of Canadians and quickly delivered support and services.

We did not observe the same service mindset and inter-departmental coordination in our audit of the Investing in Canada Plan, which I will turn to first. The Investing in Canada Plan is important because the government is investing $188 billion to generate long-term economic growth, improve communities’ resiliency, support the transition to a green economy, and improve social inclusion and socio-economic outcomes for all Canadians.

Infrastructure Canada is unable to present a full picture of results achieved and progress made under the Investing in Canada Plan. We found that the Department’s reporting excluded almost half of the government’s investment because it did not capture more than $92 billion of funding that was committed before the Plan’s creation in 2016. In addition, Infrastructure Canada’s reporting captured only some programs each year, making it impossible to compare results year-over-year. The clarity of reporting was also impacted by inconsistent information received from federal partners in the Plan. The absence of clear and complete reporting on the Investing in Canada Plan makes it difficult for parliamentarians and Canadians to know whether progress is being made against the intended objectives.

The issues affecting the Investing in Canada Plan are not new. We have seen similar problems in many past audits in areas that require cross-departmental or cross-jurisdictional collaboration, such as Indigenous issues and climate change. This audit is yet another example of the need for the government to act on known issues, in this case the need for broad collaboration and clear reporting on results for this large initiative.

In contrast, we observed nimbleness during our audits of the government’s COVID 19 response. I am going to turn first to the Canada Emergency Response Benefit. With this benefit, the government wanted to quickly deliver financial support to eligible individuals.

We found that the Department of Finance Canada, Employment and Social Development Canada, and the Canada Revenue Agency rose to the challenge and quickly analyzed, designed and delivered the Canada Emergency Response Benefit.

To simplify the process and get support to people quickly, Employment and Social Development Canada and the Canada Revenue Agency took the approach of relying on personal attestations and automated pre-payment controls to validate applicants’ eligibility. Once the benefit was launched, they introduced additional pre-payment controls to limit potential abuse.

With the decision to rely on personal attestations, post-payment verification becomes very important. Employment and Social Development Canada and the Canada Revenue Agency are working to start their post-payment verification efforts relating to the Canada Emergency Response Benefit later this year. Their work in this area will be the subject of a future audit.

Turning now to the Canada Emergency Wage Subsidy, we observed a similar focus on getting help out quickly, in this case to businesses. Once again, the Department of Finance Canada and the Canada Revenue Agency worked together within short timeframes to support the development and implementation of the Canada Emergency Wage Subsidy.

The design and rollout of the subsidy highlighted pre-existing weaknesses in the Agency’s systems, approaches and data. These weaknesses will need to be addressed to improve the robustness of Canada’s tax system. To prioritize issuing payments, the Canada Revenue Agency chose to forego certain controls that it could have used to validate the reasonableness of subsidy applications. For example, the Agency decided that it would not ask for social insurance numbers, though this information could have helped prevent the doubling-up of applications for financial support. This decision limited the Agency’s ability to perform pre-payment validations, as did the absence of complete and up-to-date tax information that would have helped it efficiently assess applications.

I am going to now turn to our last audit, which focused on pandemic preparedness, surveillance, and border control measures.

In this audit, we found that the Public Health Agency of Canada was not as well prepared as it could have been to respond to the COVID 19 pandemic. Not all emergency and response plans were up to date or tested, and data sharing agreements with the provinces and territories were not finalized.

The Agency relied on a risk assessment tool that was untested and not designed to consider pandemic risk. The Agency continued to assess this risk as low despite growing numbers of COVID 19 cases in Canada and worldwide. In addition, the Global Public Health Intelligence Network did not issue an alert about the virus that would become known as causing COVID 19.

I am discouraged that the Public Health Agency of Canada did not address long-standing issues, some of which were raised repeatedly for more than two decades. These issues negatively affected the sharing of surveillance data between the Agency and the provinces and territories during the pandemic. While the Agency took steps to address some of these problems during the pandemic, it has much more work to do on its data sharing agreements and its information technology infrastructure to better support national disease surveillance in the future.

We also found that the Public Health Agency of Canada and the Canada Border Services Agency implemented restrictions at the border and quarantine measures. They provided guidance and tools to inform travelers and essential workers coming into the country of public health requirements. However, the Public Health Agency of Canada had not contemplated or planned for a quarantine on a nationwide scale, from the collection of travelers’ information through to all enforcement activities, including following up on those identified to be at risk of non-compliance. As a result, the Agency doesn’t know if the majority of travelers properly quarantined.

These audits looked at programs that were rolled out in record time. Faced with a pandemic, the public service focused on the pressing outcome: helping Canadians. In its first year, this pandemic has shown that when the public service must, the public service can.

This crisis has highlighted the importance of dealing with known issues, whether it’s agreeing on which organization has the lead, who will do what when, who will report what to whom, or replacing outdated systems or processes and addressing issues in data quality. These are not problems that you want to have to deal with at the same time that you are focusing on helping people, because this is not an efficient way of working, nor is it a productive way to serve Canadians. Government organizations need to do collaboration better.

Overview: Impact on CRA (from AERB)

2021 March Reports of the Auditor General of Canada
Report 6 – Canada Emergency Response Benefit

Impact on the Canada Revenue Agency

Audit objective

The objective of this audit was to determine whether:

• ESDC and the Department of Finance Canada (FIN) provided analysis to support the initial design and subsequent adjustments to the Canada Emergency Response Benefit (CERB).
• ESDC and the CRA designed mechanisms so that the CERB would support eligible workers who suffered a loss of income for reasons related to COVID-19, including limiting its abuse.

Audit scope

The audit focused on the analysis carried out by ESDC and FIN on the design of the CERB. The audit also examined the mechanisms designed and put in place by ESDC and the CRA to provide eligible recipients with the amount of money they were entitled to under the CERB, in coordination with other COVID-19 programs. This included the examination of the controls in place to assess eligibility as well as the mechanisms to mitigate vulnerabilities (e.g., suspected fraud).

The audit did not sample files to assess the controls mentioned in the report. The implementation of post-payment verification will be the subject of a future audit. The audit covered the period from March 1, 2020, to January 10, 2021.

Highlights

• On March 18, 2020, as part of its wide-ranging economic response to the coronavirus disease (COVID-19) pandemic, the federal government announced two new benefits to provide income support to workers – the Emergency Care Benefit and the Emergency Support Benefit. On March 25, 2020, these benefits were replaced by the CERB.
• From the onset of the COVID-19 pandemic, the government set out to quickly get the CERB to eligible workers to help keep people at home to avoid overwhelming the country’s health care system.
• The most recent figure reported by the government on total CERB payments was about $74 billion as of October 4, 2020.
• The OAG found the following:
  • CRA and ESDC made an early decision to focus on post-payment controls to simplify the process and expedite issuing benefit payments. CRA and ESDC introduced additional controls once the benefit was rolled out.
  • CRA and ESDC have planned for post-payment verification work. Most of that work will start in the 2021-2022 fiscal year.
  • The unprecedented nature of the global pandemic meant that developing policy, conducting economic analysis, drafting legislation, preparing communications products, and ultimately putting the CERB in place occurred very quickly. The turnaround time for key steps was often a few hours or overnight which stood in stark contrast to the usual policy and program development process which can take place over many months.

Positive observations about the Canada Revenue Agency

• The OAG found the following:
  • CRA and ESDC focused on delivering the benefit quickly to help workers who had lost income as a result of the COVID-19 pandemic. Both organizations understood the risks of emphasizing quick delivery instead of their usual approach to validating eligibility, which includes more controls.
  • In order to prevent benefit payments from being issued to ineligible applicants, CRA and ESDC introduced additional pre-payment controls as the benefit was being delivered to limit potential abuse (e.g., to prevent access to multiple benefits and to identify suspicious applications).
  • CRA successfully blocked applications with suspicious information. Out of 141,000 blocked applications, CRA determined that only 11% were actually entitled to the benefit.
  • When CRA launched the Canada Emergency Student Benefit (CESB), it designed controls to prevent an applicant from receiving benefits from both the CESB and the CERB for the same period.

Negative observations about the Canada Revenue Agency

• The OAG found the following:
  • Some people applied for and received payments for both the CERB and the Employment Insurance Emergency Response Benefit before a control was introduced by CRA and ESDC to prevent this from occurring. This represented approximately $500 million in CERB payments. However, this figure represents less than 1% of total payments made for the benefit.
  • CRA could have introduced certain pre-payment controls earlier to limit potential abuse of the benefit. However, the OAG acknowledged that CRA officials informed them that introducing these controls earlier would have delayed the launch of the benefit.
  • It was unclear to the OAG how CRA’s post-payment verification plans would address the risks directly related to CERB as these plans were still in draft form.

OAG recommendations and Agency response

The audit report contains two recommendations for CRA:

1. Recommendation. Employment and Social Development Canada and the Canada Revenue Agency should finalize and implement their plans for the Canada Emergency Response Benefit post-payment verification work.

   Canada Revenue Agency’s response
   Agreed. The CRA has been working in partnership with Employment and Social Development Canada (ESDC) to align post–payment compliance activities. The post-payment compliance plan has always been present, but remains evergreen due to the shifting economic and public health landscape.

   The Agency’s verification work will be largely supported by data and systems that will become available during the upcoming tax filing season. It is important that our risk assessments include 2020 tax data to calibrate our verifications using current data. This will help avoid unnecessary reviews of recipients that may in fact have been eligible to receive (a) benefit payment(s) and/or may have already completed a voluntary repayment. Post-compliance work will commence in September 2021, and is expected to continue until March 2023.

2. Recommendation. Employment and Social Development Canada and the Canada Revenue Agency should conduct a formal assessment of the delivery of the Canada Emergency Response Benefit in order to apply the findings to the design and delivery of future government emergency response and recovery benefits.

   Canada Revenue Agency’s response
   Agreed. The Canada Revenue Agency will conduct a formal assessment of the delivery of the Canada Emergency Response Benefit (from March 15-December 31, 2020), to identify best practices, lessons learned and to determine if functionality and processes can be reused in a future crisis.

   The findings from this exercise will be available by December 31, 2021 to assist government in the design and delivery of future government emergency response and recovery programs.

Government of Canada welcomes the Auditor General’s report on the Canada Emergency Response Benefit (March 25, 2021)

The Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough, and the Minister of National Revenue, Diane Lebouthillier, today issued the following statement in response to the Auditor General’s report on the Canada Emergency Response Benefit (CERB):

“Since the very beginning of this pandemic, our government’s number one priority has been to keep Canadians safe. At a time when we were asking people to stay home and flatten the curve, the CERB helped more than 8 million workers and their families stay afloat. The quick and decisive actions we took to provide income support to millions of Canadians affected by closures and public health restrictions helped buffer the worst economic impacts. As a recent International Monetary Fund report found, these actions helped protect both lives and livelihoods.

The Auditor General’s report highlights the incredible work done by the Canadian public service, and recognizes the approach taken by our government to roll out support quickly during an unprecedented emergency. In fact, the report notes that accepting certain risks to expedite payments to those in need is consistent with best practices promoted by the International Public Sector Fraud Forum and its Principles of Fraud Control in Emergency Management.

To make sure Canadians received support when they needed it the most, we created a simple and straightforward application with back-end verifications. As the benefit rolled out, we made adjustments to support even more Canadians and our economic recovery. This included an expansion of eligibility so that workers making up to $1,000 a month could still be eligible, as well as key measures to prevent fraud.

Today, we welcome the Auditor General’s report on the design and delivery of the CERB, recognize the importance of the findings and accept all recommendations. Work is already underway to address the report’s recommendations. A post-payment verification plan has been developed and initiated to ensure that those who received the benefit were eligible. Additionally, work will begin on an assessment of the CERB’s design and delivery. This will help the Government of Canada apply lessons learned for the design of future emergency response benefits.

The Government of Canada is committed to addressing cases of deliberate fraud, and the Fall Economic Statement provided additional resources to both Employment and Social Development Canada and the Canada Revenue Agency to support this work.

As we move ahead in our economic recovery, we will continue our work on post-payment verification, while also supporting Canadians who have been hit hardest during the pandemic.”

Action Plan (to be shared with PACP)

Canada Revenue Agency detailed action plan

Issue Notes

How will CRA implement the OAG recommendations?

Key messages:

• The CRA welcomes the report, and is committed to meeting the recommendations made by the OAG, having developed an action plan in regards to our upcoming verification work for the CERB and in the development of future emergency programs.
• The CRA has developed a detailed action plan to address all of the CRA-related recommendations, as provided to the Committee.
• In response to the OAG’s recommendations, the CRA has committed, in our action plan, to taking the following steps:
  • A post-payment verification plan has been developed and initiated to ensure that those who received the benefit were eligible.
  • Additionally, work will begin on an assessment of the CERB’s design and delivery. This will help the Government of Canada apply lessons learned for the design of future emergency response benefits.

Background:

• The CRA has been working in partnership with ESDC to align post–payment compliance activities. The post-payment compliance plan has always been present, but remains evergreen due to the shifting economic and public health landscape.
• The CRA’s verification work will be largely supported by data and systems that will become available during the upcoming tax filing season. It is important that our risk assessments include 2020 tax data to calibrate our verifications using current data. This will help avoid unnecessary reviews of recipients that may in fact have been eligible to receive (a) benefit payment(s) and/or may have already completed a voluntary repayment.
  • By August 2021: Leverage assessed 2020 tax filing data to risk assess CERB recipient population in order to select and prioritize cases for post-payment reviews.
  • September 2021-2023: Implement post payment compliance review plan. Post-compliance reviews could commence in September 2021, however, considering the current economic and public health landscape as well as potential future relief measures, the workload priority order and timing of post compliance activities remains evergreen.
• In order to effectively utilize resources, the CRA will use a risk-based approach to compliance activities, focusing on most significant cases of fraud or misrepresentation as identified through data analytics or tips. Workloads will be addressed in a priority order that is being established through the aforementioned risk analysis as well as ongoing consultation with ESDC.
• Planned Post-Validation Process:
  • Beginning September 2021, contact letters will be sent to applicants when potential ineligibility is identified, to request supporting documentation.
  • If documentation is received, assessors will review the individual’s eligibility. Contact by telephone will be attempted if a response to the letter is not received within 45 days.
  • If documentation has not been submitted after contact was attempted, or if the information provided does not satisfy the eligibility requirements, the individual will be sent a notice of determination indicating the amount of the overpayment.
  • If an individual disagrees with this determination, they can contest it through a secondary review.
  • If a secondary review results in the recipient still being ineligible the individual can request a judicial review.
  • Automated validations are limited due to the eligibility criteria of a minimum of $5,000 of eligible employment or self-employment income in the 12 month prior to an application. (i.e. even once the CRA has 2020 tax data, applicants may be eligible based on income earned from January 1, 2021 onwards).

Why did the CRA not verify the $5,000 income threshold upfront?

Key messages:

• The goal of the CERB was to provide immediate financial assistance to those who had lost their employment and self employment income as a result of the pandemic.
• When we launched the CERB on April 6, 2020, three weeks after we were approached by the Department of Finance, we did not have any recent income on file for most taxpayers.
• Specifically, the most recent data we had on file for most Canadians was from their 2018 income tax return.
• However, CERB eligibility was based on earning $5,000 of eligible income in 2019 or the 12 months prior to the CERB benefit period. This meant that we needed both the 2019 and 2020 tax returns to make a full assessment of eligibility, with 2020 returns not due until April 30 of this year (2021).
• As a result, the Government of Canada determined that the CERB application process would be attestation-based in order to provide immediate emergency support.
• The attestation approach is not new to the CRA -- this is similar to the approach that is used in tax filing, where individuals attest to the information they provide when they file their taxes, and the CRA may verify this information at a later date.
• Let me just emphasize that this approach was chosen for the emergency benefits to ensure urgently needed funds were made quickly available to Canadians who suffered a loss of income for reasons related to COVID 19, and to ensure the health care system did not become overwhelmed.
• While we put in place a number of non-income related upfront measures, and we verify income on suspicious applications, the full verification of income cannot take place until after the filing season, over the summer and into fall of 2021.

What pre-payment controls did the CRA have in place for CERB?

Key messages:

• In April 2020, in the middle of filing season, the most up to date information we had on file was 2018 filing information.
• Given the need to support Canadians in the circumstances they found themselves in 2020, we opted to use an attestation-based process, similar to the tax filing process (as the 2018 information would not have reflected the 2020 circumstances).
• We have the capacity to verify this information at a later time, and are doing so. As with other benefits administered by the CRA, we will take steps at a later time to verify that claimants were eligible to receive payments for any of the new COVID-related economic measures.
• The CRA has records of those who received the CERB and for what period. These will be used, along with tax slips received from employers and other relevant information available to the CRA, to validate eligibility after tax filing season.
• In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.
• Over the lifespan of the CERB, we introduced a number of pre-payment controls to protect Canadians from fraud and maintain public confidence in the integrity of Canada’s tax and benefit system.
• This included introducing changes to front-end controls within the application processes themselves (e.g. validation of recipients older than 75 years), as well as safeguards to interrupt high risk applications where the applicant’s eligibility to receive a benefit payment was questionable (e.g. may not have met the $5,000 employment or self-employment threshold based on CRA data holdings) and known cases of identity theft and suspicious activities.
• In these instances, Canadians were provided instructions to provide supporting documents or were redirected to call the CRA to complete their applications, meaning that they had to go through up-front verification of identity and eligibility requirements before payments were issued. CRA has also established a dedicated centre of expertise, the Canada Emergency Benefits Validation and Identity Protection Service (CEBVIPS), to facilitate the resolution of these cases.

Why weren’t more pre-payment controls put in place?

Key messages:

• The CRA designed the CERB program to deliver funds to Canadians within days. While the CRA could have performed a greater degree of validation up front, this would have delayed providing funds to millions of Canadians who found themselves suddenly unemployed during an unprecedented crisis.
• Over the lifespan of the CERB, we introduced additional controls to protect Canadians from fraud and maintain public confidence in the integrity of Canada’s tax and benefit system. Relying on the good faith of Canadians through attestations and limiting the number of pre-payment controls allowed money to flow quickly.
• Specifically, a certain level of risk of fraud was accepted in order to issue financial support to Canadians in urgent need. Within this context, the Agency strived to maintain a balance between making the CERB accessible to those that urgently needed it, while providing safeguards to identify and prevent certain high risk applications
• The ability to implement pre-payment controls is limited in an emergency. As such, it is important that post-payment verification work be planned for and carried out to uphold the stewardship of public funds. Post-payment verifications have begun and will continue until 2023.
• As with other benefits administered by the CRA, we will take steps at a later time to verify that claimants were eligible to receive payments for any of the new COVID-related economic measures.
• The CRA has records of those who received the CERB and for what period. These will be used, along with tax slips received from employers and other relevant information available to the CRA, to validate eligibility after tax filing season. In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.
• The Government of Canada aligned with best practices of the International Public Sector Fraud Forum for the development and implementation of the CERB.

Does CRA have the capacity to effectively screen out CERB applicants that do not qualify?

Key messages:

• The CRA is striving to maintain a balance between making the benefits accessible to those that urgently need support and ensuring only eligible people receive payments.
• The emergency and recovery benefits application processes were designed to be attestation based. This is similar to the approach used in tax filing, where individuals self declare the information they provide when they file their taxes.
• The CRA may verify this information at the time of filing or at a later date as part of its post-payment compliance efforts.
• Upfront validations identify applicants who may not be eligible for benefits or who may have been affected by identity fraud.
• As mentioned into the report of the AG, the Agency as blocked 141,000 individuals to validate their eligibility.
• These safeguards interrupt benefit application and clients are redirected to call the CRA and submit supporting information to complete their application.
• For example, if an applicant has not filed their taxes, the CRA would request documents proving they meet the income criteria of a minimum of $5,000 in 2019, 2020, or the 12 months prior to their application.
• If documents are received, a manual review takes place to confirm whether the applicant is eligible.
• Considering the current the socio-economic climate and the ongoing health crisis, the CRA continues to adjust the number of resources dedicated to these workflows, balancing the health and safety of our employees, maintaining service to Canadians, and ensuring the integrity of the emergency and recovery benefit programs.
• Once the majority of 2020 tax filing data becomes available in summer 2021, the CRA will be able to leverage this information and information slip data to confirm eligibility. This will help avoid unnecessary reviews of recipients that may in fact have been eligible to receive (a) benefit payment(s).
• Therefore, the CRA strongly encourages Canadians to file their taxes. This is the best way to ensure that the CRA has the information required to confirm their eligibility and ensure the timely issuance of benefit payments to those in urgent need.

Background:

• In implementing the CERB the Government’s priority was to quickly provide payments to those in need. Given the urgent nature of the benefits, it was recognized from the outset that up-front verification would be limited and that the majority of compliance activities would occur post-payment.
• Pre-validation measures for the CERB were rolled-out gradually, following the urgent implementation of the program. Based on lessons learned, pre validation measures for the suite of Recovery Benefits were implemented at launch and are ongoing. These more rigorous upfront validations, reducing (but not eliminating) the need for post-validation activity.

How long will it take CRA to recoup amounts from ineligible claims?

Key messages:

• The CRA has records of those who received the CERB and for what period. These will be used, along with tax slips received from employers and other relevant information available to the CRA, to validate eligibility after tax filing season.
• In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.
• With every program there is always a degree of risk. We take this very seriously given the large amounts distributed through these programs, and that's why we are taking steps to recover payments made to ineligible recipients.
• The CRA will continue its commitment to due diligence, and engage in comprehensive audits in order to track down and recover payments made to ineligible recipients, from Spring 2021 onward.

What is the CRA doing to improve their security systems against identity theft and fraudsters?

Key messages:

• Over the past few years, the CRA has noticed an increase in activity by unauthorized third parties attempting to gain access to taxpayers’ CRA accounts. These incidents have increasingly targeted the emergency benefit and subsidy programs administered by the CRA.
• The methods used by fraudsters are constantly evolving.
• In addition to existing security measures such as security questions and answers, email notifications, and personal identification numbers, the CRA is adding multi-factor authentication to enhance the security of taxpayers’ accounts. Once enrolled for multi-factor authentication, users will be required to enter a one-time passcode, that will be sent to them via text or voice message, each time they access their CRA account.
• The CRA routinely monitors accounts for suspicious activity to detect, prevent and address potential instances of fraud and identity theft. The CRA combines advanced data analytics and business intelligence gathered from many sources, including law enforcement agencies, financial institutions, and leads to support these efforts.
• The CRA works with its government counterparts to manage and prevent incidents of fraud and identity theft. Financial institutions continue to be an important partner in helping the CRA identify and combat fraudulent activity.
• A recent internal analysis revealed evidence that some account credentials (i.e. user IDs and passwords) are available on the dark web for use by unauthorized individuals. These credentials were not compromised as a result of a breach of the CRA’s systems. Rather they have been obtained through a variety of means by sources external to the CRA.
• As a result, in February 2021, the CRA locked some taxpayers accounts as a preventative measure to prevent unauthorized access to their accounts. The CRA understands that some of this communication could have been more clear to explain why these accounts were being locked.
• Then, in March 2021, the Agency revoked CRA user IDs and passwords that had been identified as being available to unauthorized individuals. These individuals were provided an email notification or letter with steps on how to regain access to their CRA account.
• Additional security measures over the past year have involved sending letters to taxpayers whose direct deposit and address had recently changed on their online accounts.
• We have also added more CRA agents to increase our capacity to respond to call volumes and process files more quickly.
• We have a dedicated team who are prepared to support victims of fraud, in addition to hiring additional agents who will help with increased call volumes, the Agency has contracted a third-party service provider to assist with client service capacity issues.
• The Agency has also put a focus on general fraud education and how Canadians can protect themselves from identity theft by updating frequently accessed webpages, web banners on high traffic pages, and social media.
• CRA has also worked closely with the Canadian Centre for Cyber Security as an authoritative source as part of these efforts.
• Despite the CRA’s actions to combat CRA-related scams, identity theft linked to scams happens every year, with scammers acquiring taxpayers’ personal information, including SINs, through a variety of means, such as phishing scams and data leaks.
• As scammers adapt their practices, so does the CRA. For example, safeguards are in place to identify and prevent high risk or potentially suspicious applications from being made in relation to the recent emergency measures, including the CERB.
• In some cases, applicants may be asked to call the CRA’s Canada Emergency Benefits Validation and Identity Protection Service (CEBVIPS) before receiving their next payment. The CRA also stopped the processing of suspected CERB applications until such a time that the applicant provided supporting documents to prove their identity.

What is the total loss to Government as a result of CERB fraud?

Key messages:

• As analysis and verification work is still underway, the CRA cannot confirm how much fraud related to CERB there has been. We can confirm however that it only affects a small proportion of the applications.
• While the vast majority of Canadians are applying correctly and are making good efforts to comply, in any major government support program there will be a small percentage of people who submit fraudulent claims.
• The CRA is committed to protecting the integrity of programs that provide financial support for taxpayers using Canadian tax dollars.

Can the CRA confirm how many fraudulent claims have been made since the emergency benefits have been introduced?

Key messages:

• As the analysis is ongoing, we cannot confirm those details at this time. We can confirm however that it only affects a small proportion of the applications. However, we can provide the following information on our approach:
• As with other benefits administered by the CRA, we will take steps at a later time to verify that claimants were eligible to receive payments for any of the new COVID-related economic measures.
• It is difficult to estimate the magnitude of fraud that may have taken place until we complete our compliance activities.

Can the CRA confirm how many taxpayers have fallen victim of identity theft and unauthorized benefits claims made using their CRA accounts?

• Establishing identity fraud is the outcome of investigative work that begins with one of many triggers (e.g. reporting of an incident by a taxpayer, reporting of an incident by a third party, detection of suspicious activity through business intelligence and data analytics etc.).
• While the investigation is underway, account protections are used to prevent further unauthorized activity on an account. Each case must be reviewed and the investigative work concludes with a confirmation of the presence of unauthorized use of taxpayer information (UUTP) (a.k.a. fraud) or the case is determined not to be founded.
• There are a number of factors that may influence our investigation timeframes.
  • For instance, even in situations where an applicant has been contacted and has provided supporting documents they may not be sufficient and contact must re-initiated to request additional supporting documents.
  • The severity and complexity of the case may influence the time it takes to restore and protect the individual’s personal information and re-issue benefits, where applicable (e.g. tracing fraudulent payments issued, cancelling fraudulent T1 returns/adjustments, processing the ‘true’ application/T1 return, preparing a referral to the Criminal Investigations Division, etc.).
  • We acted quickly, with an abundance of caution, to identify and restrict access to impacted taxpayer accounts. Some of these cases will likely be found to be legitimate benefit claims while the others require a full investigation to confirm our suspicions.
  • We continue to receive calls from taxpayers who suspect fraudulent activity on their accounts.
  • We are currently investigating these cases and will issue amended T4As once identity fraud has been confirmed. While we expect to see additional cases reported to us, we believe that our efforts to identity these cases early and notify taxpayers of suspicious activity on their account have resulted in CRA being able to identify many of these cases before T4As were issued.
  • The CRA was proactive in addressing the issue of identity fraud and alerting taxpayers to potential issues with their account. For example, in the past year, the CRA issued letters to over 800K taxpayers who had recent Direct Deposit or address changes to ensure that these changes were initiated by the taxpayer.

What is the CRA doing to help the victims of identity fraud?

Key messages:

• Over the past few years, the CRA has noticed an increase in activity by unauthorized third parties attempting to gain access to taxpayers’ CRA accounts. These incidents have increasingly targeted the emergency benefit and subsidy programs administered by the CRA.
• The CRA has robust safeguards in place to identify fraudulent applications for emergency and recovery benefits. However, unauthorized third parties continue to acquire taxpayer and personal information, including SINs, through a variety of means, such as phishing scams, security incidents at other organizations, and data leaks.
• As scammers adapt their practices, so does the CRA. Throughout the lifespan of our benefit and subsidy programs, we have made necessary adjustments to introduce new measures and controls to address suspicious activity.
• As soon as the CRA becomes aware of an alleged incident of identity fraud or suspect an account could be the target of a fraudster, we take precautionary measures on the client’s account. We have also been working diligently to notify Canadians whose accounts may have been compromised by unauthorized third parties.
• We understand the financial hardship that victims of identity fraud can face. We want to assure all confirmed victims of identity fraud that they will not be held responsible for any money paid out to scammers using their identity. Also, the victims of identity fraud who are eligible for benefit payments will still receive those payments.
• We will work with affected Canadians to provide them with the support that they need. This includes offering free credit protection.
• The CRA is prioritizing calls from people impacted by fraud and identity theft. Our employees are working tirelessly to complete our validation work as quickly as possible. We have added additional phone lines and more employees to increase our capacity to respond to call volumes and process files more quickly.
  • Calls from those who suspect they have been victims of identity theft or fraud can select the menu option in the CRA telephone system that directs these calls to agents specifically skilled to assist with these enquiries.
  • These are dedicated agents who have been trained specifically for ID theft and fraud.
  • Additionally, these calls are placed at a higher priority within our phone system to ensure these callers reach an agent as quickly as possible.
• We thank Canadians for their patience and understanding during these challenging times.

How can Canadians better protect themselves from fraud?

Key messages:

• To help lower the risk of being affected by fraudulent activity, Canadians are strongly encouraged to:
  • Avoid reusing passwords for different systems and applications. Use unique passwords for both CRA and banking accounts.
  • Change passwords regularly.
  • Enable email notifications in My Account and/or My Business Account. This service notifies taxpayers, by email, if their address or direct deposit information has been changed. Canadians who receive these alerts, but have not authorized any changes, should contact the CRA immediately.
  • Set a unique Personal Identification Number (or PIN) for their account in order to identify themselves quickly and securely.
  • Monitor their My Account and/or My Business Account for any unsolicited changes or suspicious activity.
• The CRA's web page on fraud prevention can help Canadians establish good security practices. In addition, the following web pages can help Canadians create strong passwords to prevent security incidents:
  • Rethink Your Password Habits to Protect Your Accounts from Hackers
  • Best Practices for Passphrases and Passwords
• While the government continues to take action to mitigate any incidents, scammers are constantly adjusting their methods. When in doubt, Canadians should call a verified help line to double-check. Canadians' vigilance in protecting their personal account information is an essential layer of security.

Why did CRA seek repayment from self-employed individuals

Key messages:

• The letters sent in November 2020 were intended to educate CERB recipients and recommended they repay any amount they were not eligible for, in an attempt to provide taxpayers an accurate tax slip for 2020.
• The CRA has several post-payment verification measures planned to ensure that only eligible individuals received the CERB.
• Specifically, the CRA has introduced more controls throughout the program, deliberately to target ineligible and fraudulent claims.
• The CRA has records of those who received the benefit and for what period. These records will be used, along with tax slips received from employers and other relevant information available to the CRA, to verify eligibility.

Update on the ‘net vs gross’ issue?

Key messages:

• When the CERB was initially introduced, the CRA had to work quickly to answer the questions that Canadians had about this new benefit.
  • Unfortunately, the CRA may have initially provided some Canadians with incorrect information regarding the self-employment income requirement for the Canada Emergency Response Benefit.
  • Over the course of the first month of CERB, the CRA sought additional clarification on how to interpret the CERB legislation once the Agency identified that there was confusion about how the self-employment income requirement for CERB should be calculated. As clarification was received in the latter part of April, call centre agent procedures and reference material were updated.
• The Government of Canada has announced that self-employed individuals who applied for the CERB and would have qualified based on their gross income will not be required to repay the benefit, provided they also met all other eligibility requirements. The same approach will apply whether the individual applied through the CRA or Service Canada.
• Self-employed individuals whose net self-employment income was less than $5,000 and who applied for the CERB will not be required to repay CERB, as long as their gross self-employment income was at least $5,000 and they met all other eligibility criteria.
• Self-employed individuals will need to file their 2019 and 2020 income tax returns so that the Government can verify that they earned $5,000 in gross self-employment income.
• Some self-employed individuals whose net self-employment income was less than $5,000 may have already voluntarily repaid the CERB. The CRA will return any repaid amounts to these individuals. Additional details will only be available once the remission order is enacted. Until such time as the remission order is in effect the CRA is unable to process any requests.
• To date, the CRA has not required any individuals to repay the CERB and no repayment deadline has been established. For many Canadians, the CRA will only be able to make a final determination on eligibility once they have filed their 2020 taxes.

Key messages (Letters):

• The CRA sent 441,000 letters to some CERB recipients, for whom we were unable to confirm the employment and/or self-employment income of at least $5,000 in 2019, or in the 12 months prior to the date of their application. Having earned this income was an eligibility criteria for CERB, as it is an income replacement program.
• The CRA took an educational approach with these letters. As such, the goal of the letter was to explain what qualifies as earned income to be eligible for CERB, and what does not.
• Individuals who received this letter should not interpret it as a determination that they have been deemed ineligible for the CERB; what the letter means is that the CRA did not yet have the information needed to confirm that they were in fact eligible for the benefit.
• The CRA is sympathetic to the fact that, for some individuals, repayment of these amount may have financial implications. For this reason, payment arrangement parameters have been expanded to give Canadians more time and flexibility to repay based on their ability to pay. Individuals who cannot make a payment in full are advised to contact the CRA to make a payment arrangement.
• Since having earned a minimum of $5,000 in the last 12 months, or in 2019, was a requirement to received CERB payments, as mentioned above, as part of the CRA’s verification process we will be taking steps to verify that claimants were eligible to receive payments. For many of these applicants, this will mean filing their taxes and declaring their income.
• It should be noted that this verification process is still ongoing. The CRA will be undertaking a number of validation activities during the up-coming filing season to ensure that claimants were eligible to receive payments for any COVID-related economic measures.

What is CRA doing for Canadians that had fraudulent CERB applications made in their name?

Key messages:

• The CRA recognizes that there is a significant financial and emotional impact for victims of identity theft. We are doing our part to detect, address, and prevent transactions associated with identity theft. As part of the Identity Protective Services (IPS), the CRA will contact taxpayer’s by telephone in order to support them through the process. The CRA will verify the information on their account, and adjust the accounting as required.
• Taxpayers who are confirmed victims of identity fraud will not be held responsible for any money paid out to scammers using their identity and the CRA remains dedicated to resolving these incidents. Their T4A slip or RL-1 slip will be corrected as required. Once the issue has been resolved, an amended slip will be issued.
• As soon as the CRA becomes aware of an alleged incident of identity fraud or suspect an account could be the target of a fraudster, we take immediate precautionary measures on the client’s account such as locking it to prevent transactions, conducting in-depth reviews, and contacting the potential victims. The CRA has been proactive by sending 800K letters to Canadians asking them to validate their direct deposit and contact information.

How long will it take CRA to complete its CERB verification and compliance activities?

Key messages:

• As outlined in the OAG Report, the CRA has developed several verification plans, expected to continue until 2023.
• We strive to ensure that non-compliance is detected and addressed, using sound risk management, business intelligence, and data analytics to guide our reviews and develop tailored compliance strategies to address the areas of highest risk.
• Verification work will be largely supported by data and systems that will become available during this tax filing season, along with other sources of information, such as Leads.
• 2020 tax data is necessary to calibrate our risk assessments using current data.
  • The Agency’s data holdings will be refreshed as 2020 tax returns are assessed and various information slips are received by the Agency.
  • This information will inform our risk assessments and determine where individuals may not have met the $5,000 income eligibility criteria and may result in a pre-and/or post-payment verification review.
  • Similarly, new T4 reporting requirements introduced for the 2020 tax year require employers to identify employment income earned within defined periods.
  • This information will be used to identity recipients who may have exceeded the $1,000 income threshold while in receipt of CERB and, where required, post-payment reviews will be completed.
  • The data will help to the select appropriate cases that may require verification and avoid unnecessary pre-payment reviews of applicants that may in fact be eligible to receive (a) benefit payment(s).
  • 2020 tax data will be used to inform a risk-based approach to post-payment compliance activities, focusing on the most significant cases of fraud or misrepresentation as identified through data analytics or tips.
  • Intensive post-payment compliance reviews are expected to begin in September 2021; however, considering the current economic and public health landscape as well as potential future relief measures, the workload priority order and timing of post compliance activities remains evergreen.
  • Automated validations are not possible due to the eligibility criteria of a minimum of $5,000 of eligible employment or self-employment income in 2019, 2020, or in the 12 months before the date of their application (i.e. even once the CRA has 2019 and 2020 tax data, applicants may be eligible based on income earned from January 1, 2021 onwards). For this reason (and similar to the above-noted process) some recovery benefit applicants will need to be reviewed after the 2021 tax filing season.
• As of April 4, 2021 there were 22,653,463 CERB applications from 5,416,745 unique applicants since the launch of the program (delivered by CRA only – does not include Service Canada). Given the volume of applications received the Agency has planned to do this work over two years starting in September 2021.
• The aforementioned post-validation process is comprised of multiples steps (risks assessment, initial manual reviews, communications with TP, receipt of supporting documents, potential second level and judicial reviews, etc.), most of them representing manual work.
• The CRA will need to adjust the number of resources dedicated to these workflows, while balancing the health and safety of our employees, service to Canadians, the administration of the recovery benefit program and potential future relief measures, as well as the delivery of its core tax and benefit programs.

How are CRA call centres managing call volumes around emergency benefits?

Key messages:

• At the onset of the COVID-19 pandemic, the Government of Canada called upon the CRA call centres to help administer emergency relief benefits to Canadians in need, and call volumes increased significantly as a result.
• In order to manage call demand to the CRA’s general enquiries call centres, and to help maintain service to taxpayers and those in need, the CRA set up a new telephone platform to answer general (non-account specific) questions related to the emergency benefits.
• CRA employees from across the Agency whose workloads were deemed non-essential were called upon to answer general questions on the new telephone line.
• To prioritize incoming calls relating to the emergency benefits the CRA created new Interactive Voice Response (IVR) routing paths. The CRA established an IVR phone line to help Canadians easily and securely apply for CERB and CESB, without requiring the assistance of an agent.
• The CRA worked collaboratively with Shared Services Canada (SSC) to increase their telephone infrastructure capacity, allowing the Agency to handle a larger number of calls at a time.
• CRA call centre agents were trained to respond to enquiries with the highest demand, ensuring Canadians were helped as efficiently as possible.
• To increase agent capacity, the CRA reallocated resources from other areas, to assist on the Individual tax and Business enquiries lines.
• In order to respond to the continued call demand, the CRA procured the services of a third party telephone service provider from February 2021 to August 2021, when CRA employees who were temporarily redeployed as call centre agents needed to return to their regular workloads.
• The CRA continues to hire additional agents to help manage increased call demand as a result of the ongoing COVID-19 pandemic and the emergency benefits.
• The CRA call centres have extended their hours of service on the Individual Tax and Business enquiries lines.

How was the CRA prepared to handle the calls relating to new programs?

• Calls on the new CERB started when the program was announced prior to the legislation being created and finalised.
  • At that time there was minimal information that agents were able to provide.
  • At the time the responsible program areas were unable to provide the required information for call centre agents to respond to caller enquiries.
• Legislation was put through quickly, at which point policies and procedures had to be created, finalized, and translated.
• The CRA worked closely with ESDC and since the program was dynamic and evolving, the procedures were modified as clarifications and further details were provided, often with minimal notice.

Background:

Since the onset of the COVID-19 pandemic, CRA call centres have played a vital role in administering emergency relief benefits to Canadians on behalf of the Government of Canada.

As a result, the CRA experienced a significant influx of calls to our Individual Tax Enquiries (ITE) line. The CRA took the following measures, to help manage call demand, and to continue to provide service to taxpayers and those in need of emergency benefits:

• established a new telephone platform to handle general (non-account specific) inquiries related to COVID-19 relief measures;
• set up a telephone application method to help callers easily and securely apply for emergency benefits they are entitled to;
• reallocated resources, internally as well as from areas of the Agency, to help manage call demand; and
• increased telephone capacity to serve more callers at one time.

The CRA call centres remain dedicated to continuing to support Canadians in need of emergency benefits. Call centres continue to hire additional agents to help manage the ongoing call demand. Additionally, the CRA will continue to offer extended hours of service, including Saturdays.

Has the CRB-EI application issue been resolved?

Key messages:

• The Government is committed to making it easier for individuals to apply for, and receive, COVID-19 income support benefits.
• The CRA and ESDC have developed a process to improve access to the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB).
• The new process was implemented in March 2021 in an effort to ensure individuals are not referred inappropriately between departments when trying to apply for the CRSB and/or CRCB.
• Individuals with an open EI claim period remain ineligible for the Canada Recovery Benefit (CRB).

What is being proposed and how does it simplify the process?

• When an application is blocked due to an open EI claim, individuals are directed to connect with CRA call agents.
• In the case where the individual may be eligible for the CRCB or CRSB, it is referred directly to the area within CRA that liaises with ESDC to resolve the case and process the CRCB and CRSB applications, if warranted.
• In the event that Service Canada receives a request, rather than referring the client to contact the CRA, the request will be referred directly to the CRA for processing.

Background:

To ensure program integrity, individuals who have an open Employment Insurance (EI) claim are prevented from applying to for any of the Canada Recovery Benefits through My Account or automated telephone line, even if they are not receiving EI benefits. A regular data exchange between ESDC and CRA flags these open claims to prevent the CRA from processing an invalid application for the Canada Recovery Benefit. These flags are an important tool to prevent duplicate payments across programs and cannot be removed while the EI claim remains open. The majority of applications blocked by these flags result in the individual being properly referred to ESDC to discuss their open EI claim.

There are, however, a number of scenarios where individuals may be eligible for the Canada Recovery Sickness Benefit (CRSB) or Canada Recovery Caregiving Benefit (CRCB), even though their EI claim is still considered active.

In an effort to simplify the application process for individuals in this situation, ESDC and the CRA have developed a process to ensure that individuals are no longer bounced between departments.

New process:

• Individual tries to complete a CRSB/CRCB application and is block from applying due to the open EI claim.
• Individual calls the CRA Call Centre agent who will review the scenario, and if applicable, make a referral to the CRA processing team.
• The CRA processing team reviews the request, and sends a request to ESDC tom confirm eligibility to the requested benefit.
• The CRA re-initiates contact with client to confirm eligibility and the application is processed as warranted.
• Where Service Canada receives a request, rather than referring the client to the CRA, the request will be captured at their end and referred to the CRA processing team.

This process must be followed for subsequent applications as the EI flag cannot be removed from the account until the EI claim is closed.

How is CRA handling so-called ‘double dippers’?

Key messages:

• In collaboration with Employment and Social Development Canada (ESDC), the CRA designed the CERB and the CESB application processes to be attestation-based.
  • This is similar to the approach used in tax filing, where individuals attest to the information they provide when they file their taxes, and the CRA may verify this information at a later date.
• The vast majority of Canadians are honest, and the CRA has effective systems in place to manage the small percentage of people who submit fraudulent claims.
• The CRA determines if claimants were eligible to receive the CERB payments, and in cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts. These amounts do not carry any penalties or interest but must be paid back.
• Over the lifespan of the CERB, the CRA introduced additional controls to protect Canadians from fraud and maintain public confidence in the integrity of Canada’s tax and benefit system.
• The CRA is committed to ensuring the integrity of the CERB program, and will conduct post-payment compliance activities as part of the Agency’s mandate.
• The CRA is dedicated to ensuring that individuals receive only those benefits to which they are entitled so that important benefit programs can be administered to those who need them. As a result of COVID-19, we are seeing the increased importance of these benefits, and are working to ensure that they continue to be available to Canadians.
• The CRA and Service Canada have records of all individuals who have received payments for the CERB and the CESB, and verification activities will be conducted to make sure the payments were correctly allocated.
• The CRA will continue its commitment to due diligence, and engage in comprehensive audits in order to track down and recover payments made to ineligible recipients, from Spring 2021 onward. Post payment verifications have begun and will continue until 2023.
• The CRA has records of those who received the benefit and for what period. These records will be used, along with tax slips received from employers and other relevant information available to the CRA, to verify eligibility.
• Where eligibility is in question, a review will be conducted. In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.

How will CRA ensure that firms don’t get CEWS in respect of employees that claimed CERB?

Key messages:

• The CRA implemented the CEWS program quickly, to ensure taxpayers received necessary funds to keep businesses open during an unprecedented health crisis.
• The legislation does not provide the CRA discretion to deny CEWS payments based on non-CEWS compliance issues - in other words, as long as all eligibility criteria were met, the claim was to be approved.
• As with other benefits administered by the CRA, we will take steps at a later time to verify that claimants were eligible to receive payments for any of the new COVID-related economic measures. The CRA has records of those who received the CERB and for what period. These will be used, along with tax slips received from all employers and other relevant information available to the CRA, to validate eligibility.
• We explored the option of having employers identify the employees whose salaries were included in each CEWS claim while we were developing the application process.
• However, we determined that it would not have been feasible for employers to provide this information at the time of application because this would have significantly slowed down the application process and delayed payments of these emergency measures to businesses. Instead, we determined that it would be feasible for employers to provide this information on employees’ T4 slips (after emergency payments were received) for post-payment verification control purposes, and the T4 slip was modified accordingly.
• In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts. Specifically for CERB new T4 reporting requirements introduced for the 2020 tax year require employers to identify employment income earned within defined periods. This information will be used to identity individuals who may have exceeded the $1,000 income threshold while in receipt of CERB and, where required, post-payment reviews will be completed.

How much has the CRA spent on the CERB (including CERB data)?

Key messages:

• CERB provided financial support to employed and self employed who were directly affected by COVID 19.
• CERB delivered by CRA only – does not include Service Canada:
  • 22.6 million applications processed amounting to $45.31 billion in CERB payments issued
  • 5.4 million unique applicants
  • 1.5 million applicants who applied for all 7 periods of the CERB
  • 84% of payments were issued via direct deposit and 16% via cheque
• The CERB was put in place within the first three weeks of the pandemic with applications being processed as of April 6, 2020.
• Applicants received $2,000 for up to seven four-week periods, between March 15 and September 26, 2020 although applicants had until December 2020 to apply for these benefits.

Facts:

• CRA expenditures for the administration of CERB include:
  • Development of business requirements for IT solutions
  • IT system changes (implementation, post-launch system upgrades to support pre and post payment validations and verifications)
  • Outreach and information sessions, development of application guides, Canada.ca website and upgrades to Chatbot
  • Costs associated with processing of applications
  • Issuing cheques including postage
  • Costs associated with development of business intelligence/reporting
• The total amount of CERB payments made to Canadians by the CRA only, up to March 31, 2021, is $45.3 billion.
• The last CERB application period ended on September 26, 2020; however, eligible Canadians may apply for the Canada Recovery Benefit, Canada Recovery Caregiving Benefit or the Canada Recovery Sickness Benefit.

PACP Committee Information

Member Profiles

Chairperson

Kelly Block (CPC)

Key Issues raised in the House of Commons:

• Goods and services tax.
• Harmonized Sales Tax.

Written Questions:

Q-522² — March 10, 2021 — Mrs. Block (Carlton Trail-Eagle Creek) — With regard to government contribution agreements: (a) how many contribution agreements ended or were not renewed since January 1, 2016; (b) what is the total value of the agreements in (a); and (c) what are the details of each agreement in (a), including the (i) summary of agreement, including list of parties, (ii) amount of federal contribution prior to the agreement ending, (iii) last day the agreement was in force, (iv) reason for ending the agreement?

Response prepared by FAB.

Correspondence:

• N/A

Vice-Chairs

Lloyd Longfield (Lib.)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Maxime Blanchette-Joncas (BQ)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

Q-404² — February 16, 2021 — Mr. Blanchette-Joncas (Rimouski-Neigette—Témiscouata—Les Basques) — With regard to government spending in the ridings of Rimouski-Neigette—Témiscouata—Les Basques, Avignon—La Mitis—Matane–Matapédia, Manicouagan, Montmagny—L’Islet—Kamouraska—Rivière-du-Loup, Gaspésie—Les Îles-de-la-Madeleine, Papineau, Honoré-Mercier, Ahuntsic-Cartierville and Québec, since 2015 and broken down by constituency: (a) what is the total annual amount, broken down by year; (b) what is the detailed annual amount, broken down by department, Crown corporation, agency or body; and (c) what grants and contributions have been made, broken down by year according to the source of the funding?

Response prepared by FAB and SIIB.

Correspondence:

• N/A

Members

Luc Berthold (CPC)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

Q-287² — December 2, 2020 — Mr. Berthold (Mégantic-L'Érable) — With regard to contracts issued by ministers' offices for the purpose of media training, since December 1, 2019: what are the details of all such contracts, including the (i) vendors, (ii) dates of contract, (iii) dates of training, (iv) individuals for whom the training was for, (v) amounts?

Reply was tabled on January 25, 2021.

Q-288² — December 2, 2020 — Mr. Berthold (Mégantic-L'Érable) — With regard to polling by the government since December 1, 2019: (a) what is the list of all poll questions and subjects that have been commissioned since December 1, 2019; (b) for each poll in (a), what was the (i) start and end date each poll was in the field, (ii) sample size of each poll, (iii) manner in which the poll was conducted (in person, virtually, etc.); and (c) what are the details of all polling contracts signed since December 1, 2019, including the (i) vendor, (ii) date and duration, (iii) amount, (iv) summary of the contract, including the number of polls conducted?

Reply was tabled on January 25, 2021.

Correspondence:

• N/A

Kody Blois (Lib.)

Key Issues raised in the House of Commons:

• Canada Emergency Response Benefit.
• Canada Emergency Wage Subsidy.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Greg Fergus (Lib) (Parliamentary Secretary to the Prime Minister, to the President of the Treasury Board and to the Minister of Digital Government)

Key Issues raised in the House of Commons:

• Canada Student Service Grant.
• Charitable organizations.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Matthew Green (NDP) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Tax credits.
• Persons with disabilities.

Written Questions:

Q-71² — September 28, 2020 — Mr. Green (Hamilton Centre) — With respect to the tax fairness motion that the House adopted on March 8, 2017: what steps has the government taken since then to (i) cap the stock option loophole, (ii) tighten the rules for shell corporations, (iii) renegotiate tax treaties that allow corporations to repatriate profits from tax havens back to Canada without paying tax, (iv) end forgiveness agreements without penalty for individuals suspected of tax evasion?

Reply was tabled on November 16, 2020.

Q-314² — December 7, 2020 — Mr. Green (Hamilton Centre) — With regard to government business finance programs and government contracts, broken down by funding program, contracts and fiscal year, since 2011: (a) what is the total funding for (i) Facebook, (ii) Google, (iii) Amazon, (iv) Apple, (v) Netflix?

Reply was tabled on January 25, 2021.

Q-541² — March 10, 2021 — Mr. Green (Hamilton Centre) — With regard to the CRA's decision to temporarily suspend, as of March 2020, the programs and services of "high-risk audits", "international large business", "high net worth compliance", "GST/HST audit of large businesses", "audit of complex transactions", "audit of flow-through shares" and "foreign tax whistleblower program", broken down by each of the programs and services mentioned, by month, since March 2020 to the re-establishment of the service of audits, and by risk level of non-compliance: (a) how many audits were suspended as a proportion of total audits; (b) of the audits in (a), how many are still suspended as a proportion of total resumed audits; (c) what duties were performed by the auditors during the suspension period; (d) how many files were closed; (e) of the files closed in (d), what was the average amount of time spent processing each file before a decision was made to close it; (f) of the files closed in (d), (i) how many have been assessed (ii) how many have been transferred to the criminal investigation program; and (g) what was the change in the number of auditors, in terms of full-time equivalent?

Response prepared CPB.

Q-542² — March 10, 2021 — Mr. Green (Hamilton Centre) — With regard to Canada Revenue Agency (CRA) high net worth compliance program, broken down by year, from November 2015 to date : (a) how many audits were completed; (b) what is the number of auditors; (c) how many new files were opened; (d) how many files were closed; (e) of the files in (d), what was the average time taken to process the file before it was closed; (f) of the files in (d), what was the risk level of non-compliance of each file; (g) how much was spent on contractors and subcontractors; (h) of the contractors and subcontractors in (g), what is the initial and final value of each contract; (i) among the contractors and subcontractors in (g), what is the description of each service contract; (j) how many reassessments were issued; (k) what is the total amount recovered; (l) how many taxpayer files were referred to the CRA's Criminal Investigations Program; (m) of the investigations in (l), how many were referred to the Public Prosecution Service of Canada; and (n) of the investigations in (m), how many resulted in convictions?

Response prepared by CPB, FAB, ABSB and CVB.

Correspondence:

• N/A

Philip Lawrence (CPC) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Canada Revenue Agency.
• Tax exemption.
• Canada Emergency Response Benefit.
• Canada Recovery Benefit.
• Goods and services tax.

Written Questions:

Q-32² — September 23, 2020 — Mr. Lawrence (Northumberland-Peterborough South) — With regard to the Canada Revenue Agency’s approach to workspace-in-the-home expense deductions in relation to the COVID-19 pandemic’s stay-at-home guidelines: are individuals who had to use areas of their homes not normally used for work, such as dining or living rooms, as a temporary office during the pandemic entitled to the deductions, and, if so, how should individuals calculate which portions of their mortgage, rent, or other expenses are deductible?

Reply was tabled on November 16, 2020.

Q-283² — December 2, 2020 — Mr. Lawrence (Northumberland-Peterborough South) — With regard to the section on page 116 of the Fall Economic Statement 2020, which reads, "CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home": (a) how many Canadians does the government project will be eligible for the deduction; (b) what is the required amount of time working from home to be eligible for the full $400 deduction; (c) what is the required amount of time working from home to be eligible for a deduction less than $400, and what is the formula used to calculate the eligible deduction amount; and (d) what is the specific eligibility criteria to determine if someone who worked from home is eligible for this new deduction, as opposed to the traditional work from home deductions for individuals who worked from home prior to the pandemic?

Reply was tabled on January 25, 2021.

Correspondence:

• N/A

Francesco Sorbara (Lib.) (Parliamentary Secretary to the Minister of National Revenue)

Key Issues raised in the House of Commons:

• Tax evasion.
• Canada Student Service Grant.
• Charitable organizations.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Len Webber (CPC)

Key Issues raised in the House of Commons:

• Bill C-210 An Act to amend the Canada Revenue Agency Act (organ and tissue donors).
• Income tax returns.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Jean Yip (Lib.)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Associate Member

Luc Desilets (BQ) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Income tax returns.

Written Questions:

• Nil for the CRA

Correspondence:

• N/A

Relevant Committee Meeting Recap

PACP Committee Hearing Recap (April 13, 2021)

Parliamentary Affairs monitored the House of Commons Public Accounts (PACP) Committee meeting held on April 13, 2021. PACP met with the Office of the Auditor General to discuss the March 2021 OAG Reports released on March 25, 2021 – including Report 6 (CERB) and Report 7 (CEWS).

During her opening statement (almost verbatim as the media statement delivered on March 25, 2021), the Auditor General declared for Report 6 “the Department of Finance Canada, Employment and Social Development Canada, and the Canada Revenue Agency rose to the challenge and quickly analyzed, designed and delivered the Canada Emergency Response Benefit … Employment and Social Development Canada and the Canada Revenue Agency are working to start their post-payment verification efforts relating to the Canada Emergency Response Benefit later this year. Their work in this area will be the subject of a future audit” and for Report 7 that “we observed a similar focus on getting help out quickly, in this case to businesses. Once again, the Department of Finance Canada and the Canada Revenue Agency worked together within short timeframes to support the development and implementation of the Canada Emergency Wage Subsidy. The design and rollout of the subsidy highlighted pre-existing weaknesses in the Agency’s systems, approaches and data. These weaknesses will need to be addressed to improve the robustness of Canada’s tax system. To prioritize issuing payments, the Canada Revenue Agency chose to forego certain controls that it could have used to validate the reasonableness of subsidy applications. For example, the Agency decided that it would not ask for social insurance numbers, though this information could have helped prevent the doubling-up of applications for financial support. This decision limited the Agency’s ability to perform pre-payment validations, as did the absence of complete and up-to-date tax information that would have helped it efficiently assess applications.”

During the question and answer portion of the meeting, Report 9 (Investing in Canada Plan) and Report 8 (Pandemic Preparedness, Surveillance, and Border Control Measures) were the primary focus - there was only one question, see below, on Report 7 (CEWS) and there were no direct questions on Report 6 (CERB) during the meeting.

• PACP CPC Member Len Webber asked about the lack of controls to validate CEWS applications (especially not asking for SINs) to preventing the ‘doubling up’ of support; the AG noted that the Department of Finance and CRA worked on tight timelines to design and implement CEWS with a focus on flowing support out quickly and – informed by international best practices in emergency situations - lessened the typical use of pre-payment controls – instead shifting validation to post-payment controls (hence, why the OAG has planned audit work on CRA’s post-payment validation on CEWS and CERB). The AG also explained that SINs were not requested due to CRA’s weak IT systems that could not handle the data for ‘cross-comparability’ and the lack of timely tax information (especially late GST filings from prior years). The AG also noted that the CRA has explained its post-payment work will take “several years to get through”, underscoring the need for the OAG to conduct additional future and early audits to ensure CRA has ‘good’ post-payment controls in place.
• PACP CPC Member Len Webber asked the OAG to clarify that CRA actually had ‘no pre-payment controls in place at all’ for CEWS and simply paid out what organizations applied for; the AG explained that CRA did, in fact, have some automated controls in place for CEWS (and CERB), but not the stronger controls normally seen for payment programs – hence the potential for some payments being made in error to ineligible applicants that will need to be recovered.
• Finally, Webber also complained about some constituents being asked to repay CERB amounts following ‘post-audits that are going through the CRA’ and finding it “very difficult”.