Issue

The Canada Revenue Agency (CRA) is striving to maintain a balance between making the COVID-19 emergency and recovery benefits and subsidies accessible to those who urgently need them while providing safeguards to protect Canadians' identities, the integrity of the programs and to prevent high-risk and/or fraudulent applications.

Things to consider

• In implementing the initial emergency benefits and subsidies, the government's priority was to provide payments quickly to individuals and businesses in need. Given the urgent nature of the benefits, the application process was based on an attestation from the applicant that they met all eligibility criteria. As a result, most compliance activities occur after benefits and subsidies are paid (i.e., post-payment).
• Individuals and businesses confirmed that they met the eligibility criteria and acknowledged that the CRA could verify the information provided either at the time of application, or at a later date. The application indicated that if applicants were found to be ineligible at a later date, they would be required to repay the benefits or subsidies.
• In order to ensure that applicants receive only the benefits or subsidies for which they are eligible, the application system was designed to include a number of automated safeguards to identify and prevent high risk or potentially suspicious applications from being made (e.g., preventing Employment Insurance recipients to apply for the recovery benefits). The automated safeguards determine if an application can be submitted (i.e., that all eligibility criteria is met) or gets rejected for further manual review after submission but before payment (e.g., verifying payroll information for subsidies applications).
• The automated safeguards and manual reviews embedded within the application processes help to reduce the need for extensive review activities after the benefit or subsidy has been paid (i.e., post-payment validation activity).
• Post-payment validation activities are conducted once applications are closed, to further examine the validity of claims. The claims subject to post-payment validations are selected using a risk-based approach based on existing information on recipients, and the use of sophisticated business intelligence tools.
• In delivering the programs, the CRA has identified and notified non-compliant businesses and individuals. To date, individuals have not been asked to repay any overpayments. Some businesses have been asked to repay as verifications were completed on their claim(s).
• As per legislation, the CRA implemented the Canada Emergency Wage Subsidy (CEWS) Registry, a web page which provides a list of businesses and registered charities that have applied for and received (or will soon receive) the CEWS.

Next steps

• Validation procedures and safeguards continue to be adjusted on an evergreen basis in order to combat new and evolving risks.
• The CRA continues to work with law enforcement to address cases of suspected organized fraud.
• A risk-based approach is being used to focus validation efforts on cases with the highest risk of non-compliance or ineligibility, including misrepresentation and fraud.
• Post-payment validation activities for individuals are currently planned to commence in the fall of 2021. The first phase will consist of notifying recipients, already informed of their ineligibility, of the amount that they have to repay.
• For businesses, audits were initiated in August 2020 for the CEWS. Initial Canada Emergency Rent Subsidy (CERS) audits were initiated in the summer of 2021 and are expected to continue into fall 2022.
• The CRA will use an empathetic, people-first approach to support all individuals and businesses facing issues with repayment. Payment arrangement parameters have been expanded to provide more flexibility based on their ability to pay.

Key messages

• Since the beginning of the COVID-19 pandemic, the CRA has designed and rolled out in record time 9 emergency response benefits and subsidies programs and provided two additional benefits payments, which have delivered urgently needed income support to millions of individuals and businesses.
• The eligibility criteria for COVID-19 benefits and subsidies were designed in the legislation enacted by Parliament to be as inclusive as possible so that workers who needed support could receive it.
• Those who received benefit or subsidy payments, and are later determined to have been ineligible, will be required to repay those amounts.
• The CRA is empathetic to the fact that for some individuals repayment of these amounts may have financial implications. For this reason, payment arrangement parameters have been expanded to give Canadians more time and flexibility to repay based on their ability to pay.

Background

In response to the COVID-19 pandemic, emergency and recovery benefits were introduced for individuals, and subsidies were introduced for businesses.

Additional benefits and subsidies were released to the public after the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit ended. These benefits consist of the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB), collectively referred to as the Recovery Benefits. The Recovery Benefits had more rigorous up-front controls incorporated, compared to CERB.

The following subsidies provide support to businesses and help stimulate the economy: the Temporary Wage Subsidy (TWS); the CEWS; the CERS and the Canada Recovery Hiring Program (CRHP). The CRA built on lessons learned from the implementation of the CEWS to improve the program delivery of the CERS and the CRHP.

The CRA also provided a supplemental payment of the GST/HST quarterly tax credit on April 9, 2020, providing low income individuals and families a total of $5.4 billion, and a one-time increase to the Canada Child Benefit payment on May 20, 2020, providing families with children a total of $2 billion.