False Pandemic Benefit Claims Could Be Billions Higher Than Thought, CRA Warns

A sign outside the Canada Revenue Agency is seen in Ottawa, on May 10, 2021. The Canadian Press/Adrian Wyld

The Canada Revenue Agency has raised concerns that false claims for pandemic benefits could be billions of dollars higher than initially thought.

“Overall the Agency estimates its verifications alone will exceed the dollar value of potentially ineligible benefits received by individuals by almost $3.2 billion,” the Canada Revenue Agency (CRA) wrote to the House of Commons Public Accounts Committee.

“That is 22 percent more coverage than the amount of potentially ineligible payments requiring further investigation identified by the Auditor General.”

The rising costs detailed in CRA records did not include the growing expense of auditing taxpayers who claimed the $2,000 monthly Canada Emergency Response Benefit (CERB) cheques.

Only $1.93 billion of pandemic benefits given to ineligible Canadians has been recovered to date, as reported by Blacklock’s Reporter. The amount of ineligible claims has cost each Canadian taxpayer at least $7.96.

Another $250 million was falsely claimed by Employment Insurance claimants through Employment and Social Development Canada. To date, just $133.9 million has been recovered.

The CRA told the committee that the cost of auditing to retrieve the funds was high. It said further work is planned to continue until 2025, with a projected cost of $707 million for the period from 2020 to 2025.

“The Revenue Agency is sensitive to the hardship Canadians may still be facing as a result of the Covid-19 pandemic,” the agency wrote. “Payment arrangements have been expanded to allow the repayment of debt over a longer period of time. This approach takes into account the individual financial circumstances of the person.”

Auditor General Karen Hogan said in a 2022 report on the CERB that only cursory checks were made on applicants claiming the $2,000 monthly benefit intended for jobless taxpayers facing eviction or foreclosure.

“As the pandemic continued to evolve, the post-payment verifications were delayed,” Ms. Hogan told reporters at the time.

When asked how much of the overpayments were the result of “good faith mistakes by Canadians” versus fraud, Ms. Hogan said “I can’t give you an answer.”

The CRA disclosed in 2021 that it had been flooded with tips on suspected cheats.

“This past year, the National Leads Centre processed over 60,000 leads with the increase being attributable to COVID-19 benefits,” said a report titled “Management of Leads.”

The report found that while the typical report volume was 30,000 annually, informants sent in so many tips that the CRA reassigned staff to manage the paperwork.

Within days of the COVID-19 pandemic in March 2020, Parliament passed the Canada Emergency Response Benefits Act to pay the monthly benefits. It didn’t require any upfront proof of eligibility. The program, which was originally budgeted at $24 billion, instead ended up costing $81.6 billion.

The CRA announced in March 2024 that it had fired more than 200 employees for falsely claiming the federal income benefit during the pandemic. The employees must repay the CERB funds they received if they have not already done so.