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No CERB Clawback for Self-Employed Canadians

On Wednesday January 27th I tabled petition e-3066 and participated in a debate during adjournment proceedings. Both of these were in support of self-employed Canadians who were told by the Canada Revenue Agency that they may have to pay back CERB payments they received last year.

This is an issue I have been speaking out about since the beginning of December, when the CRA sent out 440,000 "educational" letters to Canadians. Self-employed people from Nanaimo-Ladysmith and elsewhere began contacting my office right away. They are experiencing a lot of stress over this issue. With so much hardship and uncertainty, no one needs more stress in their lives right now! The government has acknowledged that errors were made regarding CERB eligibility for self-employed Canadians. I've been calling on the government to own their mistake, and to stop attempts to clawback CERB payments from self-employed Canadians who applied in good faith. Watch my videos from yesterday to learn more about this problem and why I am calling for this action.


Mr. Speaker, it is a privilege to table e-petition 3066 which has been signed by 7312 Canadians.

The petitioners are concerned that 441,000 Canadians received letters stating they may have to pay back the CERB due to ineligibility.

They note that the government has admitted that it was not clear about CERB eligibility for self-employed workers, that CRA agents provided incorrect information and even government MP’s did not know the rules.

Many self-employed Canadians will have great difficulty repaying this emergency benefit that they applied for in good faith.

The petitioners are calling upon the Government of Canada to retroactively allow self-employed Canadians to use their gross pre-tax income before business expenses when determining their CERB eligibility.


Thank you Madam Speaker

When COVID 19 forced an economic lockdown in March, this parliament took a Team Canada approach to ensure that Canadians received the financial support they needed. The government introduced the Canada Emergency Response Benefit or CERB in a hurry and it passed with unanimous consent from all MP’s and all parties.

Speed was necessary under the circumstances, but it created a situation where eligibility requirements were unclear. This was particularly true for individuals who are self-employed.

In December, the Canada Revenue Agency sent out more than 441,000 letters, advising some CERB recipients that they may not be eligible for the benefit and may have to pay back up to $14,000. Many of the people who received the letters are low-income self-employed Canadians.

On the CERB application, the government did not specify whether eligibility would be based on gross or net self-employment income. The CERB Act did not define self-employed income, and did not mention expenses or deductions. The government website states multiple times that ‘income of at least $5,000 may be from employment and/or self-employment’ for CERB eligibility. There is no mention of gross or net income.

Immediately after the CERB Act was passed, the Finance Minister stated in both press conferences and in testimony before the Senate that CERB eligibility would be based on “earned revenue.” ”Revenue” in business terms means income before expenses or “gross income”.

It wasn’t until late April, weeks after people started applying for the CERB, that the CRA quietly added a clarifying statement that eligible self employment earnings were quote “net pre-tax income - gross income less expenses”. This clarification is buried in one of the frequently asked questions on the government website near the bottom of the page.

There have been many reported examples of CRA agents providing incorrect information about whether eligibility was based on gross or net self-employment income. The union representing CRA workers stated that agents were not given clear directions. Even MPs from the governing party provided incorrect information to their constituents. Clearly the confusion was widespread.

The government has acknowledged that both CERB eligibility guidelines and government advice failed to clearly specify that income for people who are self-employed meant net income after deductions.

Home-based businesses can write off a portion of house expenses such as rent and utilities against their business income. This helps people make ends meet. But these home based businesses were not eligible for the Canada Emergency Rent Subsidy.

People who are self-employed or own small businesses will often incur additional expenses in one year vs another for capital improvements, to expand a product line or to start a new business. I have heard from a number of people who were in this situation.

During this pandemic many large corporations used wage subsidy programs to pay employees, at the same time they increased shareholders dividends, CEO bonuses and their wealthy owners raked in billions. This should not have been allowed.

If the government needs to recoup emergency benefits it should be going after the wealthy who took advantage of these programs, not after self employed Canadians.

The government made a serious error and it needs to own that mistake. Self-employed Canadians applied for CERB in good faith and should not be penalized. The government needs to retroactively allow self-employed Canadians to use their gross pre-tax income before business expenses when determining their CERB eligibility.


Madam Speaker

I would like to thank the parliamentary secretary for his response. The government needs to take responsibility for their error.

I have heard from self employed single mothers and people with disabilities who have home based businesses that received these CRA letters.

The self-employed people who received the CERB used that money to pay their rent, their bills, and to put food on the table for their families. The money is spent, and it is not fair to ask people who did their due diligence and applied for the CERB in good faith to pay back the money. Many self-employed Canadians will never be able to repay these large debts to the CRA, no matter how flexible the terms.

This request for repayment is unacceptable. The government made a serious error and it needs to own their mistake. Self-employed Canadians need a break during this pandemic.

If the government needs to recoup benefits that were abused they should be going after wealthy Canadians and corporations who lined their pockets with government relief funds.

Thank you.

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