Future Issues May Arise from Simplified CERB Application Process

Beth Graddon

It’s money that Canadians needed quickly and the government must be commended for their processing over 4 million CERB applications to date, and close to 2 million this week alone. But are Canadians setting themselves up for a significant audit process in the future?  These funds are taxable, and there are additional audit risks that should be a hot topic of discussion for advisors and their clients.

Canadians are already reporting a number of experiences in the application process that indicate this could be a big complication down the line. And, there is little guidance from the government about what happens next if money has been received when it shouldn’t have been. Here are some of the issues being reported:

Ability to submit duplicate applications in both the EI and CERB portals. Those that applied for EI through Service Canada since March 15 should have had their application transferred directly to the CERB program (no additional application required). However, some Canadians are reporting being allowed to apply directly through the CRA’s CERB portal anyway, which has led to duplicate applications and payments received.

Since the government opened two web portals (Service Canada EI portal, and CRA’s CERB portal) and has instructed Canadians on which one to use based on their work situation, there’s additional opportunity to submit duplicate claims. It does not appear that there are processes in place to check for duplicate claims prior to issuing the payments. The automated phone system may lead to the same result. These duplicate payment recipients will have to pay the money back.

Receipt of payment from both CERB and EI programs in overlapping time periods. Some people who applied for EI since March 15 that were then transferred to the CERB program are reporting the receipt of duplicate payments that include a $2,000 deposit and plus an additional sum (of varying amounts).

Anyone who applied for EI from March 15 onward (per government guidelines) should have been automatically transferred to the CERB program making them eligible to receive only the $2,000 CERB payment for the March 15 to April 11 period. This may indicate that they’re receiving money out of both programs in an overlapping time period, which is not allowed under either program and it again could lead to repayment requirements.

Applications submitted for the wrong time period. Under current CERB criteria, Canadians must be out of income (or expect to be) for 14-consecutive days in the CURRENT period: March 15 to April 11 to be eligible to receive this week’s $2,000 payments. People recently laid off who should only be eligible to apply after April 12 have reported that they applied early and received payment this week.

Lack of access to the standard EI program, for those laid off prior to March 15. People laid off before March 15, who should not qualify for the CERB are struggling to apply to the standard EI program due to the overload at Service Canada and are considering applying for this instead to get the financial support they need. Although it appears likely they’ll receive it, being ineligible due to date criteria for the CERB could also lead to repayment requirements for those who are forced to go outside of the system.

The issues that Canadians are experiencing makes it evident that the government isn’t doing any kind of verification that people applying for the CERB meet the eligibility criteria. It’s a fast way to get money in the hands of those who need it, but those making claims incorrectly (unintentionally or on purpose) or receiving additional sums due to government processing errors better not spend all the money in one place. 

Knowledge Bureau Report will keep you posted as more details are revealed from the government on how audits are going to be conducted, and how funds can be repaid. In the meantime, it’s important that tax and financial advisors educate and guide clients through this process correctly to avoid future repercussions that currently remain unclear.

Additional educational resources: get all the technical details of the COVID-19 Canada Emergency Response provisions by enrolling in the Virtual CE Summits. It’s a sought-after educational event from Knowledge Bureau in a new format: a professional online course plus interactive live virtual meeting. The online learning release will be available April 22 on the Virtual Campus, and the interactive Zoom event will take place on May 22.

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