Christine McDonald says she did everything she could to ensure Canada qualified for the Emergency Response Benefit (CERP) before applying in March.
His home-based custom cake business – which relied on people ordering cakes for weddings and birthday parties – was tasked with thanking COVID-19 for imposing infection controls.
This left her husband with only the income from his husband’s construction work.
“I told my husband,‘ There’s no way I can apply for this if I don’t qualify, ’and I did a lot of research and research,” McDonald said.
All he saw was that he said he would qualify for CERB because he earned more than $ 5,000 in self-employment income in 2019.
So he applied and received his first fee on April 16th. Between CERB and the Canadian redemption benefit that changed it, the total benefits he has received so far in 2020 is 500 18,500.
But on November 26, McDonald received a letter from the Canadian Revenue Agency (CRA) stating that he was not really eligible and that he would have to repay the money in full – with the suggestion that he should do so by December 31 to avoid tax penalties.
“I’m in my bed at 11pm, reading this, and I’m starting to cry,” McDonald said.
“When you have no income, how can you repay 500 18,500?”
Net and gross income
Why would CRA say McDonald did not qualify? It all comes down to the word “net”.
He applied on the basis of his gross income for 2019 – before allowing a portion such as baking materials and his home heating and electricity bills.
Watch | ‘They expect me to repay 500, 18,500 now,’ says the PEI woman:
But to qualify for the CRA, small business operators such as McDonald’s claim to have a net income of more than $ 5,000 a year – in other words, earn income after expenses.
McDonald did not meet that bar.
I faithfully did everything I had to do in an emergency. I made no mistake, so I do not know why I have to repay this emergency fund.– Christine McDonald
But when he applies, he insists there is no indication of eligibility based on net income. At the time, the federal government was paying as quickly as possible to prevent Canadians from falling financially, and officials planned to act with due diligence on applications after the fact.
Landing page describing eligibility requirements at Canada.ca The term “net” is not yet mentioned when referring to income earned through self-employment.
However, a spokesman for the Canadian Revenue Service told CBC News that eligibility has always been based on net income through self-employment. The agency provided the CBC with a link to a different FAQ webpage that contained the information and stated that the details were available on that page “from the beginning”.
However, the CBC News search of the archived web pages shows that the information was added after April 21 – almost a month after McDonald’s applied.
“It’s a three-letter word that puts screws on everyone, and that word is‘ net ’,” he said.
“I really did everything I had to do in an emergency. I did nothing wrong, so I don’t know why I have to repay this emergency fund.”
Complaints to Charlottetown MP
The Charlottetown MP said he had received a dozen calls and emails from blocks to his office in a situation like McDonald’s. Says Sean Casey.
“We have to show some mercy on this,” the Liberal MP said. “We made a mistake in getting the money out quickly. I think there should be some humanity in the collection efforts.”
Casey said he was advising people to be allowed to file an amendment to the 2019 tax code, where they could transfer some of the eligible expenses to another tax year or not claim them.
This, he explained, would raise the net income they declared and “qualify them in advance” to CERB.
Casey reiterated the comments made by Prime Minister Justin Trudeau on Thursday, saying “the government has no interest in punishing people who act in good faith.”
But it is not clear to McDonald what this means.
‘You may have made an honest mistake’
In a letter from CRA, McDonald’s understands that “you may have made an honest mistake by applying to CERB, and we want to assure you that we will not charge any penalties or interest on your CERB payments.”
But the agency says the money must be returned by December 31. “Thus we will not send a tax slip on the amount you receive.”
In follow-up contacts with the CBC, the CRA said December 31 was not the actual payment deadline. It said the parameters for payment arrangements have been “expanded to give Canadians more time and flexibility to repay based on their ability to pay.”
But McDonald says he has no ability to pay.
Without emergency benefits, she says she has no income and has taken a $ 4 pay cut per hour that her husband absorbs every December.
“I text my daughters, ‘Ladies, you know, we’m not going to have a Christmas. Sorry,’ ‘McDonald said. “I don’t know where I’m going to get this money to pay them back.”