Some Canadians who repaid pandemic benefits are seeing their tax refund withheld

Some Canadians who have repaid a pandemic benefit they received by mistake are still seeing their tax refunds withheld by the government.

The Canada Revenue Agency (CRA) has resumed efforts to recover the money through a process it calls “offsetting,” which means that it automatically uses money from tax refunds and some benefits to settle a person’s debt with the government.

But Ottawa’s Sarah Dykeman said she repaid what she owed and still had her tax refund held back last year.

“I spent the next year trying to figure out how to get my tax refund back,” she said.

Dykeman, who was a supply teacher at the time, said she applied for employment insurance (EI) once public health measures came into effect. But she said she began receiving payments from both EI and the Canadian Emergency Response Benefit (CERB).

“I wasn’t clear on whether [I was supposed to get] CERB or if it was normal EI,” she said. “I ended up panicking and cancelling my claim because I didn’t want to have to repay even more if it turned out later that they shouldn’t have paid me in the first place.”

Dykeman said she received a notice to repay last year but found the instructions on where to make the payment confusing.

“It was like I just sent $2,000 into the ether and I have no idea if it got where it needed to,” she said.

A sign reading "Canada Revenu Agency" under the shade of a tree stands next to an old brick building.
The Canada Revenue Agency (CRA) has been withholding tax refunds and other benefits from Canadians it says received pandemic benefits for which they weren’t eligible. (Sean Kilpatrick/The Canadian Press)

After contacting both the CRA and Service Canada — the department responsible for administering EI — Dykeman finally got her tax refund reimbursed.

But she said the process was onerous.

“If English wasn’t my first language, I would have been snookered. I don’t know how I would have gotten it resolved,” she said.

According to Canada’s Taxpayers’ Ombudsperson, Dykeman is not alone. François Boileau told CBC that his office has heard from nearly two dozen Canadians with similar complaints, but he suspects there are even more having similar issues.

Boileau said that at first glance these issues stem from a lack of communication between Service Canada and the CRA.

“It looks like the left hand doesn’t talk to the right hand,” he said.

Boileau noted that the CRA legally has to exercise caution when dealing with people’s personal information — even when dealing with other departments — which may be causing some communication issues. But he said that shouldn’t result in an extra burden for those who have repaid their debt.

“If there’s a lack of communication within two … agencies it’s of no concern to the citizens,” he said. “Their contractual obligations with Canada is done.”

A spokesperson for Service Canada said due to a high volume of CERB repayments Canadians’ tax files might not be up to date.

“The Department understands that this may be a cause for concern and is working to correct the situation as soon as possible,” the spokesperson said in an email.

Service Canada issues revised T4E slips — which outline recipients’ EI and other benefits — to both the CRA and the taxpayer once they repaid what they owe. But the Service Canada spokesperson said there is no time limit for issuing an amended T4E.

Boileau’s office announced earlier this month that it was monitoring complaints and would launch a formal investigation into the matter if needed.

In the meantime, he said he wants those who are still receiving collection notices after having repaid what they owe to contact his office.