The CRA is still playing hardball over CERB payments — while larger tax questions go unanswered

The court rulings are now stacking up, and for individuals, they tell a tale of Byzantine rules and desperate people.

At a macroeconomic level, they tell a tale of a government that is on the hunt for revenue but has little strategy about how to find it.

Take the case of Vatankhah v. Canada for example. Court documents show Masoud Vatankhah and his wife ran a tiny café that they had to shut down in August 2020. He applied for and received CERB for six four-week periods.

But CRA later told him he shouldn’t have qualified because he hadn’t earned the required $5,000 in income in the 2019 tax year.

So Vatankhah had a chartered professional accountant go through his paperwork, and the accountant found several major errors. The corrected 2019 tax return calculated his income at almost $7,000 — a version the CRA accepted, issuing a notice of reassessment telling him to pay $478 in back taxes.

But CRA still insisted he had not qualified for CERB and demanded repayment. Back and forth they went, with two formal reviews that kept the argument alive into 2024. By 2025, the courts were involved. A federal court judge ruled last winter that the CRA was being “unreasonable” and sent them back to the drawing board.

To be sure, CRA has a responsibility to collect money owed to the government, especially if there’s fraud or misrepresentation at play. And of course, given the speed and ease at which the CERB was issued in 2020, there were mistakes made.

Statistics Canada found that 35 per cent of Canadian workers who made more than $5,000 in 2019 received CERB payments, and so of course there were problems along the way.

At the time, politicians actively encouraged everyone in tough circumstances to apply for CERB help and said there would be plenty of time later to sort out the paperwork.

But six years later, there are still cases bouncing around in court for tiny amounts of money, with claimants quibbling with the government over how close they were to making the qualifying $5,000 amount.

These are not rich or middle-class people for the most part. Statcan’s study of recipients found they were mainly the poorest of the poor, often young, and often from the accommodation and food services industries.

But now, the CRA’s budget for enforcement and debt collection has been increased, with the expectation that the agency will recoup much more than it spends on its efforts.

An internal audit published just before the pandemic says the CRA recovered just over 60 per cent of the cash it believed it was owed through income tax, and 71 per cent of the GST and HST it was owed.

So it’s a lucrative exercise with decent returns at a time when budgets at all levels are pinched by heightened demands for infrastructure, defence, housing and health care just as the economy slows dramatically.

Provincial governments in February and March have tabled budgets notable for their rising costs and feeble revenue growth. British Columbia raised taxes in a couple of areas, but others have allowed their deficits to balloon. Economists at TD project aggregate provincial revenues to shrink 1.5 per cent in the 2025-26 fiscal year.

At the federal level, Prime Minister Mark Carney has cut income tax, some boutique taxes and some corporate taxes since he came to power a year ago but has not replaced those sources of revenue.

Meanwhile, the third-most common type of complaint received by the federal Tax Ombudsman is about CRA’s collections practices.

In other words, federal authorities are nickel-and-diming individual taxpayers, often in low-income circumstances, while fiscal authorities are side-stepping a full-on conversation about how to fairly finance the society we want and who will pay.

That’s just not sustainable.

Addendum

After this piece was published in the Toronto Star, the CRA responded to several questions initially sent to them in mid-March. Here are some numbers from them:

• If a CERB recipient receives a letter from CRA telling them to repay, they can ask for a review within 30 days. If the recipient disagrees with the review, they can apply to Federal Court for a judicial review within 30 days.
• As of March 16, 2026, CRA had received 4,512 applications for judicial reviews for COVID-19 benefits for individuals. Of these, 1,276 are still ongoing; 2,143 were resolved and 1,064 were withdrawn or dismissed.
• So far, the court has returned 118 applications to CRA for additional review.
• As of November 30, 2025, CRA says 773,992 people who wrongly received COVID benefits still had a debt owing. The amount of outstanding money is $10.35 billion, of which $5.41 billion is for CERB and $3.2 billion is for the Canada Recovery Benefit (a later version of CERB).