I got the CERB but did not qualify. What can I do?
The Canada Emergency Response Benefit (CERB) program ended December 2, 2020. The Canada Revenue Agency (CRA) is now reviewing CERB applications to make sure people qualified for the money. If they decide that you did not qualify, you may have to pay the money back.
Net income versus gross income
It was not clear to many self-employed people and contractors whether the CERB required $5,000 in gross income or net income. Gross income means your income before expenses. Net income means your income after expenses. On February 9, the government said that people who had $5,000 in either gross or net income will not have to repay CERB money, as long as they met the other requirements.
What to do if the CRA contacts you
If you receive a letter from the CRA saying you might not have been eligible for the CERB, read the letter carefully. Many of these letters are not asking for the money back. They may just say that the CRA cannot confirm that you were eligible. This may be, for example, because you:
- earned more income than expected while you were getting the CERB,
- applied for the CERB from both Service Canada and the CRA at the same time, or
- did not file your taxes for 2019
You may only have to file your 2019 taxes to sort things out, instead of having to pay the money back.
If you can’t pay the money back
If the CRA says you have to pay the money back, but you can't afford it, you need to get legal help. There may be ways for you to avoid repaying the money.
Make notes of why you thought you qualified when you applied. This is important because there are new rules that let the government forgive the debt in some situations. Forgiving your debt means that you don't have to pay it back. These rules apply to people who got the CERB through the CRA. If you got the CERB through Service Canada then these rules may not apply to you.
Some of the reasons why the government can forgive your debt, include:
- you've gone bankrupt
- you owe less than $100
- the government made the mistake
- it would cause you “” if the government collected the money
But, if you applied and knew that you did not qualify, it will be difficult to have your debt forgiven.
Paying back the CERB
If you know that you have to repay the CERB there are several ways to do it. For example, by mail, online banking, or through your bank or credit .
CERB money is taxable. If you repay the money before December 31, 2020 then you will not have to pay tax on it. If you cannot repay the money before December 31, 2020 then you may have to pay tax on the amount you got from the CERB.