Standing Committee on Public Accounts (PACP) - February 2, 2023

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Standing Committee on Public Accounts (PACP) - February 2, 2023

Notice of meeting

Standing Committee on Public Accounts (PACP)
44th Parliament, 1st Session

Meeting 47

Thursday, February 2, 2023, 3:30 p.m. to 5:30 p.m.
Room 415, Wellington Building, 197 Sparks Street
Televised

Report 10, Specific COVID-19 Benefits, of the 2022 Reports 9 and 10 of the Auditor General of Canada

Witnesses

Canada Revenue Agency

Bob Hamilton, Commissioner of Revenue
Marc Lemieux, Assistant Commissioner, Collections and Verification Branch
Gillian Pranke, Assistant Commissioner, Assessment, Benefit and Service Branch
Adrianna McGillivray, Director General, Compliance Programs Branch

Department of Employment and Social Development

Jean-François Tremblay, Deputy Minister
Tammy Bélanger, Senior Assistant Deputy Minister, Benefits and Integrated Services Branch (by videoconference)
Catherine Demers, Associate Assistant Deputy Minister, Skills and Employment Branch
Mary Crescenzi, Assistant Deputy Minister, Integrity Services Branch, Service Canada
Cliff C. Groen, Business Lead, Benefits Delivery Modernization
Nathalie Manseau, Acting Chief Financial Officer and Director General , Financial Management Advisory Services (by videoconference)

Office of the Auditor General

Karen Hogan, Auditor General
Mélanie Cabana, Principal
Lucie Després, Director

Opening Remarks

Opening remarks for Bob Hamilton, Commissioner of Revenue, Canada Revenue Agency

House of Commons’ Standing Committee on Public Accounts
Reports of the Office of the Auditor General of Canada
Report 10 — Specific COVID-19 Benefits
Canada Emergency Wage Subsidy (CEWS)

Ottawa, Ontario
February 2, 2023

Check against delivery.

Good afternoon.

Thank you, Mr. Chair, for this second opportunity to discuss the Auditor General of Canada’s Report 10 — Specific COVID-19 Benefits.

Today, I am accompanied by: Gillian Pranke, Assistant Commissioner, Assessment, Benefit and Service Branch; Marc Lemieux, Assistant Commissioner, Collections and Verification Branch; and Adrianna McGillivray, Director General, High Net Worth Compliance Directorate in the Compliance Programs Branch.

As I stated at my last appearance before this Committee, I want to thank the Auditor General and her team for their essential and diligent work. Work at the Agency has already begun to respond to the Auditor General’s recommendations.

The CRA agrees fully with six of the Auditor General’s recommendations and partially accepts the recommendation that applies to both ESDC and CRA.

This is noted in the CRA’s Action Plan, which has been submitted to this Committee.

In the context of the pandemic, the CRA was tasked with administering 12 emergency programs in order to deliver critical support to Canadians who either lost their job, couldn’t go to work because they were sick, or had to stay home in order to take care of a loved one or to comply with local health guidelines.

The attestation-based approach put in place by the government guided the implementation of all of the COVID-19 emergency and recovery support programs administered by the CRA, ensuring that funds needed by Canadians were issued in a timely and compassionate manner.

Delivering benefits to Canadians was key to the government’s response. The CRA’s approach throughout has been to ensure that people got the help they needed when they needed it.

Relying on our robust systems and a strong experienced workforce, we were well placed to administer these programs by conducting application processing and compliance activities.

But let me be clear, we were not perfect. Each week, we learned something new based on the intelligence we were gathering. Those “lessons learned” allowed us to refine our pre-payment controls and adjust the manner in which we administered the programs.

And those “lessons learned” were shared with this Committee on March 31, 2022.

A key pre-payment control was added in the summer of 2020 where tax data was used to progressively block 700,000 applicants.

Our controls also prevented a potential of $5 billion dollars in additional ineligible payments.

Post-payment verification activities — also part of our compliance strategy — are now well underway within the CRA, with hundreds of thousands of post-payment verifications planned.

As I noted in my appearance last week, the approach adopted by the CRA optimizes recoveries and prioritizes the stewardship of public funds and efficient use of resources. It also reduces the impact on Canadians by limiting the number of audits of eligible applicants.

The CRA will continue to work with ESDC to identify compliance risks and to act accordingly.

As of January 19, 2023, the CRA has sent out more than 960,000 Notices of Redetermination to individuals, with thousands more to be sent, informing them that they have an unpaid debt on their account.

These notices represent approximately $4.2 billion dollars.

In addition — as part of our compliance efforts — the CRA and ESDC will continue to pursue all of those cases where individuals were provided with an advance lump-sum payment for EI-ERB as well as cases where individuals received more than one type of benefit for the same period.

All recovery efforts are progressing.

It’s important to note that our compliance work can involve vulnerable populations, many of whom are struggling with the high cost of living. The CRA’s recovery approach continues to be flexible and rooted in empathy, to respond to the situations these Canadians face.

In closing, I want to once again recognize the dedicated work of CRA employees during this difficult time as they administered these programs which, in the words of the Auditor General herself, "prevented a rise in poverty" in Canada.

Additionally, our employees have done all of this while continuing to deliver upon our core tax and benefit administration programs, including processing of individual and business returns, and issuing benefits, credits and refunds to Canadians.

Thank you, Mr. Chair.

Supporting Documentation

OAG December 2022 Report – Report 10

Report 10 — Specific COVID-19 Benefits

OAG Opening Statement to the News Conference (December 6, 2022)

2022 Reports 9 and 10 of the Auditor General of Canada to the Parliament of Canada — Auditor General of Canada’s Opening Statement to the news conference

Statement by the Minister of National Revenue, the Honourable Diane Lebouthillier and Minister and of Employment, Workforce Development and Disability Inclusion, the Honourable Carla Qualtrough on the Auditor General of Canada (OAG)’s performance audit of Specific COVID-19 Benefits (December 6, 2022)

Statement by the Minister of National Revenue, the Honourable Diane Lebouthillier and Minister and of Employment, Workforce Development and Disability Inclusion, the Honourable Carla Qualtrough on the Auditor General of Canada (OAG)’s performance audit of Specific COVID-19 Benefits (December 6, 2022)

CRA Progress Report – PACP Report 7, CEWS (December 2, 2022)

Report on progress: seventh report of the Standing Committee on Public Accounts – 44th parliament, 1st session (response to recommendation 4)

Overview: Impact on CRA (from AERB)

2022 December Reports of the Auditor General of Canada
Report 10 – Audit of Specific COVID-19 Benefits

Impact on the Canada Revenue Agency

The Office of the Auditor General of Canada (OAG) concluded that COVID-19 programs delivered quick financial relief to individuals and employers as was mandated by the government. This prevented an increase in poverty and helped the economy recover from the effects of the pandemic.

The OAG noted that the decision to rely on self-attestation and limited pre-payment controls to facilitate quick financial relief resulted in $4.6 billion in overpayments to ineligible recipients and $27.4 billion of payments that should be investigated further for eligibility. The OAG therefore concluded that the Canada Revenue Agency (CRA) and Employment and Social Development Canada (ESDC) did not manage the COVID-19 programs efficiently.

The OAG also concluded that CRA and ESDC are not performing a sufficient number of post-payment verifications to identify all payments made to ineligible recipients, and that the actions taken to date to identify and recover overpayments have not been timely.

The audit report contains six recommendations. One recommendation is addressed to both the CRA and ESDC and five recommendations are addressed solely to CRA. The CRA agrees with five recommendations and partially agrees with one recommendation. The CRA has provided corresponding management responses.

Audit objective

The objective of this audit was to determine whether

The CRA and ESDC, according to their roles and responsibilities, ensured that COVID-19 benefits payments were accurate, paid to eligible applicants, and undertook timely procedures to recover payments made to ineligible recipients and/or of over payments.
The CRA and ESDC managed the COVID-19 programs efficiently and measured their administrative effectiveness. Furthermore, the audit examined whether programs’ objectives were achieved and provided value-for-money outcomes.

Audit scope

The audit scope included the CRA and ESDC and covered the benefits and programs listed below:

Canada Worker Lockdown Benefit (CWLB)
Canada Recovery Benefit (CRB)
Canada Recovery Sickness Benefit (CRSB)
Canada Recovery Caregiving Benefit (CRCB)
Canada Emergency Response Benefit (CERB), including Employment Insurance Emergency Response Benefit (EI-ERB)
Canada Emergency Wage Subsidy (CEWS)

This audit did not examine:

other COVID-19 programs put in place by the federal government that are not identified in Bill C-2, An Act to provide further support in response to COVID-19.
COVID-19 provincial and municipal support programs offered to individuals, businesses, and organizations.

Highlights

To respond to the global coronavirus disease (COVID-19) pandemic, the government put in place emergency income support programs to provide rapid financial relief to individuals and employers in Canada with the objective of minimizing the impacts of the pandemic on the health of Canada’s population, business, and the economy.
The original programs were expected to last only few months; however, the government had to extend the existing programs and introduce new ones as additional waves of the pandemic occurred. This, in turn necessitated flexibility and changes to program plans, as benefit payments were made well into 2022.
To meet the government’s objective to quickly get financial support into the hands of those affected by the pandemic, and to simplify and accelerate the application process for the COVID-19 benefits, both ESDC and CRA relied on applicants’ attestations and some pre-payment controls to confirm eligibility. The intention was to focus on verifying recipients’ eligibility after payments were issued.
The OAG found the following:
- The approach used by CRA and ESDC to rely on attestation, with limited pre-payment controls, coupled with the lack of timely data at the time of the application resulted in $4.6 billion in overpayments to ineligible recipients and $27.4 billion of payments that should be investigated further to confirm eligibility.
- CRA and ESDC lacked comprehensive post-payment verification and recovery plans and they did not plan to verify payments made to all identified recipients at risk of being ineligible. In addition, there have been delays in conducting post-payment verifications and collection activities.
- CRA and ESDC did not manage the COVID-19 programs efficiently due to the significant amount of payments made to potentially ineligible recipients.
Following the issuance of the DM draft, there were a number of exchanges with the OAG and some edits were made to the report to address the concerns raised by the CRA regarding the content of the report.
On November 24, 2022, the CRA signed off on the factual accuracy of the report with the exception of the OAG’s estimate of CEWS overpayments.
A statement will be added to the “About the Audit” section at the back of the report to acknowledge CRA’s disagreement in this area.

Positive observations about the Canada Revenue Agency

The OAG found the following:

COVID-19 programs provided rapid financial relief ($211 billion) to those most impacted, thus preventing an increase in poverty and income inequalities, and contributing to Canada’s economic recovery.
Individuals from the groups most impacted by the pandemic were able to access the programs and receive timely payments. The Canada Emergency Wage Subsidy (CEWS) supported employers in sectors that experienced the largest employment declines.
The focus on the verification of eligibility after payment to offset the limited controls in place at pre-payment (due to the attestation model) is consistent with best practices promoted by the International Public Sector Fraud Forum.
CRA and ESDC reported that an estimated $2.2 billion has been repaid by ineligible recipients.
The CRA added numerous pre-payment controls as the COVID-19 benefits programs for individuals evolved. CRA estimated that one of its pre-payment controls blocked billions in benefit payments to ineligible recipients.
For individual benefits, CRA stopped payments and requested additional information from more than 544,000 applicants.

Negative observations about the Canada Revenue Agency

The OAG found the following:

CRA and ESDC did not manage the COVID-19 programs efficiently. Limited pre-payment controls and the absence of timely data resulted in $4.6 billion of overpayments made to ineligible recipients of benefits for individuals and an estimated $27.4 billion of payments to individuals and employers that should be investigated further.
ESDC and CRA did not develop rigorous and comprehensive plans to verify the eligibility of payment recipients and take action to recover amounts owing in a timely manner. In addition, ESDC and CRA are not planning to verify payments made to all identified recipients at risk of being ineligible for the COVID-19 benefit programs. The percentage coverage rates for individuals and businesses are low.
There have been delays in conducting post-payment verifications and collections activities. Furthermore, there is a risk that all planned post-payment verifications may not be completed by the deadlines imposed by legislation, and this may result in the departments being unable to recover amounts owing.
For the CEWS, CRA made an estimated $15.5 billion in payments to recipients that should be investigated further as they did not demonstrate a sufficient revenue decline according to the OAG’s analysis of recipients' GST/HST data. Multiple opportunities to improve pre-payment controls for the CEWS were not taken at various stages of the program. In addition, CRA did not have the data needed to measure the effectiveness of the CEWS.
CRA and ESDC did not have a modern real-time payroll data requirement for businesses which could have been used to assess program eligibility.
CRA’s system could not provide disaggregated information on amounts owed and amounts repaid for each benefit program. Furthermore, CRA’s system does not currently have the capability to apply future government payments against a COVID-19 benefit amount owed by an individual.

OAG recommendations and Agency response

The audit report contains six recommendations for CRA:

Recommendation. In the administration of future programs, the Canada Revenue Agency should engage with its partners, such as Statistics Canada and relevant departments, to ensure it collects pertinent data from applicants to better monitor and measure the effectiveness and outcomes of programs.
- Canada Revenue Agency’s response
  
  Agreed. As the administrator of future government programs, the Agency will continue to engage with program departments to discuss the data required to measure and report on the effectiveness of these programs, as well as the framework to exchange this information in a timely and secure manner. While the program departments are responsible for measuring and reporting on the outcome of initiatives under their responsibility, the Agency will be an active partner, supporting them in their data needs.
Recommendation. In order to improve the efficiency of the tax and programs administration and to follow good practices, the Canada Revenue Agency should assess the value of implementing a real-time business revenue data requirement.
- Canada Revenue Agency’s response
  
  The Canada Revenue Agency continuously strives to enhance its program administration through the review of new international best practices. The Agency is already advancing its understanding of real-time business revenue data requirements to support program administration and increase business efficiencies. Within its legislative authority, the Agency will assess the value of implementing a real-time business revenue data requirement, including the necessary infrastructure analysis, completion of a cost benefit analysis, and required policy and legislative changes to implement such a requirement.
Recommendation. In order to improve its efficiency of delivering benefit programs, the Canada Revenue Agency, with the collaboration of Employment and Social Development Canada, should pursue the development and implementation of a real-time payroll system with clear timelines and deliverables.
- Canada Revenue Agency’s response
  
  Agreed. Budget 2021 announced funding of $43.9 million over three years, starting in 2020-2021, for the CRA and ESDC to develop options for the implementation of an ePayroll solution for the Government of Canada that will increase the speed and accuracy of services and benefits to Canadians.
  
  Now in its second year, the current phase of the project will deliver a fully costed implementation plan consisting of 3 deliverables: a business case that will recommend an ePayroll solution, supported by a transformation blueprint and a project management framework, with a view to moving to the implementation phase beyond March 2024.
Recommendation. The Canada Revenue Agency and Employment and Social Development Canada, should:
- update their post-payment verification plans to include all activities to identify payments to ineligible recipients of COVID-19 benefit programs, taking into account the legislated timeframes.
- increase the extent of post-payment verifications for COVID-19 benefit programs for individuals to include all cases identified as being at risk of being ineligible.
- Canada Revenue Agency’s response (Joint response developed with ESDC)
  
  Partially agree. ESDC and the CRA have ensured that their plans include both reconciliation activities such as the collection of lump-sum payments as well as post-payment verifications of potentially ineligible applicants. As part of their integrity work, the Department and Agency have assessed all COVID benefit programs against the eligibility criteria and will leverage a risk-based approach to verifications that focuses on the highest risk files and the greatest dollars at risk.
  
  ESDC and CRA were provided funding by the government to conduct risk-based post-payment verifications at a level that balances the number of resources required to investigate a potentially ineligible recipient against the amount paid to an individual. It would not be cost effective nor in keeping with international and industry best practices to pursue 100% of all potentially ineligible claims. This approach is evergreen and will be adapted as the circumstances warrant.
Recommendation. To increase the recovery of COVID-19 amounts owed and reduce the administrative burden, the Canada Revenue Agency should put in place system functionalities to apply refunds against amounts owed before end of December 2022.
- Canada Revenue Agency’s response
  
  Agreed. The functionality to automatically apply refunds from other tax lines (such as T2 income tax, GST/HST, etc.) to CEWS debts has been operational since CEWS was first implemented. Beginning October 17, 2022, the Agency has had the ability to apply T1 refunds to COVID-19 individual benefit debts.
  
  The functionality to apply GST credits to COVID-19 individual benefit debts is currently planned for February 2023.
Recommendation. To improve the usefulness of information and the transparency of COVID-19 reporting, the Canada Revenue Agency should improve its information collection and reporting capabilities to accurately report for each benefit program how much has been collected for each individual and business.
- Canada Revenue Agency’s response
  
  Agreed. The CRA has continually enhanced its systems since it began the administration of COVID-19 benefits for individuals and subsidies for businesses in an iterative fashion. This includes enhancements to support post-issuance compliance, reporting, and collection activities. As part of this ongoing process, the CRA will continue its efforts to accurately report how much has been collected for each COVID-19 benefit and subsidy program.

Action Plan (for PACP)

Canada Revenue Agency Detailed Action Plan

Issue Notes

Overall

Why has the CRA only partially agreed with one of the OAG’s recommendations?

Key messages:

The CRA welcomes the OAG recommendations to improve the administration of the emergency benefits as well as the recognition that the programs we administered were effective in meeting the objectives of contributing to the reduction of poverty and inequality while supporting the economy.
With regards to the recommendations from the audit of specific COVID-19 benefits, none were specific to the CRA’s post-payment verification plans for CEWS.
However, the CRA only partially agrees with the OAG's recommendation that all individuals who are potentially ineligible for individual benefits be reviewed.
From the start, the CRA made it clear that verification of COVID-19 income support benefits eligibility for individuals would mainly occur after payments were issued, given that the attestation-based application process selected did not allow for complete pre-payment verifications, and there was not recent income data available at the time. At the time the program was launched, the Agency only had the 2018 income data.
Once tax data became available, it became evident that potentially ineligible applications were being submitted, and pre-payment blocks were placed on these applicants. Between July 2020 and July 2022, the CRA blocked approximately 700,000 individuals, and in doing so, prevented high-risk applications from proceeding further until documents were submitted, and were manually reviewed to confirm eligibility.
For the remaining instances of ineligibility, the CRA is conducting targeted risk-based verifications that balance high likelihood of ineligibility with potential recovery amounts because, although they may appear ineligible, there is not certainty. The CRA's targeted, risk based approach, is in keeping with the advice of the International Public Sector Fraud Forum.
Many eligibility reviews have been completed for the income based eligibility criteria using the risk based approach, starting with pre-payment reviews in June 2020. The CRA's compliance plans remain subject to adjustment as needed, and work is planned to be ongoing until 2025.
The CRA and ESDC have agreed that all debts would be created for individuals who received an advance lump-sum payment of EI-ERB, and individuals who received two benefit payments in the same period.

Does the CRA take issue with any figures/numbers/projections the OAG included in their report?

Key messages:

The CRA does take issue with certain figures projected in the OAG report.
It is recognized that the OAG was legislatively obligated to complete her audit very early in the CEWS post-payment audit process.
In attempting to evaluate potential risk of ineligible claims that existed in the claimant population based upon revenue drop criteria, was limited to data available at that early stage.
The CRA agrees that the OAG report is factually accurate, with the exception of the estimate of CEWS claims requiring further review, which the report estimates to be $15.5 billion.
The OAG chose to use GST/HST monthly reported revenue (taxable supplies) as a basis for determining an estimate of actual revenue declines for CEWS purposes; however, GST/HST reported revenue does not closely align to CEWS qualifying revenue.
The CEWS revenue criteria does not have a direct correlation to GST taxable supplies. Therefore, this comparison results in an inflated estimate of ineligible or inaccurate payments and is an unreliable indicator of risk.
For example, the various forms of revenue for GST/HST purposes (taxable, zero-rated and exempt) result in the measurement criteria not aligning with income tax revenues or qualifying revenue for CEWS; and, as a result of the variety of difference, numerous factors would require evaluation and adjustment in order to attempt to align the data for estimate purposes.
The CRA implemented the use of GST/HST data as a pre-payment validation for the revenue drop criteria of the Canada Emergency Rental Subsidy (CERS) program, whose revenue drop rules rely on the same revenue test as the CEWS. Results have shown that the vast majority of CERS applicants that did not meet the "revenue drop" test based strictly on GST/HST filing data, did in fact meet the revenue drop test based on qualifying revenue for CEWS/CERS purposes. This supports the position that there is very limited correlation between the two different concepts of revenue (being GST/HST data and qualifying revenue for CEWS and CERS purposes).
Generally speaking, we do not believe the estimate of amounts at risk as identified by the OAG ($15.5B) would directly result in audit adjustments or recoveries. Based on the results to date, we are seeing high levels of compliance overall, which was expected given the pre-payment controls and the efforts employed by the CRA to support voluntary compliance from the outset.
In high risk audits completed as of January 3, 2023 results indicate that approximately 5.8% of the dollar value of the claim amounts reviewed were being denied or adjusted. "Adjusted claims" are claims where the claimant was eligible, but the amount claimed was incorrect.
Overall, CEWS compliance audits have largely found that most claimants have applied the rules correctly and have made every effort to comply. Some claimants, while eligible, simply did not understand all of the rules and made honest mistakes when filing their applications.
Our results from completed reviews and audits to date do not align with the Auditor General's estimate. Although the CRA's post-payment audit work for CEWS started early and is well underway, we have much more left to do.
As noted in the OAG report, a more definitive estimate of payments to ineligible recipients will only be determined once additional comprehensive post-payment audit activities are completed.
It is therefore the CRA's position that it is too early in the compliance cycle of this benefit program to be able to provide concrete numbers related to potential ineligible claims based upon the revenue drop criteria with any degree of certainty. Based on our work at the pre-payment stage and our audit results to date, we strongly believe that the amounts of ineligible claims will be much lower than what the OAG report suggests.

Does the CRA recognize the independence and integrity of the OAG when preparing its reports, including Report 10?

Key messages:

The CRA recognizes, values and respects the OAG’s independent role and the integrity of its office.
The CRA has a positive relationship with the OAG and has a long history of working collaboratively and constructively with the OAG during its engagements.
The CRA understands and respects the OAG's statutory role to conduct independent audits and studies that provide objective information, advice, and assurance to Parliament and Canadians.
The CRA believes that independent entities of integrity can have differences of opinion while maintaining a positive working relationship.
While the CRA only partially agrees with one of the recommendations of the OAG's Report 10, "Specific COVID-19 Benefits," that should not call into question the CRA's respect for the independence and integrity of the OAG when preparing its reports.

The OAG identified $4.6 billion in overpayments to ineligible individuals and at least another $27 billion that needs to be investigated. How much of this $32 billion can the CRA expect to recover?

Key messages:

As per the OAG report, it is too early to determine the expected amounts to be recovered.
The $27 billion amount identified by the Auditor General as payments that should be investigated further includes $15.5 billion for the CEWS and $12.1 billion for individual benefit programs.
With the most recent figures, combined, the CRA and ESDC have issued Notice of debts & Notice of redetermination amounting to $6.7B in individual COVID 19 benefit overpayment.
For CEWS post-payment audits as of January 3, 2023, results indicate that approximately 94% of claim amounts were allowed.
Comprehensive post-payment audits are ongoing to further examine the level of compliance of claimants who, based upon risk criteria, warrant further review. As of January 3, 2023, 4,117 post-payment audits are either in-progress or have been completed, representing $14.7B of the total CEWS benefits paid.

Does CRA have a comprehensive compliance plan? What are the elements of this plan?

Key messages:

The CRA's has had plans for post-payment verifications and these are adjusted and refined on an ongoing basis. They must remain flexible based on the results of ongoing compliance work, and socio-economic factors.
Compliance work is planned to be ongoing until 2025, and the CRA plans to review a total of approximately 850,000 - 900,000 recipients of all COVID-19 income support benefits for individuals.
Of the total planned reviews, around 650,000 - 700,000 are planned to be post-payment, which includes individuals selected for pre-validation who did not submit documents to prove their eligibility. Post-payment verifications officially began in January 2022.
The CRA's compliance reviews are based on the eligibility criteria, and to date have been mainly focused on the income-based eligibility criteria. As of January 2023, the CRA has commenced eligibility reviews based on the minimum of $5,000 income threshold, the maximum $1,000 income threshold, the minimum 50% income reduction requirement, and the incarceration risk factor.
Additional eligibility criteria are being evaluated for their viability as post-payment workloads, and will be added as work continues, but heavily depend on results of ongoing work. These could include but are not limited to benefit recipients with an ineligible SIN type, CRCB recipients without a dependent on file, or more than one CRCB payment issued to a single address for the same period.
Benefit recipients are selected for post-payment verification using a risk-based approach, where individuals who appear to be at the highest risk of not meeting the eligibility criteria are selected.
High risk individuals are identified using business intelligence and analysis of tax data. Selected individuals receive an Initial Contact Letter (ICL) requesting they submit documents for manual review to prove their eligibility for the benefits they received. Receiving an ICL does not mean that the individual has been determined to be ineligible, and an ICL does not request repayment.
The CRA is conducting post-payment verification reviews of COVID subsidy claims to identify applicants that did not accurately report their amounts and/or provided false information, whether knowingly or through gross negligence.
Procedures are in place based on issues identified from the initial implementation and administration of the subsidy programs.
CRA officers are reaching out to applicants and requesting clarification and documentation to verify their claims. As necessary, a reassessment of the period(s) under review will be made and repayment of any disallowed amounts will be required.

How much has the CRA spent already and how much more will the CRA spend on post-payment verification activities?

Key messages:

The CRA can provide the following response based on the effort related to compliance, verification, collections and/or appeals activities associated with post-payment verification for the following programs:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Worker Lockdown Benefit (CWLB)
- Canada Emergency Wage Subsidy (CEWS)
- Canada Emergency Rent Subsidy (CERS)
- 10% Temporary Wage Subsidy (TWS)
- Tourism and Hospitality Recovery Program (THRP)
- Hardest-Hit Business Recovery Program (HHBRP)
- Canada Recovery Hiring Program (CRHP)
As of March 31, 2022 the total cost for these activities was $331,032,474.
Projected costs for the aforementioned activities from April 1, 2022 to March 31, 2026, are estimated at $691,699,555.
Funding requirements, if any, beyond March 31, 2026 will be re-evaluated at a later date.

Key Messages - Attestation-based applications

Key messages:

The CRA was called on to quickly develop emergency financial support programs for both individuals and businesses. Processes that would usually have taken years were delivered in weeks.
The application processes for individual benefits and business wage subsidies needed to be both efficient and easy to use in order to quickly deliver benefits to Canadians already suffering from job losses or business slowdowns and shutdowns.
The Government of Canada determined that an attestation-based application process for both individual benefits and business subsidies was the only way to get critical support to Canadians quickly given there was not recent income data available at the time.
Self-attestation was identified by the Organization for Economic Co-operation as an option where it is not possible to automate validation checks based on available information and the objective was to make payments as quickly as possible. Canada was among other jurisdictions, such as the United States and Australia, that also used attestation-based applications, an approach which delivered benefits quickly and for which the CRA received positive reviews.
We recognized that this approach would require more emphasis on post-payment verification, which meant that some recipients could later be found to be ineligible and would need to repay benefits. The attestation-based design also provided the CRA with flexibility to pursue audit activities beyond typical timeframes.

Why were COVID-19 benefits attestation-based?

Key messages:

The Government of Canada determined that an attestation-based application process for both individual benefits and business subsidies was the only way to get critical support to Canadians quickly given the absence of recent income data available at the time.
This allowed the Government of Canada to provide urgently needed income support to millions of Canadians quickly and in fact, in many cases, within days of an application being submitted.
This approach relied on individuals and businesses to determine themselves if they were eligible to receive the benefits based on established criteria.
The CRA recognized that this approach would put a strong focus on post-validation and meant that some recipients could later be found ineligible and need to repay benefits or business subsidies they were not entitled to.

Background:

Self-attestation has been identified by the Organization for Economic Co-operation (OECD) as a reasonable option where it is not possible to automate validation checks based on available information, and in this case, the objective was to make payments as quickly as possible.
A comprehensive compliance program is ongoing to confirm the eligibility of claimants and that the amounts claimed were accurate.

Eligibility

Key messages:

The COVID-19 benefits were designed to allow funds to be delivered quickly and initially relied primarily on attestations of eligibility as a method of verification. The attestation approach was necessary given the absence of tax data on file at the onset of the pandemic and the necessity of getting funds in the hands of citizens on an urgent basis. Further up-front controls and pre-payment verifications were added gradually as benefits continued and with the introduction of other benefits.
The Government of Canada was clear that some recipients could later be found to be ineligible and would be required to repay some or all of the benefits they received. The CRA continues to work with the identified individuals on flexible payment options on a case-by-case basis. The CRA and ESDC are working together in this effort.
As found in most significant government support program for businesses, the CRA has identified a small percentage of CEWS claimants that are suspected to have committed fraud and/or aggressive non-compliance, including preparers of ineligible claims.
Preparers of ineligible claims are individuals or entities who promote and assist in breaking or bending the rules and knowingly facilitate the production of inaccurate or fraudulent claims. The CRA is continuing to identify and pursue all preparers that appear to have prepared or counselled others to file ineligible CEWS and the Canada Emergency Rent Subsidy claims as well as their associated claimants.
In order to maintain the integrity of the COVID-19 benefits programs and Canadians' confidence in Canada's tax and benefit systems, compliance activities were initiated and continue to be carried out. These activities will help ensure that Canadians were eligible for the COVID-19 benefits or subsidies they received and demonstrated sound stewardship of public funds that Canadians rightfully expect.

Timeliness of recoveries

Key messages:

The timelines for compliance activities were affected due to multiple waves of the pandemic over a two year period.
Benefit programs were renewed and there were requirements for subsequent emergency programs in order to meet the ongoing needs of Canadians.
As such, the CRA took a People First approach by maintaining its focus on delivering benefits to Canadians that continued to be experiencing financial hardship due to the pandemic.
Putting the priority on delivering these benefits to those in need, while trying to balance its compliance activities simultaneously, led the CRA to experience some delays.

Will the CRA have adequate time, from a statutory perspective, to collect all outstanding debts before they become uncollectable?

Key messages:

The CRA is confident that it has the tools to substantially recover at-risk funds in the time it has left to collect them.
While Notices of Redetermination ask for people to repay debts voluntarily, the CRA also has tools that allow recovery of funds using off-sets which means the CRA can hold back refunds or certain benefits until someone's account gets back to balance.
The CRA will exercise our discretion to use these tools as the situation warrants.
The legislated collections limitation period for Individual COVID benefit debts is 6 years following the date the debt is created, and business COVID subsidies debts have a collection limitation period of 10 years beginning 90 days after the date the notice of determination/notice of assessment is sent. The collections limitation period for both Individual and business debts can be restarted under certain circumstances, such as an acknowledgement of debt.
Generally income tax returns cannot be reassessed after three or four years (depending on the nature of the taxpayer) from the date of the original assessment or determination.
However, the CRA may assess or reassess or issue a redetermination to a person for a tax year at any time beyond the normal reassessment/redetermination period if that person has made any misrepresentation that is attributable to neglect, carelessness, or wilful default, or committed fraud or in instances where the person has voluntarily filed a waiver with CRA before the end of the normal reassessment period agreeing to leave the period open.
Therefore, there is no deadline for reassessing in cases of fraud, or negligent, careless, or wilful misrepresentation.
Through the attestation based approach, claimants must attest to the information provided within their application including that they meet the prescribed eligibility criteria to qualify for the benefit. This provides support to allow the CRA to reassess beyond the normal reassessment/redetermination period where negligence is suspected or that reasonable care was not exercised when providing this information.

Key Messages - Identity Theft/Fraud

Key messages:

The safety and security of Canadians, and their information, is a top priority for the CRA. The confidence and trust that individuals have in the CRA is a cornerstone of Canada’s voluntary tax system.
Throughout the duration of the COVID-19 relief programs, the CRA implemented and adapted new measures and controls to address suspicious activity. In particular, the CRA built safeguards into application processes to verify the identity of applicants, and introduced additional controls that required further review of certain applications before they were processed.
At the start of the COVID-19 relief programs, the CRA created a dedicated team to help individuals validate their identity and address their concerns about identity theft issues
In order to confirm unauthorized use of taxpayer information, each account deemed to be at high risk of unauthorized access must be reviewed; the result may confirm the unauthorized use of the taxpayer information or the case can be deemed unfounded. In both scenarios, the taxpayer's account will remain monitored and any subsequent changes will be analyzed to determine the associated risks.
Suspected cases are complex and may require several months of review and verification. The CRA does not disclose specific information related to its examination strategies, as disclosure could compromise its compliance activities and the integrity of the Canadian tax system.
The CRA has processes in place to recover money lost due to fraudulent activity, including working with the Royal Canadian Mounted Police, the Canadian Anti-Fraud Center, and local police to investigate the incident.
The total number of cases of identity theft and unauthorized access represents a very small percentage of total applications. Unauthorizes access to taxpayer information represents less than 0.18% of the total envelope of individual COVID-19 benefits.

How is the CRA dealing with fraud and/or identity theft related to COVID-19 benefits?

Key messages:

The safety and security of Canadians, and their information, is a top priority for the CRA.
The confidence and trust that individuals have in the CRA is a cornerstone of Canada’s voluntary self-assessment tax system.
Throughout the duration of the COVID-19 relief programs, the CRA implemented and adapted new measures and controls to address suspicious activity.
In particular, the CRA built safeguards into application processes to verify the identity of applicants, and introduced additional controls that required further review of certain applications before they were processed.
The total number of cases of identity theft and unauthorized access represents a very small percentage of total applications.

Why were post-payment controls emphasized more than pre-payment controls?

Key messages:

Over the course of three weeks, when developing the Canada Emergency Response Benefit (CERB) the CRA designed and delivered the system, processes, and infrastructure for individual benefits.
This ensured emergency benefits payments could be issued quickly to Canadians, with Employment and Social Development Canada developing the program policy and legislation simultaneously. CRA designed pre-payment validation controls that would allow Canadians to receive much needed funds within days.
The CRA was subsequently called on to quickly develop emergency financial support programs for businesses, including the Canada Emergency Wage Subsidy (CEWS). Processes that would usually have taken years were delivered in weeks.
For these subsidies and benefits, the use of automated pre-payment validations at time of application allowed the CRA to distribute funds most efficiently, as an alternative approach based more heavily on manual review would have meant that some Canadians might experience a slower process for payments being issued.
Given the benefits and subsidies were based on periods not yet filed for income tax purposes, efforts to obtain current data for purposes of pre-payment validation would have slowed down the release of the subsidies, reducing their overall impact.
These pre-payment controls were increased over time in order to balance the risk of payments to ineligible applicants while also adapting to the needs of Canadians.

If more rigorous pre-payment controls had been put in place, how would have that impacted the delivery and the timing of COVID-19 benefit payments?

Key messages:

The CRA was called on to quickly develop emergency financial support programs for both individuals and businesses. The development and implementation of the policies and processes that would normally have taken over a year, were put in place within weeks.
The Government of Canada determined that an attestation-based application process for both individual and business subsidies was the most efficient and only real viable way to get critical support to Canadians quickly given the circumstances.
The CRA implemented attestation-based applications, relying on individuals and businesses to determine and confirm that they met the established eligibility criteria required to receive support.
The CRA recognized that an attestation based approach would require more emphasis on post-payment verification, which meant that some recipients could later be found to be ineligible and would need to repay benefits. The attestation-based design also provided the CRA with flexibility to pursue audit activities beyond typical timeframes.
Relying on an alternative approach that required increased demand for information and disclosure from claimants, as well as in-depth levels of manual review, would have resulted in eligible claimants experiencing a significant filing burden. Given the benefits were based on income earned during periods not yet filed for income tax purposes, efforts to obtain current data to support pre-payment validation would have slowed down the release of the benefits and those subsidy payments would not have been issued in a timely fashion when it was needed the most.
The development of additional screening and pre-payment validation measures would have significantly delayed the payment of benefits to thousands of Canadians businesses who found themselves in sudden need of financial support during an unprecedented crisis, possibly by months.

Background:

Self-attestation has been identified by the Organization for Economic Co-operation (OECD) as a reasonable option where it is not possible to automate validation checks based on available information, and in this case, the objective was to make payments as quickly as possible.
At the time of development and implementation of the application process, there was no current income data available and the most recent income related data was for the 2018 taxation year. The 2019 income tax returns were not yet due at the start of the pandemic in March 2020.
With respect to business subsidies, they were designed with upfront pre-payment controls that were in place at the time of their launch. One example of a control included direct deposit and address change validations that were in place in an attempt to mitigate identity theft and fraud. In addition, pre-payment controls were applied to 100% of CEWS applications to confirm eligibility, minimize risk and identify claims showing the highest risk of ineligibility for manual review prior to payment.
The pre-payment validation phase allowed the CRA to evaluate and risk assess claims through both automated and manual reviews. This included a combination of automated validation programming when CEWS application claims are initially received and entered into CRA systems, validation against CRA data and publicly held information, as well as follow-up phone calls to confirm and verify certain elements of their claims.
Along with the possibility of denying ineligible claims before payment, the pre-payment phase also allowed the CRA to gain intelligence on areas of risk and provided an opportunity to educate claimants.
In addition, the observations made at the pre-payment phase contributed to the identification of audit issues that led to the creation, development, and refinement of numerous risk-assessment algorithms that could be applied to the post-payment file selection processes, resulting in the identification of the highest risk claims.

Should the CRA have taken more time to develop the COVID-19 benefits?

Key messages:

The CRA was not in a position to take even more time to formulate and integrate additional program design and control mechanisms into the COVID-19 benefits and subsidies.
Every day that was used in furthering program design was another day that Canadians would go without support if they lost their job or if their business was forced to temporarily close due to the ongoing pandemic or (social distancing) restrictions.
However, after the launch of the programs, we were continually implementing changes and adding controls to strengthen the programs and to prevent fraud. For example, throughout the lifespan of the CERB program, we made adjustments to introduce new measures and controls to address suspicious activity.

Is the CRA going after those easier where it is easier to collect money?

Key messages:

The CRA intends to establish debts against all of those who have been found to be non-compliant for both Individual benefits and Business Subsidies.
The supports available to businesses and those available to individuals were different programs and the post-payment verification work underway reflects these differences.
The complexity of the compliance work required or the scope of the non-compliance in terms of dollar value does not factor into our decision making as to whether or not to pursue repayment.
For the COVID-19 Individual Benefits, individuals are selected for post-payment review using a risk-based approach, based on a balance of likelihood of eligibility and potential recovery amounts.

CEWS focused

Pre-payment validations (Business)

Key messages:

The CRA designed the business programs to include up-front verification controls to ensure that subsidies were provided to eligible applicants in a timely manner.
The business subsidies delivered payments to employers impacted by the COVID-19 pandemic, allowing them to keep workers on their payroll, bring back previously laid-off employees and help ease their businesses back into normal operations.
In an effort to mitigate non-compliance and ensure the integrity of the COVID-19 support programs for businesses, the CRA developed a comprehensive compliance program which consisted of many activities, including:
- Automated pre-payment validation criteria were applied to 100% of CEWS applications (i.e., 5,091,630 applications) to confirm eligibility and to identify claims of risk requiring additional review prior to payment.
- Manual pre-payment verification was conducted on all claims where validation criteria identified potential concerns regarding eligibility at the application stage. This manual intervention included activities such as phone calls to verify that certain elements of the claim were correct. Over $33B of the total CEWS claims were subject to manual pre-payment verification.
- Comprehensive post-payment audits are ongoing to further examine the level of compliance of claimants who, based upon risk criteria, warrant further review. As of January 3, 2023, 4,117 post-payment audits are either in-progress or have been completed, representing $14.7B of the total CEWS benefits paid.
This compliance approach was supported with additional controls, such as identifying duplicate Business Numbers or Registered Payroll accounts, and identifying duplicate or changed direct deposit information, among others.
The CRA also consulted with organizations, including the Canadian Federation of Independent Business and the National Payroll Institute, to develop tools such as the calculator and to ensure that the process would be as easy as possible while remaining comprehensive in terms of controls.
As part of the government's ongoing commitment to transparency, the CRA also launched the CEWS Registry on December 21, 2020. This web page allowed Canadians to identify which employers were using the wage subsidy to support jobs.

Post-payment verifications (Business)

Key messages:

The CRA is working to ensure compliance through post-payment audit activities following the closure of the Canada Emergency Wage Subsidy (CEWS) in October 2021.
Generally, for a traditional refundable tax credit program for business, verification and compliance work begins only after the end of the tax year and the filing of tax returns. However, given the size of the CEWS program, the CRA began compliance interventions, including audits, much earlier than it has done traditionally. Starting CEWS audits before the end of the tax year was an innovative approach to provide taxpayers with earlier certainty and allow for better stewardship of public funds.
CEWS post-payment audits are being conducted in phases, with the lessons learned from each phase informing the next. This approach allows the CRA the flexibility to expand or reduce its focus in different areas as audit activities progress and business intelligence is acquired.
Post-payment audit activities are undertaken on a risk-based approach.
Through the risk based approach, CRA applies business intelligence tools and underlying algorithms to the automated risk assessment of a CEWS applicant, to assist in identifying those claims that are considered high risk and warrant a further review.
Algorithms are continuously updated and created as new data becomes available to the CRA, such as more current payroll and tax information, or as the CEWS legislation was amended or extended.
Algorithms take into consideration a variety of data elements, including filing information, rebate applicability, claim by claim comparisons, existing relationships, and accounting methodologies, among others. This approach allows the CRA to focus on those claims that are more likely to be ineligible or overstated.
- Phase 1 commenced in August 2020, using a combination of risk-assessment and random selection from the claimant population, to assist the CRA in better understanding the risks, gauge the degree of non-compliance, validate the effectiveness of existing pre-payment validation criteria and obtain feedback from auditors and claimants. The risk-based approach included pre-payment verification findings, advanced business intelligence tools and internal and external leads.
- Phase 2 commenced in November 2021 and targeted the highest risk claimants by using enhanced risk assessment algorithms and lessons learned from Phase 1 completed audits. Phase 2 is ongoing, with additional audits to be identified. File selection will continue to be based on business intelligence, referrals, leads and enhanced risk-assessment algorithms to ensure the CRA focuses its audit resources on the claimants who demonstrate the highest level of risk for non-compliance.
Overall, CEWS compliance audits have largely found that most claimants have applied the rules correctly and have made every effort to comply. Some claimants, while eligible, simply did not understand all of the rules and made honest mistakes when filing their applications. The most common adjustments relate to payroll issues, mathematical and calculation errors, as well as instances where the claimants failed to provide responses or information to the auditors. Likewise, the CRA has found that vast majority applicants correctly applied and met the revenue drop requirements for the CEWS.
- The CRA has identified a small pocket of claimants that are suspected to have committed fraud and/or aggressive non-compliance, including preparers of ineligible claims who promote and assist in breaking or bending the rules and knowingly facilitate the production of inaccurate or fraudulent claims. The CRA is continuing to identify and pursue all preparers that appear to have prepared or counselled others to file ineligible CEWS and CERS claims as well as their associated claimants.
- As of January 3, 2023, over 3,800 CEWS/CERS high risk preparer-linked claimants have been identified and are being evaluated for potential denial or adjustment based upon ineligibility.
Many CEWS post-payment audits remain underway and additional audits will continue to be identified based on risk assessments and lessons learned to date. Therefore, the results of the CEWS post-payment audit activities will continue to change as the CRA's compliance actions progress.

What pre-payment controls were in place for CEWS to ensure only eligible employers received the subsidy?

Key messages:

The CRA designed the CEWS to include up-front verification to help ensure the subsidy was provided to eligible applicants.
During the COVID-19 pandemic, the Government’s priority has been to provide income support quickly to those who urgently need it and to support the Canadian economy.
The application processes for individual benefits and business wage subsidies needed to be both efficient and easy to use in order to quickly deliver benefits to Canadians already suffering from job losses or business slowdowns and shutdowns.
This approach relied on individuals and businesses to determine by themselves if they were eligible to receive benefits based on established criteria and allowed the Government to provide urgently needed income support to millions of Canadians quickly.
The CRA recognized that this approach would require more emphasis on post-payment verification, which meant that some recipients could later be found to be ineligible and would need to repay benefits
To achieve a balance between getting money out quickly and ensuring the integrity of the programs, the CRA developed automated and manual pre-payment validation activities and controls to help ensure the benefits and subsidies were provided to eligible applicants in a timely manner.
The development of more screening and up-front validation measures would have delayed providing funds to millions of Canadians who found themselves in sudden need of financial support during an unprecedented crisis, possibly by months.
A comprehensive compliance program is ongoing to confirm the eligibility of claimants and that the amounts claimed were accurate.
The CRA also developed comprehensive web content, held regular information sessions with stakeholders and introduced tools including an online CEWS calculator to help businesses comply from the outset.
Automated pre-payment validation criteria were applied to 100% of CEWS applications to confirm eligibility and to identify claims of risk requiring additional review prior to payment.
Manual pre-payment verification was conducted on all claims where validation criteria identified potential concerns regarding eligibility at the application stage. This manual intervention included activities such as phone calls to verify that certain elements of the claim were correct.

What is the status of compliance activities for CEWS?

Key messages:

The CRA is working to verify compliance through a post-payment audit program, following the ending of the CEWS in October 2021.
Overall, CEWS compliance audits have largely found that most claimants have applied the rules correctly and have made every effort to comply.
Some claimants, while eligible, simply did not understand all of the rules and made honest mistakes when filing their applications. The most common adjustments relate to payroll issues, mathematical and calculation errors, as well as instances where the claimants failed to provide responses or information to the auditors. Likewise, the CRA has found that most applicants correctly applied and met the revenue drop requirements for the CEWS.
As of January 3, 2023, 1,924 audits have been completed and 2,193 audits remain underway. Additional audits will continue to be identified based on risk assessments and lessons learned to date. Therefore, the results of the CEWS post-payment audit activities will continue to change as the CRA’s compliance actions progress.

Why isn’t the CRA tougher with companies who maliciously applied for CEWS?

Key messages:

The CRA takes malicious intent and fraud very seriously and has tools at its disposal to pursue gross negligence penalties and criminal prosecution where warranted.
The CRA does not hesitate to pursue these sanctions when the evidence supports such action.
Although it is still early in our verification work, CEWS compliance audits have largely found that most claimants have applied the rules correctly and have made every effort to comply. Some claimants, while eligible, simply did not understand all of the rules and made honest mistakes when filing their applications.
The most common adjustments relate to payroll issues, mathematical and calculation errors, as well as instances where the claimants failed to provide responses or information to the auditors.
However, as is found in most compliance programs, the CRA has identified a small pocket of CEWS claimants that are suspected to have committed fraud and/or aggressive non-compliance, including preparers of ineligible claims.
The CRA is continuing to identify and pursue all preparers that appear to have prepared or counselled others to file ineligible CEWS and the CERS claims as well as their associated claimants.
As of January 3, 2023, the CRA has applied over $11 million in penalties as result of a CEWS audit and will continue to consider applying penalties in cases of fraud, or negligent, careless, or wilful misrepresentation.
CEWS post-payment audits remain underway and additional audits will continue to be identified based on risk assessments and lessons learned to date.

Why were companies that had such large tax debts allowed to receive CEWS benefits?

Key messages:

The intent of the CEWS was to provide payroll relief to companies that had experienced a significant and defined revenue drop.
The relief was provided so that companies could retain or re-hire employees. The relief should not be seen as a contribution to a company’s bottom line but rather as an employee retention and support program.
The nature of a business, its reputation or its financial health were not factors that were considered for eligibility, as the legislative framework did not allow for these considerations.
Eligibility criteria included having an open payroll account prior to March 15, 2020, having employed one or more individuals in Canada, and having experienced a qualifying reduction in revenue. Owing money to the CRA did not preclude an applicant from receiving the CEWS, if all other criteria have been met.

Some have claimed that certain companies used CEWS funding to hire ‘replacement workers’ in a strike situation (outside of the intended use of CEWS), will this issue be addressed in some way by the CRA?

Key messages:

The intent of the CEWS was to provide payroll support to companies that had experienced a significant and specifically defined revenue drop. This relief was provided to enable employers to retain or hire workers, help prevent further job loss, and ease businesses back to normal operations.
Employers were obligated to meet specific criteria to receive the subsidy, which included employing one or more individuals in Canada.
An eligible employee includes furloughed employees, rehired employees, as well as new hires.
An employer cannot claim the CEWS on amounts that have not yet been paid to employees. Therefore, the subsidy is based on salaries that have already been paid to employees by the employer.
The CRA administered the legislation as it was drafted. There is nothing in the legislation restricting eligible employers from using the CEWS payments to subsidize wages for newly hired eligible employees, including the scenario described.
A comprehensive compliance program is ongoing to confirm the eligibility of claimants and that the amounts claimed were accurate. However, as noted, newly hired employees were generally not excluded from eligibility for CEWS.

CERB (and individual benefit) focused

Pre-payment validations (Individual)

Key messages:

Over the course of three weeks, the CRA designed and delivered the system, processes, and infrastructure for individual benefits. This ensured emergency benefits payments could be issued quickly to Canadians, with ESDC developing the program policy and legislation simultaneously. CRA designed pre-payment validation controls that would allow Canadians to receive much needed funds within days.
The development of more screening and up-front validation measures would have delayed providing funds to millions of Canadians who found themselves in sudden need of financial support during an unprecedented crisis, possibly by months.
Additional pre-payment controls were put in place to mitigate the risk of delivering payments to ineligible applicants while also evolving the support programs by bringing new, more tailored benefits on-stream as the pandemic continued.
These pre-payment validations included pre-payment controls based on tax data, as it became available, where applicants who appeared unlikely to be eligible would be prompted to submit documents for manual review to prove they were eligible before payments could be issued. These manual pre-payment eligibility reviews related to the COVID-19 benefits for individuals have been ongoing since the summer of 2020.
Automated pre-payment validations at time of application allowed the CRA to distribute funds most efficiently, as an alternative approach based more heavily on manual review would have meant that some Canadians might experience a slower process for payments being issued. Given the benefits and subsidies were based on periods not yet filed for income tax purposes, efforts to obtain current data for purposes of pre-payment validation would have slowed down the release of the payments, reducing their overall impact.

Post-payment verifications (Individual)

Key messages:

The Compliance efforts related to the COVID-19 benefits for individuals have been ongoing since the summer of 2020.
Post-payment verifications related to the COVID-19 benefits for individuals have been ongoing since January 2022.
Individuals selected for post-payment review receive letters requesting supporting documentation for their benefits application. If upon manual review of their documentation they are not found eligible, they receive a decision letter informing them they were not eligible for the benefit payment(s) they received.
CRA communications with those whose eligibility needed to be verified, or who have been found ineligible, has been focused on providing information on how to make repayment arrangements. The CRA has made a concerted effort to demonstrate empathy, patience, and flexibility throughout its compliance efforts.
In an effort to minimize the financial burden on Canadians, the CRA had suspended or delayed some audit and debt collection actions.
Post-payment verification activities are undertaken on a risk-based approach to optimize recoveries and ensure that higher-risk situations are addressed with appropriate compliance actions, while adhering to principles of sound stewardship of public funds and cost-benefit analysis.
The CRA began issuing Notices of Redetermination (NoR) in May 2022. As of January 19, 2023, approximately 960k individuals have received a notice advising them of their need to make a repayment. Individual notices will continue to be sent as reviews and redeterminations are completed. While the bulk of these notices have been issued, these types of notices will continue to be issued as CRA’s validation and compliance work proceeds.
Since the CRA began issuing NoRs in May 2022, until the end of 2022, the CRA received close to $40 million in repayments. However, it is important to note that prior to the May 2022 issuance of NoRs (that is to say, prior to notification that a debt has been established), voluntary repayments totaling approximately $910 million were received by the CRA in respect of COVID-19 benefits for individuals.
- In other words, to date, in excess of $950M in payments have been received from individual COVID-19 benefit recipients who either determined on their own, or at the prompting of the CRA to return funds received.
As compliance efforts and reviews are ongoing, the precise magnitude and financial impact of the CRA's compliance efforts are not yet fully known.

What is the status of compliance activities for individual benefits?

Key messages:

The CRA’s compliance efforts related to the COVID-19 benefits for individuals have been ongoing since the summer of 2020.
To date, CRA communications with those whose eligibility needed to be verified, or who have been found ineligible, has been focussed on providing information on how people should manage repayments.
The CRA has made a concerted effort to demonstrate empathy, patience and flexibility in its compliance efforts thus far.
Post-payment verifications related to the COVID-19 benefits for individuals have been ongoing since January 2022 and will continue over the next couple of years. Individuals selected for post-payment review receive letters requesting supporting documentation for their benefits application.
If upon manual review of their documentation they are found ineligible, they receive a decision letter informing them they were not eligible for the benefit payment(s) they received.
Based on the timelines established in the legislation for the suite of Recovery Benefits and the CWLB for the reconsideration of an application, post-payment work is expected to be completed within the extended 72 month time limit. The legislation related to the CERB is silent on a timeline for reconsideration of application, and therefore a timeframe for compliance is not a concern.
Compliance correspondence for individual benefits, including notices for repayments, are nearing completion. Canadians are meeting their obligations by either making repayments in full or entering into repayment agreements.

Are Notices of Redetermination focused on ‘vulnerable populations’?

Key messages:

Asking Canadians to repay amounts, if they were deemed ineligible, is not an easy task, especially when dealing with vulnerable populations. However, it is essential.
We are taking necessary discretion in asking Canadians to repay. While we are practicing sound stewardship of public funds, we are also taking a compassionate and realistic approach to repayments.
We understand that there will be those who are not in a position to pay their debts and we will never put people into extreme financial hardship. That would defeat the overriding goal of the program.

How many Canadians do you anticipate will have their debt written off due to an inability to pay?

Key messages:

The CRA started sending out its Notices of Redetermination in May of 2022 and thousands more are still yet to be sent.
It is premature at this point to try to make a determination of how many people will be unable to make repayments.

Will the CRA implement a low-income repayment amnesty?

Key messages:

The CRA is performing collections activities within the parameters outlined in COVID-19 benefit legislation.
The CRA is unable to implement a low-income repayment amnesty as legislation does not allow for it.
The CRA recognises that Canadians may be in financial hardship. We are sensitive to Canadians who are experiencing financial difficulty and will work with them to make payment arrangements based on their ability to pay.
Individuals who require assistance in the form of a financial solution tailored to their specific financial circumstances should contact the CRA as early as possible.

As recommended by the OAG at PACP, will the CRA be ‘clear and transparent’ on how and when repayment forgiveness will be implemented for certain categories of ineligible recipients?

Key messages:

The CRA does not forgive or waive debts. Debt is managed according to the FAA and the Debt Write-Off Regulations, 1994.
The Government of Canada was clear and upfront in its communication that while there will not be any penalty for Canadians who received their benefits in error, individuals will have to repay the benefits for which they are not entitled.
The CRA recognizes that individuals face different and unique circumstances and is clear and transparent when negotiating payment arrangements with debtors.
Existing repayment flexibilities allows for compassionate treatment of low-income debtors. This flexibility balances the need to maintain program stewardship and management of government funds while ensuring that those vulnerable individuals found to be ineligible for COVID-19 benefits are not placed into financial hardship.

Why is CRA taking a risk-based approach in selecting files for review instead of verifying all cases identified as being at risk?

Key messages:

The Government of Canada entrusted the CRA to administer a total of 12 emergency benefit programs, injecting billions of dollars into, and effectively stabilizing, the Canadian economy.
The CRA takes this responsibility seriously. We understand that Canadians expect the CRA to ensure that the money provided through these benefits was distributed fairly and only to those that were eligible.
The CRA collects and analyzes income data for recipients of the COVID-19 income support benefits for individuals. It is used to plan compliance activities, and assess risk for verifications. The data is, however, only correct at the time it is gathered, and cannot be used to predict the financial situations of benefit recipients in the future.
With this in mind, when selecting individual benefit recipients for review, the decision was taken to use the risk-based approach, and select based on a balance of likelihood of eligibility and potential recovery amounts, and then address resulting debts and recoveries with compassion and flexibility. Debts are established for all individuals found to be ineligible.
Applicants whose eligibility to receive the individual benefits was questionable, based on CRA data holdings, were selected for review and prompted to submit documents to prove their eligibility before they were able to proceed with any future applications and receive any further benefit payments.
The CRA understands that, due to COVID-19, individuals may find it challenging or impossible to meet their financial obligations, and CRA agents are working with impacted individuals on a case-by-case basis. Provisions are available to help individuals during these difficult times, including flexible payment arrangements.

Why were applicants that resided outside of Canada / in prison / were deceased allowed to receive COVID-19 benefits without special verification?

Key messages:

Pre-payment controls helped to evaluate an applicant’s eligibility based on the information that was available to the CRA at the time of application.

Resided outside of Canada:

The majority of non-residents of Canada would not have a social insurance number and would not have been able to apply for the COVID-19 individual benefits.
A foreign address for mailing purposes is not an indication of whether or not an individual resides in Canada. For example, military personnel and those working abroad may be considered to reside in Canada.

In prison:

The CRA blocked any federally incarcerated individuals from applying at the time of launch – April 6, 2020.
The CRA is notified of federal incarcerations from Correctional Service Canada. Since this information is only provided on a periodic basis, timing can be a factor with respect to when the block is placed.
With respect to provincial incarceration, this segment of the population may have been eligible due to the various provincial programs which allow for weekend-only incarceration in order to allow for the continued participation in the workplace, and day programs for inmates. The CRA is not notified of these incarcerations. However, those individuals who had a mailing address located at a provincial institution were blocked on May 11, 2020, and would have to contact the CRA in order for their eligibility to be determined prior to a benefit payment being issued.

Deceased:

The accounts of deceased individuals were blocked for applications from program launch – April 6, 2020.
The CRA is notified of deaths either through a family member or executor proactively reaching out to the CRA or via a periodic data feed through Service Canada that originates from the provincial death registries. As a result, timing can be a factor with respect to when the block is placed.
It should be noted that estates of a deceased individual would be entitled to the benefit payment for those eligibility periods prior to the date of death.

Given the issues flagged in the OAG report, why is the CRA using the ‘attestation model’ for distributing the new dental and rental benefits?

Key messages:

The COVID benefits and the Canada Dental Benefit and one-time top-up to the Canada Housing Benefit cannot be compared.
Unlike the COVID benefits, both of the new benefit programs require that a current year tax return has been filed and many of the eligibility criteria are anchored in tax information that CRA would have in its possession.
As a result, the CRA is able to validate the vast majority of the eligibility criteria for an applicant before a payment is made. This was not the case with the COVID benefits given the program design in the legislation.
By anchoring these new benefits in the tax system, and existing program processes, the CRA is able to leverage current financial data and family data to reduce the risk of ineligible applications despite an attestation based application model being utilized.
Along with the decision to use some degree of attestation, lessons learned from CRA’s administration of numerous pandemic benefit programs were incorporated into the development and delivery of the two new benefits. A combination of up-front controls, post-payment validation activities, and clear communication on the eligibility criteria along with clear legislative-based consequences of non-compliance are expected to mitigate the risks and strengthen the integrity of the program.

Background:

The key aim of the interim Canada Dental Benefit is to address cost barriers families face in getting dental care for their children.
Upfront payments ensure that eligible families – most of whom can’t afford to pay first and be reimbursed later – can still get care for their children. Similarly, the goal of the one-time top-up to the Canada Housing Benefit is to get payments to low-income renters quickly to help with the cost of renting.
While upfront payments did require that an attestation-based model was chosen despite the inherent risk, the importance was placed on making the benefits available to Canadians in need, upfront without heavy administrative burden.
Embedding the dental benefit within existing CRA infrastructure, and requiring families to be in receipt of the Canada Child Benefit, ensured that most of the eligibility information was immediately available and could be drawn from existing CRA information – only those with a 2021 tax return on file with CRA, and for whom the Canada Child Benefit system confirms residency and presence and age of children can apply.
Each of these processes have specific and established verification steps to confirm eligibility. A similar approach was taken for the one-time top-up to the Canada Housing Benefit, embedding the eligibility information within existing benefit system infrastructure and applying the same types of up-front and post-payment validations and controls. This created a robust and comprehensive integrity regime.
Where information is not on file, attestation is used but with safeguards in place. For example, for dental, applicants must attest to not having private insurance and provide information about their employers. They must provide information about their dental care providers and appointments and keep receipts from out-of-pocket dental care expenses, which CRA can later verify through compliance activities. For housing, they must provide their rental addresses and landlord contact information and must keep proof of rent paid for the CRA to review.
In addition, as set out in the Dental Benefit Act and the Rental Housing Benefit Act, violations and criminal offenses in relation to benefits provided for under the Acts, such as false identity information, can lead to fines and possible imprisonment.

PACP Committee Information

PACP Member Profiles

Standing Committee on Public accounts (PACP)

Mandate

Pursuant to Standing Order 108(3)(g) of the House of Commons, the Standing Committee on Public Accounts has a mandate to, among other matters: review of and report on the Public Accounts of Canada and all reports of the Auditor General of Canada, which shall be severally deemed permanently referred to the Committee immediately after they are laid upon the table [...]

The Committee also has the general mandate given to all committees under Standing Order 108(2); that is, the power to study and report on all matters relating to the mandate, management and operation of the government department(s) that are assigned to them. In the case of the Committee, the department is the Office of the Auditor General of Canada.

Additionally, the Committee may enquire into any other matter that the House of Commons may refer to it.

The Public Accounts Committee is Parliament’s standing audit committee, and it reviews the work of the federal government’s external auditor, the Auditor General of Canada.

When the Speaker tables a report by the Auditor General in the House of Commons, it is automatically referred to the Public Accounts Committee. The Committee selects the chapters of the report it wants to study and calls the Auditor General and senior public servants from the audited organizations to appear before it to respond to the Office of the Auditor General’s findings. The Committee also reviews the federal government’s consolidated financial statements – the Public Accounts of Canada – and examines financial and/or accounting shortcomings raised by the Auditor General. At the conclusion of a study, the Committee may present a report to the House of Commons that includes recommendations to the government for improvements in administrative and financial practices and controls of federal departments and agencies.

Government policy, and the extent to which policy objectives are achieved, are generally not examined by the Public Accounts Committee. Instead, the Committee focuses on government administration – the economy and efficiency of program delivery as well as the adherence to government policies, directives and standards. The Committee seeks to hold the government to account for effective public administration and due regard for public funds.

Contents

Jean Yip (Vice-Chair)

Liberal – Scarborough—Agincourt (Ontario)

Biography

Jean Yip was born in Scarborough, and raised in Agincourt, and has deep roots in the community. Jean’s mother and father immigrated to Canada, and she grew up in Agincourt surrounded by their values of hard work, family, and compassion – values which she now instills in the three sons she raised with her late husband, Arnold Chan.

After completing her degree at the University of Toronto, Jean pursued a career in insurance and underwriting, becoming a team leader in her field. Jean holds the Fellow Chartered Insurance Professional Designation.

Prior to becoming an MP, Jean has focused on her community and her family, stepping up to serve Scarborough—Agincourt. She has taught Sunday school at her church for over 13 years, and has been involved with the STEM Fellowship Board of Directors which promotes computer literacy and programming capacity among youth.

In Parliament, Jean sits on the Standing Committee on Public Accounts and Special Committee on Canada-China Relations. She also serves as Co-Chair of the Liberal Seniors Caucus. Jean is also a member of the Liberal Party’s Caucuses on Immigration, and Mental Health as well as Women’s and Scarborough Caucuses where she brings attention to the issues facing the people of Scarborough—Agincourt. Jean is a member of the Canada-China Legislative Association, as well as the Canada-Armenia, Canada-Philippines Parliamentary Friendship Group, and the Commonwealth Parliamentary Association.

Since being elected, Jean has spoken in the House of Commons on many issues including student employment, pension security, National Daffodil Day, the Anniversary of Armenian Independence, and removing barriers to STEM.

Valerie Bradford

Liberal – Kitchener South—Hespeler (Ontario)

Biography

Valerie Bradford has spent the last 15 years supporting small businesses and bringing jobs and investments to Waterloo Region as an economic development professional for the City of Kitchener.

She is the former Chair of the Workforce Planning Board, serving in that role for eight years. With extensive knowledge of the local economy and experience with workforce development, Valerie is well-equipped to help the region recover from the hardships caused by the COVID-19 pandemic.

Raising her three children as a single mom, Valerie understands the challenges that families face, as they juggle responsibilities at home, finances, and careers. Valerie is passionate about universally affordable and accessible childcare, which will allow parents, particularly women, to fully participate in the workforce. Making ends meet was never easy, but growing up on a dairy farm near Dunnville, Ontario, she learned the value of hard work and responsibility at a young age.

Waterloo Region is a great place to live, work, and raise a family - we need to continue to make it better and accessible for all residents. Valerie's goal is to ensure that Canadians everywhere have access to safe and affordable housing that meets their needs.

Since moving to the region 17 years ago, Valerie has been a volunteer with multiple local organizations. She is dedicated to public service and is committed to being a strong voice for residents of Kitchener South-Hespeler as their Member of Parliament.

Han Dong

Liberal – Don Valley North (Ontario)

Biography

Raised and educated in Toronto, Han, his sister, and his parents immigrated to Canada from Shanghai in the early 1990's. Growing up working at his parent's 24-hour coffee shop, Han learned the value of hard work, family, and community which ultimately lead him to public service.

In 2019 Han was elected as the Member of Parliament for Don Valley North. He currently serves as the Co-Chair Canada-China Legislative Association, a member of the Standing Committee on Human Resources, Skills, and Social Development and the Status of Persons with Disabilities, and a member of the Standing Committee on Access to Information, Privacy, and Ethics.

Prior to being elected to the House of Commons in Ottawa, Han served as a Member Provincial Parliament (MPP) at Queen's Park from 2014-2018, standing up for public education, and consumers rights.

A passionate advocate for our Community, Han has continuously stood up for the residents of Don Valley North, advocating for safer communities, easing traffic congestion, action to combat climate change, and housing affordability.

Han has proven that he will never stop working hard to support the residents of our diverse, dynamic, and forward-looking community. Han and his wife Sophie, are the proud parents of Emma and Matthew, and their extra-large dog Seesea.

Peter Fragiskatos (Parl. Sec to MNR)

Liberal – London North Centre (Ontario)

Biography

Peter Fragiskatos was first elected as the Member of Parliament for London North Centre in 2015.

In this role, Mr. Fragiskatos previously served as a member of the National Security and Intelligence Committee of Parliamentarians, the Standing Committee on Finance, and the Special Committee on Canada-China Relations. He was also a member of various other committees, parliamentary associations, and interparliamentary groups.

In December 2021, Mr. Fragiskatos was appointed by the Prime Minister to serve as the Parliamentary Secretary to the Minister of National Revenue.

Prior to entering federal politics, Mr. Fragiskatos was a political scientist at King's University College at Western University and a media commentator. His works have been published by major Canadian and international news organizations, including Maclean's, The Globe and Mail, The Toronto Star, BBC News, and CNN.

Born in London, Ontario, Mr. Fragiskatos has combined his passion for politics with a desire to give back to his community. He has served on the boards of Anago (Non) Residential Resources Inc. and the Heritage London Foundation. An active volunteer, he ran a youth mentorship program and has worked with many local not-for-profit groups, such as the London Food Bank, the London Cross-Cultural Learner Centre, and Literacy London, a charity dedicated to helping adults improve their reading and writing skills.

Mr. Fragiskatos holds a Political Science degree from Western University, a master's degree in International Relations from Queen's University, and a PhD in International Relations from Cambridge University.

He lives in the riding of London North Centre with his wife, Katy, and his daughter, Ava.

Brenda Shanahan

Liberal – Châteauguay—Lacolle (Quebec)

Biography

Brenda holds an MBA, a Bachelor of Social Work and a Bachelor of History. During her career as a banker, social worker and financial educator, she provided counsel in financial management and developed financial literacy workshops and materials as well as being a commentator on financial issues for various media outlets.

A long-time resident of Châteauguay and mother of three adult children, Brenda has been involved in a number of organizations such as Amnesty International and the Canadian Federation of University Women.

Elected as the Member of Parliament for Châteauguay-Lacolle in 2015, Brenda served on the Special Joint Committee on Physician-Assisted Death, the Standing Committee on Public Accounts and the Standing Committee on Government Operations and Estimates. She was then appointed to the Committee of Parliamentarians on National Security and Intelligence. She was also Vice-Chair of the Quebec Liberal Caucus, Vice-Chair of the Liberal Women's Caucus and Co-Chair of the Multiparty Global Health Caucus.

John Williamson (Chair)

Conservative – New Brunswick Southwest (New Brunswick)

Biography

Member of Parliament John Williamson has over 25 years of experience in public policy research and conservative movement activism. He was re-elected to Parliament in 2021 after being returned in 2019, representing New Brunswick Southwest. He is chairman of the House of Commons Standing Committee on Public Accounts as well as chairman of the Atlantic Conservative parliamentary caucus.

John was also the MP for New Brunswick Southwest until 2015. Prior to his election to the House of Commons in 2011, he worked as Stephen Harper's Director of Communications in the Office of the Prime Minister.

During his time in Parliament, John served as a member of the House of Commons committee investigating all aspects of the Canada-China relationship. He also successfully led efforts to reform gold-plated pensions for Members of Parliament, introduced a Private Member's Bill to eliminate lifetime parliamentary pensions for federal politicians convicted of criminal malfeasance, and voted with Conservative colleagues to end the Liberal's wasteful and ineffective Long-Gun Registry.

In 2016, John launched Canadians for Affordable Energy to promote the benefits of energy affordability. He was National Director of the Canadian Taxpayers Federation (CTF) from January 2004 to September 2008, and CTF Ontario Director from September 2002 to December 2003. He has also worked for the Atlantic Institute for Market Studies, is a past Fellow with the Manning Centre for Building Democracy and Senior Fellow with the Fraser Institute.

Before entering politics, John campaigned on behalf of the CTF to lower income and gasoline taxes and expose wasteful government spending. He supported the Conservative Government's two-point GST cut, a one-third cut to Canada's business tax rate and its monthly child-care allowance paid to parents with young children.

His work has been featured in national publications such as the National Post, Maclean's magazine, Toronto's Globe & Mail, Toronto Sun, CBC News, Vancouver Sun, C2C and others.

John is a former National Post editorial writer (1998-2001) and founding member of the newspaper's editorial board.

He has a master's degree in economic history from the London School of Economics and earned a bachelor's degree from McGill University after graduating from Fredericton High School.

In 2012, John met the love of his life, Kelly. Kelly Williamson is a Captain in the Royal Canadian Navy who has served both at sea and ashore and also worked with the Canadian Army, Special Operations Forces Command, and Canada's Disaster Assistance Response Team. In 2019, Kelly was invested into the Order of Military Merit.

John & Kelly have a sweet baby girl: Charlotte Tessa Abbigail Williamson. She was born on July 2, 2020. They live in St. Andrews with the family's Cairn terrier Teddy. Teddy is from Harvey, New Brunswick.

Kelly McCauley

Conservative – Edmonton West (Alberta)

Biography

Kelly J. McCauley was elected Member of Parliament for Edmonton West in October 2015. He is currently serving his third term after two successful re-election campaigns in 2019 and 2021.

Mr. McCauley was born and raised in North Vancouver, graduating from the British Columbia Institute of Technology in 1982. Prior to entering politics, Mr. McCauley spent more than 30 years managing hotels and convention centres from Victoria to St. John's. During that time, he served on many volunteer boards including as Vice President of the Burnaby Board of Trade and Vice Chair of the Avalon Convention and Visitors Bureau.

As an advocate for seniors, Mr. McCauley is a past President of the Greater Victoria Eldercare Foundation, the largest seniors hospital foundation on Vancouver Island, for which he continues to serve as a special advisor. In recognition of his advocacy for veterans, Mr. McCauley was named an honourary member of the Vancouver Island Aircrew Association.

In Edmonton, Mr. McCauley has served on the Executive Committee of the Board of Northlands, the board of the Alberta Aviation Museum, was Chairperson of the EI Board of Referees for Edmonton and Northern Alberta, and was a founding co-chair of the Edmonton Destination Marketing Hotels.

Michael Kram

Conservative – Regina—Wascana (Saskatchewan)

Biography

Michael Kram is the Conservative Member of Parliament for Regina-Wascana, a position which he has held since the general election of October 21st, 2019.

Michael was born and raised in Regina, Saskatchewan. His parents are both retired teachers and his grandparents were farmers. He graduated from Dr. Martin LeBoldus High School in Regina.

Michael has a Bachelor of Science Degree majoring in Computer Science and a Bachelor of Arts Degree majoring in Economics. Both degrees are from the University of Regina. He also studied Economics at Carleton University in Ottawa.

Garnett Genuis

Conservative – Sherwood Park—Fort Saskatchewan (Alberta)

Biography

Garnett Genuis is the Member of Parliament for Sherwood Park-Fort Saskatchewan. First elected to Parliament in 2015, MP Genuis is a long-time resident of Strathcona County, where he currently resides with his wife Rebecca, a family doctor, and their five children.

During his time as a parliamentarian, Genuis has developed a reputation for being outspoken and principled. He has served in various roles in the Conservative Shadow Cabinet since 2019. He previously served as the Vice-Chair of the Special Committee on Canada-China Relations.

Genuis has been active on many high-profile domestic and international human rights issues. His interest in human rights was shaped by the experience of his grandmother, a Holocaust survivor. Genuis is also a passionate advocate for free speech, for increased efforts to combat violence against women, and for Canadian energy. He is the sponsor of Bill C-257, a bill to add "political belief and activity" to the Canadian Human Rights Act as prohibited grounds of discrimination, and Motion 57, a motion to promote bystander awareness and intervention training to combat violence.

Genuis holds degrees from Carleton University and the London School of Economics. He runs a weekly podcast called "Resuming Debate", and spends any spare time reading history books and playing strategy games with his children. The family also includes a Newfoundlander dog named Grace.

Nathalie Sinclair-Desgagné (Vice-Chair)

Bloc Québécois – Terrebonne (Québec)

Biography

Sinclair-Desgagné was educated at McGill University, where she graduated in economics. She has a Master's Degree from the University of Oxford.

Prior to being elected, she was a senior economic advisor to the general management of the City of Montreal. She has also worked for Deloitte and PwC.

Blake Desjarlais

New Democratic Party – Edmonton Griesbach (Alberta)

Biography

Blake Desjarlais (he/him) was born in ᐊᒥᐢᑲᐧᒋᕀᐋᐧᐢᑲᐦᐃᑲᐣ (Edmonton) and raised in the Fishing Lake Métis Settlement.

Blake made history in September 2021 when he was the first openly Two-Spirit person elected to the House of Commons. Blake is currently Alberta's only Indigenous Member of Parliament.

Prior to his election, Blake was the National Director of the Métis Settlements General Council.

Blake currently serves as the Caucus Vice Chair and Critic for Treasury Board, Diversity and Inclusion, Youth, Sport and Post-Secondary Education. Blake is the Deputy Critic for 2SLGBTQI+ Rights and Immigration, Refugees and Citizenship.

Blake is proud to call the Boyle Street neighbourhood in Edmonton Griesbach home.

Relevant PACP Meeting Recap

PACP Committee Hearing Recap (December 6, 2022)

Parliamentary Affairs monitored the House of Commons Public Accounts (PACP) Committee meeting held on December 6, 2022.
PACP met with the Office of the Auditor General to discuss the two OAG Reports released on December 6, 2022 – including Report 10, Specific COVID-19 Benefits. The OAG’s opening statement was a shorten summary of the ‘Auditor General of Canada’s Opening Statement to the news conference’ delivered earlier on December 6, 2022.
During the question and answer portion of the meeting, the OAG’s Report 10, Specific COVID-19 Benefits and CRA were the main focus. Exchanges of note, included:
- CPC PACP Member Kelly McCauley expressed his shock with the Minister of National Revenue’s “attack on the integrity and independence of the OAG”, quoting the Minister’s statement in Question Period today that the OAG “figures were exaggerated. It's not her fault because we all know she was pressed by the opposition”, and asked the OAG to respond to this statement; the OAG said she stands by the findings of her report and that she was confident in the numbers put forward (stressing the “at least $27.4B” in the Report 10 reference was taken specifically to recognize an approach favourable to individuals and businesses). She also added the OAG’s work was in fact based on the limited information available at the CRA itself, adding the CRA collected “very little” information on applications for the COVID-19 benefit. Nevertheless, she was confident that the best information available was used to come to the best conclusions. The OAG also pointed to CRA’s early post-payment verifications for CEWS, 42% of which resulted in adjustments in Phase 1 and 62% of which resulted in adjustments for Phase 2, which she declared showed that a ‘much more rigorous approach to post-payment verifications was needed.’
  - CPC PACP Member Kelly McCauley asked if the OAG had been “pressured by the opposition” to alter Report 10 as claimed by the Minister of National Revenue; the OAG noted the requirement for Report 10 was the result of legislation passed by Parliament in 2021 that outlined the scope of the report and deadline. The OAG noted it had sufficient resources, time and cooperation from implicated departments. The OAG again underlined she stood by the findings of Report 10.
  - CPC PACP Member Kelly McCauley wondered if the “at least” $27.4B figure used in the report was a ‘best case scenario’ and if it could be higher figure; the OAG explained that the “27.4B” figure of identify ineligible payments was limited to the potentially ineligible amounts the OAG itself could identify. The OAG added it could not provide a complete estimate as there was missing information and believed the CRA had more work to do to further identify ineligible payments.
  - CPC PACP Member Kelly McCauley mentioned that the CRA required limited information on the CEWS application, and inquired how this would impact CRA’s ability to conduct post-payment verification work and potentially recoup ineligible payments; the OAG said that the CEWS application did not collect information needed (like SIN numbers of employees) to determine if the employee-employer relationship was maintained after CEWS payments (as well as allowing CRA to flag potential ineligible issues with employees collecting CERB and the employer collecting CEWS). The OAG added that limiting pre-payment controls in CEWS, while such followed international best practicex in emergency situations was accepted, was not trailed by a proper post-payment verification approach – stating that she was “concerned that their was not a more rigorous and comprehensive approach planned.”
- LIB PACP Member Peter Fragiskatos disagreed with how CPC PACP Member Kelly McCauley’s had interpreted the comments of Minister of National Revenue in Question Period, claiming she did not question the independence of the OAG. LIB PACP Member Peter Fragiskatos then asked the OAG to comment on the economic impact of COVID-19 benefits and their timely delivery; the OAG agreed that the COVID-19 benefits met their objectives of supporting and protecting the Canadian economy.
  - LIB PACP Member Peter Fragiskatos wanted to know if the ‘attestation approach’ was essential to ensure timely delivery for the COVID-19 benefits to support the economy; the OAG agreed the limited ‘pre-payment controls’ increased the speed of payments, but underlined this was ‘an unusual approach that should only be used in unusual times’ – and comes ‘hand-in-hand’ with the need for rigorous post-payment verification.
- NDP PACP Member Blake Desjarlais claimed that loopholes in the CEWS program meant it was used to ‘break unions and lock-out workers’, pointing to issues with a local company in Edmonton as an example. He noted that some companies used CEWS funding to hire ‘replacement workers’ in a strike situation – and that this issue needs to be addressed in some way. NDP PACP Member Blake Desjarlais wondered if the OAG knew of the $15.1B in potentially ineligible CEWS claims would fall into such a category; the OAG repeated that due to the ‘very little information’ gathered in the CEWS application it was extremely difficult to determine if the employee-employer relationship was maintained – and this further points to the need for detailed post-payment verification work to ensure CEWS was used as intended.
  - NDP PACP Member Blake Desjarlais, comment with respect to recovery efforts, asked how the Government could potentially treat and distinguish those individuals or businesses still struggling to recover from the economic impact of COVID-19; the OAG stated the CRA would need to first identify where ineligible payments were made and then make decisions about collection – and then be ‘clear and transparent’ if forgiveness would be an option for some.
- BLOC PACP Member Luc Desilets also asked for the OAG’s reaction to the Minister of National Revenue’s comments in Question Period; the OAG again repeated that she had confidence in Report 10’s and its findings – adding that no individual influenced it and the OAG would not have released a report unless it was satisfied with its findings. BLOC PACP Member Luc Desilets expressed concern with the comments made by the Minister of National Revenue and stated he did not understand the motivation, and stressed the attack by the Minister on the OAG was “not acceptable or respectable” and the Bloc would follow-up on the matter.
  - BLOC PACP Member Luc Desilets asked how much of the ineligible payments could be realistically recovered; the OAG said the CRA needs to improve its post-payment verification plans and be more efficient to meet the deadline to attempt to recoup such ineligible payments.
  - BLOC PACP Member Luc Desilets asked about those that received COVID-19 benefits that resided outside of Canada; the OAG flagged that those with non-Canadian addresses should be reviewed by CRA to ensure they were actually eligible.
- CPC PACP Member Garnett Genuis noted an area of disagreement between the CRA and the OAG on the post-payment verification in terms of the amount of review needed. He argued that the CRA is trying to suggest that a detailed review is not needed as only low-income or vulnerable Canadians would be impacted; however, Report 10 findings show that the CRA does not even know who those ineligible recipients were and if they actually fall into that low-income or vulnerable category; the OAG noted the CRA disagreed on the need to follow-up on the high-risk ineligible payments, but added that if CRA is to make a determination on what groups will not be targeted for recovery of payments that the CRA would have to first identify them and then consider collection options.
  - CPC PACP Member Garnett Genuis was critical of the CRA for not even bothering to do work to identify those with ineligible payments (before decided if recovery was necessary or appropriate) – labelling it ‘more like laziness than compassion’, as it avoids the necessary and required follow-up work; the OAG agreed, highlighting the Government needs to be clear and transparent, especially on recovery efforts.
- LIB PACP Member Brenda Shanahan asked if pre-payment controls were placed at the beginning of the COVID-19 benefits how that would have impacted delivery; the OAG declined to comment on the issue at length, but again stressed that the lack of pre-payment controls meant that rigorous post-payment verification was needed.
  - LIB PACP Member Brenda Shanahan probed the OAG’s recommendation to ‘examine’ every single COVID-19 payment should be examined; the OAG clarified that she had only recommended those ineligible payments with high-risk indicators should be reviewed. The OAG was also critical of the CRA for using at the moment the ‘same, typical level of post-payment verification’ for the COVID-19 benefits, even though there were extremely limited pre-payment controls for them.
- NDP PACP Member Blake Desjarlais again complained about the use of CEWS by select companies to hire replacement workers during a labour strike, and argued that accountability was needed through a post-payment verification to address such; the OAG again noted that the CRA’s current plans for post-payment verification are ‘not sufficient and not rigorous enough to compensate for the lack of pre-payment controls at the onset’.
- LIB PACP Member Han Dong asked if the OAG had flagged issues with the lack of pre-payment controls at any point previous to Report 10 and made recommendations related to such; the OAG referenced comments she made in May 2020 flagging the issue and also pointed to the OAG’s 2021 Reports on CERB and CEWS that made specific recommendations on the issue – adding that the CRA had made specific commitments in response to those audits for post-payment plans, but “we are just not seeing (that work from them) that right now.”
  - LIB PACP Member Han Dong asked how the ‘high-indicators’ were determined; the OAG explained that it used two years of tax return data from CRA and applied the program criteria against that to determine such.
- Near the planned end of the meeting, CPC PACP Member Garnett Genuis moved a motion that stated “the Committee report to the House that it calls on the Government to fully accept the recommendations in Report 10” – stating the motion would recognize the work of the OAG, while ensuring the follow-up work would be done and then determine if collection efforts are needed.
  - This led to an extended debate, with LIB PACP Members Han Dong and Peter Fragiskatos both arguing the motion was premature and that PACP should wait to hear from CRA first before passing such a motion. NDP PACP Member Blake Desjarlais, while expressing sympathy with the intend of the motion, also agreed that CRA and ESDC should first appear at PACP before such a motion be voted on – suggesting that this motion be deferred to the end of such a meeting with CRA and ESDC witnesses. CPC PACP Member Garnett Genuis offered to adjourn debate on the motion until ESDC and CRA appeared before PACP and then debate/vote on the motion after such a meeting – the Committee agreed to that compromise.
- CPC PACP Member Kelly McCauley then moved a new motion as follows: “PACP rejects statement made by the Minister of National Revenue on December 6, 2022 as undermining the OAG and that PACP reaffirm its support for the OAG, and its independence and integrity.”
  - This also led to an extended debate, with Liberal PACP Members rejecting the characterization of the Minister’s comments as CPC PACP Members again condemned the attack on the OAG by the Minister. BLOC PACP Member Nathalie Sinclair-Desgagné and NDP PACP Member Blake Desjarlais both though took issue with the Minister’s comments though – noting that the Minister had challenged the independence of the OAG and that PACP must defend the OAG.

PACP Committee Hearing Recap (December 9, 2022)

Parliamentary Affairs monitored the House of Commons Public Accounts (PACP) Committee meeting held on December 9, 2022.
- Note: The meeting was a continuation of the December 6, 2022 meeting that had been suspended as an extended debate on a motion regarding CRA was ongoing.
PACP met to continue debate on CPC PACP Member Kelly McCauley motion as follows: “PACP rejects statement made by the Minister of National Revenue on December 6, 2022 as undermining the OAG and that PACP reaffirm its support for the OAG, and its independence and integrity.”
- LIB PACP Member Peter Fragiskatos started the meeting by amending the motion from CPC PACP Member Kelly McCauley, as such: “That the Committee report to the House that it rejects statements made by the Minister of National Revenue in the House of Commons on December 6, 2022 regarding the independence of the Auditor General and the Committee affirms its support for the Auditor General and the independence of the office and that the Committee shall also report to the House that attacks made by the leader of the Official Opposition against the Auditor General in the context of the Government’s COVID-19 benefit programs are also unacceptable, the Committee also request a Government Response pursuant to Standing Order 109.”
- NDP PACP Member Blake Desjarlais suggested that the original motion be amended to be limited to only the portion about “the Committee affirms its support for the Auditor General and the independence of the office”
- CPC PACP Member Garnett Genuis took issue with the inclusion of other issues in the revised motion from LIB PACP Member Peter Fragiskatos, claiming the comments from the Minister of National Revenue “explicitly suggested that the OAG was making decision based on the official opposition” and that was a “outrageous claim” that merits response from PACP as it challenged the independence of the OAG. Nevertheless, CPC PACP Member Garnett Genuis welcomed NDP PACP Member Blake Desjarlais limited motion as a workable, compromise solution.
- NDP PACP Member Blake Desjarlais suggested the new wording of the motion as follows: “That the Committee report to the House that the Committee affirms its support for the Auditor General and the independence and integrity of the office, and that the Committee also request a Government Response pursuant to Standing Order 109.” The revised motion by NDP PACP Member Blake Desjarlais was adopted by the Committee by unanimous consent.

Relevant PACP Meeting Transcript

Evidence of the Standing Committee on Public Accounts - Evidence No.43 - 44-1

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Standing Committee on Public Accounts (PACP) - February 2, 2023

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Standing Committee on Public Accounts (PACP) - February 2, 2023

On this page

Notice of meeting

Witnesses

Opening Remarks

Opening remarks for Bob Hamilton, Commissioner of Revenue, Canada Revenue Agency

House of Commons’ Standing Committee on Public Accounts Reports of the Office of the Auditor General of Canada Report 10 — Specific COVID-19 Benefits Canada Emergency Wage Subsidy (CEWS)

Supporting Documentation

OAG December 2022 Report – Report 10

OAG Opening Statement to the News Conference (December 6, 2022)

CRA Progress Report – PACP Report 7, CEWS (December 2, 2022)

Overview: Impact on CRA (from AERB)

2022 December Reports of the Auditor General of Canada Report 10 – Audit of Specific COVID-19 Benefits

Impact on the Canada Revenue Agency

Audit objective

Audit scope

Highlights

Positive observations about the Canada Revenue Agency

Negative observations about the Canada Revenue Agency

OAG recommendations and Agency response

Action Plan (for PACP)

Issue Notes

Overall

Why has the CRA only partially agreed with one of the OAG’s recommendations?

Does the CRA take issue with any figures/numbers/projections the OAG included in their report?

Does the CRA recognize the independence and integrity of the OAG when preparing its reports, including Report 10?

The OAG identified $4.6 billion in overpayments to ineligible individuals and at least another $27 billion that needs to be investigated. How much of this $32 billion can the CRA expect to recover?

Does CRA have a comprehensive compliance plan? What are the elements of this plan?

How much has the CRA spent already and how much more will the CRA spend on post-payment verification activities?

Key Messages - Attestation-based applications

Why were COVID-19 benefits attestation-based?

Eligibility

Timeliness of recoveries

Will the CRA have adequate time, from a statutory perspective, to collect all outstanding debts before they become uncollectable?

Key Messages - Identity Theft/Fraud

How is the CRA dealing with fraud and/or identity theft related to COVID-19 benefits?

Why were post-payment controls emphasized more than pre-payment controls?

If more rigorous pre-payment controls had been put in place, how would have that impacted the delivery and the timing of COVID-19 benefit payments?

Should the CRA have taken more time to develop the COVID-19 benefits?

Is the CRA going after those easier where it is easier to collect money?

CEWS focused

Pre-payment validations (Business)

Post-payment verifications (Business)

What pre-payment controls were in place for CEWS to ensure only eligible employers received the subsidy?

What is the status of compliance activities for CEWS?

Why isn’t the CRA tougher with companies who maliciously applied for CEWS?

Why were companies that had such large tax debts allowed to receive CEWS benefits?

Some have claimed that certain companies used CEWS funding to hire ‘replacement workers’ in a strike situation (outside of the intended use of CEWS), will this issue be addressed in some way by the CRA?

CERB (and individual benefit) focused

Pre-payment validations (Individual)

Post-payment verifications (Individual)

What is the status of compliance activities for individual benefits?

Are Notices of Redetermination focused on ‘vulnerable populations’?

How many Canadians do you anticipate will have their debt written off due to an inability to pay?

Will the CRA implement a low-income repayment amnesty?

As recommended by the OAG at PACP, will the CRA be ‘clear and transparent’ on how and when repayment forgiveness will be implemented for certain categories of ineligible recipients?

Why is CRA taking a risk-based approach in selecting files for review instead of verifying all cases identified as being at risk?

Why were applicants that resided outside of Canada / in prison / were deceased allowed to receive COVID-19 benefits without special verification?

Given the issues flagged in the OAG report, why is the CRA using the ‘attestation model’ for distributing the new dental and rental benefits?

PACP Committee Information

PACP Member Profiles

Mandate

Jean Yip (Vice-Chair)

Biography

Valerie Bradford

Biography

Han Dong

Biography

Peter Fragiskatos (Parl. Sec to MNR)

Biography

Brenda Shanahan

Biography

John Williamson (Chair)

Biography

Kelly McCauley

House of Commons’ Standing Committee on Public Accounts
Reports of the Office of the Auditor General of Canada
Report 10 — Specific COVID-19 Benefits
Canada Emergency Wage Subsidy (CEWS)

2022 December Reports of the Auditor General of Canada
Report 10 – Audit of Specific COVID-19 Benefits