'Blown away': CRA tells Ontario man he's on the hook for over $38K in CERB payments

An Ontario man says he is "blown away" that he has to pay back the $38,600 he received in Canada Emergency Response Benefits, years after the Canada Revenue Agency approved him for it.

"I don't understand why they are clawing it back, I really don't," said Terrance Bailey of Etobicoke.

Bailey said he worked as an auto consultant when the pandemic happened, which virtually shut down car dealerships nationwide. That's when he decided to apply for CERB.

• Download our app to get local alerts on your device
• Get the latest local updates right to your inbox

"I thought, 'I'm going to apply for it.' Why not? I've paid my taxes over the years and I thought if it's available to me, I will take it," said Bailey.

Bailey was approved for CERB and received monthly payments from April 2020 to October 2021.

"When I applied for it and received the CERB, I was under the assumption everything was fine, and I was accepted in good faith," said Bailey.

But Bailey was shocked to get a notice from the CRA last April that said a review found he did not qualify for the benefits and that he must repay $38,600 to them. In the letter, the Canada Revenue Agency (CRA) said that Bailey did not earn the minimum amount of income in 2019 or in the 12 months before his application date.

"I was just absolutely blown away, and I had no idea it was coming," said Bailey.

When the COVID-19 pandemic happened, the federal government created CERB to help eligible Canadians. However, an auditor's report found that $4.6 billion was paid to people who didn't deserve it, and the CRA wants the money back.

A spokesperson for the Canada Revenue Agency told CTV News these emergency benefits were developed to ensure businesses and Canadians got the help they needed.

"Given the unprecedented financial impact of the pandemic, that money needed to be delivered extremely quickly to millions of Canadians," the statement reads, adding those who applied in good faith will not be subject to any penalties or interest.

"However, the Government of Canada made itself clear: ineligible individuals would later have to repay amounts they had received. Canadians expect the CRA to ensure benefits are only paid to those who are entitled, and to do so in a manner which recognizes individuals and families who are experiencing significant financial hardship."

Evelyn Jacks, a tax expert and president of The Knowledge Bureau based in Winnipeg, said if a taxpayer is told they need to repay benefits, they can appeal their case. But, if they are told they must still repay the funds, they should contact the CRA.

"They will make payment arrangements over time with you, and they will not charge you interest for the money owed," said Jacks.

Jacks said if you owe money and do nothing, your situation could get worse.

"The CRA can go further and take legal action against you if you don't contact them and make sure that you address the debt owed," said Jacks.

Bailey says he can't afford to pay back the money and fears he may have to declare bankruptcy.

"I'm on an old age pension and a Canada pension. I make $2,000 a month, and how am I supposed to pay back $38,000 and pay my groceries and my rent?" said Bailey.

The CRA may hold back any tax refunds, GST credits and other benefits until CERB funds are repaid.

Jacks says anyone who owes money to the CRA can seek help from a tax professional to see if there's any way to reduce the amount owed.

Anyone with questions about the CRA-issued COVID-19 benefits and payment options can speak with an agent at 1-833-253-7615.