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CERB Overpayments and Penalties: What We Know So Far

CERB Overpayment and Penalties, Grant Thornton Limited

The Canada Emergency Response Benefit (CERB) has been helpful to those who have lost their jobs or a portion of their income due to COVID-19. However, when it was first announced, it came fast and furiously with little details around qualifications. Because of this, many people who applied for the benefit may have wrongly been given money or have been notified of a CERB overpayment. While there still isn’t a lot of information surrounding how CERB overpayments will be collected, we’ve written an FAQ to help offer some guidance.

Q: I’ve received a CERB overpayment, what does this mean?

A: If you’ve received notice of a CERB overpayment, this means there was a mistake regarding your CERB payment, and you now must return or repay the money the federal government overpaid to you. This most likely occurred because you did not meet the eligibility requirements for the 4-week period in question, i.e.:

  • You applied for CERB but realized you were not eligible after the fact;
  •  You earned more from your employment than you initially anticipated; or
  •  You received two CERB payments, one from CRA and one from Service Canada.

Q: What are the potential implications of having a CERB overpayment?

A: Just like any other lender, the government will want back the money that is owed to them. If you have not spent the money or can afford to pay back your CERB overpayment, it is highly recommended to do so. Not only will it clear up the mishap, it will also help to avoid any potential legal action that may arise from the overpayment.

If you cannot pay what is owed, the federal government does have special privileges compared to a regular creditor and you are at risk of having any other government benefits withheld from you such as Employment Insurance, HST/GST cheques and further CERB payments.

Q: Are there any legal risks such as fines or charges that may be a result of a CERB overpayment?

A: There may be a risk of legal penalties if the CERB overpayment is found to be the result of fraud. The federal government has introduced Bill C-17, which if passed, could result in penalties such as fines or jail time if someone is found guilty of fraud. Applicants may be subject to a penalty if they:

  • Provided false or misleading information;
  • Knowingly failed to declare some or all their income;
  • Made a representation that they knew was false or misleading;
  • Made an application or declaration that they knew was false or misleading; or
  • Knowingly received an income support payment that they were not eligible to receive.

While Bill C-17 has not been passed, if you feel like you may have provided false or misleading information when applying for the CERB or were mistakenly given a payment, we recommend discussing your situation with a lawyer or contact a member of our team to discuss your financial situation.

Q: I’ve received notice of a CERB overpayment but cannot afford to pay it. Can bankruptcy or a consumer proposal help me with this debt?

A: Whether a CERB overpayment can be included in a bankruptcy or consumer proposal has yet to be decided. If Bill C-17 is passed and the federal government classifies overpayments as fraud, they cannot be included in a proposal or bankruptcy proceeding just like any other fine or court sanctioned payment. If CERB overpayments are not classified as fraud and are classified similarly to CRA income tax debt, they may be able to be included in an insolvency proceeding.

If you are considering a bankruptcy or consumer proposal as a means to pay back your CERB overpayment, you may still want to reach out to our team for advice regardless. One of our debt solution professionals can assist you in managing your monthly budget and provide further guidance on how to navigate your debt and other financial commitments. Even if we can’t discharge a CERB overpayment, we may be able to help with your other debts, and as a result put you in a better position to pay what is owed to the federal government.

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