CRA Paid Out $100 Billion in Wage Subsidies Without Any Screening, Auditor General Says

The Canada Revenue Agency (CRA) headquarters Connaught Building is pictured in Ottawa on Aug. 17, 2020. Sean Kilpatrick/The Canadian Press

The Canada Revenue Agency (CRA) did not do cursory checks on claims requesting wage subsidies under a pandemic relief program using the information it already had before paying out $100.6 billion to businesses, including those in tax default, according to Auditor General Karen Hogan.

“An example we saw was in the Emergency Wage Subsidy program,” Hogan testified before the Standing Senate Committee on National Finance on Sept. 4, as first reported by Blacklock’s Reporter. “The Canada Revenue Agency had information where they could have vetted the eligibility of businesses.”

The Canada Emergency Wage Subsidy (CEWS) program was first announced by the federal government on March 27, 2020, as a measure to provide small businesses impacted by the COVID-19 pandemic a 75 percent wage subsidy for up to 12 weeks, retroactive to March 15, 2020.

On April 11, 2020, the federal government introduced and passed Bill C-14, “A Second Act Respecting Certain Measures In Response To Covid-19,” to implement CEWS. The bill, which received royal assent on the same day, had the program administered by the CRA under the Income Tax Act.

Cabinet expanded CEWS in June 2021 to cover large publicly traded corporations. The program, which was originally estimated to cost $73 million, went 38 percent over budget with payments on five million separate claims, according to Blacklock’s.

“[The CRA] could have done some sort of screening before giving out wage subsidies and they didn’t use all the information available to them,” Hogan told the committee. “They didn’t share information across divisions which would have facilitated the heavy labour that is now needed during post-payment verification.”

According to an Inquiry of Ministry tabled in Parliament on May 16 and obtained by Blacklock’s Reporter, records show that the CRA paid $145.9 million in subsidies to insolvent companies, and subsidized 352 firms in default of their federal taxes.

Wage subsidies were also given to Canadian offices of Chinese corporations such as the Bank of China, Air China, China Eastern Airlines, and China Southern Airlines Company, the inquiry said.

In his testimony before the Standing Committee on Finance in April 2020, Frank Vermaeten, assistant commissioner at the CRA said that the agency was able to process claims in a timely and accurate fashion.

Vermaeten was asked by Tory MP Marty Morantz how Canadians can be confident in the services provided by the CRA after a report by the Canadian Federation of Independent Business graded the agency a “D” for its ability to answer inquiries at its call centres.

“I'd say that with respect to our ability to provide funding and refunds and do that accurately, I think we are doing a very good job,” Vermaeten said.