Ottawa’s clawback of COVID-era benefits is punishing small mistakes and hurting the poor

The Trudeau government’s refrain in the earlier days of the COVID-19 pandemic was clear and reassuring.

But critics say the debt recovery ramp-up so far has been ham-handed, unnecessarily harsh toward low- and modest-income Canadians, and intransigent toward some who made small mistakes, in some cases based on inaccurate information from the CRA itself. There’s also the issue that the CRA stopped its practice of withholding or reducing benefit payments to offset taxpayers’ government debts in May, 2020. The agency restarted clawbacks of tax credits last October, and of the Canada Child Benefit this past March.

The leniency and compassion Ottawa showed during the pandemic have evaporated, according to Prof. Robson. Now, she said, the feeling among many on the receiving end of the federal debt-collection crackdown is likely, “they have my ass.” That hasn’t stopped the CRA from clawing back her tax refunds and some of her benefits. Ms. Spicer has seen her 2021 and 2022 tax refunds – which, together, are worth a total of about $1,500 – applied to her government debt, according to documents reviewed by The Globe and Mail. The CRA also held onto several payments of her Ontario Trillium Benefit, which helps offset energy costs and taxes, the records show.

But months or years after enrolling in the pandemic benefits, some social-assistance recipients discovered they’d applied for money they weren’t entitled to or, like Ms. Spicer, found themselves embroiled in complicated disputes about their eligibility. But repayment plans don’t prevent the CRA from withholding tax refunds and government benefits to offset overpayments – and social-assistance recipients are no exception. Ms. Drumm said the clawbacks have made it harder for some of her clients to pay for medical needs.

In Saint John, for example, Rhiannon Cormier, a single mother of two on social assistance, combed through her CRA online account when she saw her child benefit payment of $1,324 a month cut in half in March. But it wasn’t until April 18 that the agency sent out a plain-language e-mail warning about the resumption of offsets to all benefit recipients who might be affected and who had signed up for electronic notifications. The agency did not say why it waited until then to send out such messages.

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