Today, the National Post published a piece in their Canadian Politics section with the factually incorrect headline “More than 800,000 ineligible people received CERB, as a cost of nearly $1.7B, CRA documents reveal.” (UPDATE: NP changed their headline after this piece went viral–see end of post. ANOTHER UPDATE: NP has now deleted the whole article–see end of post) What is worse is that the second paragraph of the story tells you why that headline is factually incorrect. All you need to a soupcon of tax knowledge to know that. If you don’t have that soupcon of tax knowledge then you should interview tax experts before publishing such drivel. The National Post should be embarrassed at how its bias leads to such disgusting errors.
My loyal Dead for Tax Reasons readers always enjoy a good tax take down, so let’s go!
Here is the first paragraph:
“A Conservative MP says Canada Revenue Agency has some explaining to do after more than 800,000 ineligible people got Canada emergency response benefit cheques.”National Post
Well first of all, the CERB was a program was administered by Services Canada, not CRA (UPDATE: for all those bitching to the contrary, please see Part II of Bill C-13 that defines the Minister as the Minister of Employment and Social Development). While you could also apply for the CERB through your CRA My Account, that was simply an application option. The main application portal was through the usual Services Canada portal.
The CERB was also delivered on a trust then verify process. The verification process has been ongoing, but has already heated up and will continue in earnest through the upcoming tax filing season. CRA will be one of the entities doing verification. The CERB was intentionally designed that way. To ensure speedy delivery. You know, in the time of an unprecedented economic shock. One that has and continues to hit women, low wage workers, and racialized Canadians more than anyone.
But wait, there is more. Let’s move on to the second paragraph:
CRA’s own records — filed in an inquiry of ministry tabled in the House of Commons — show 823,850 people who didn’t file a tax return in the past year received $2,000 monthly CERB cheques at a cost to taxpayers of nearly $1.7 billion, according to Blacklock’s Reporter.National Post
I mean holy hell with a tidge of knowledge about the CERB benefit you know this is just clickbait. Was tax filing an eligibility criteria for the CERB? No. Let’s go through this one step by step.
Is tax filing a general legal requirement? Nope, not at all. While there are various corner cases, the most important aspect to tax filing is that only people with a with tax payable to CRA are required to file a tax return. What you say? Yes. Legally, filing is required if you have tax payable. It is not required if you do not. So anyone with a refund owing is NOT required to file. The fact people do file is more because most people (2/3) are owed a refund and really want it or because they actually do not know the rules or want access to tax benefits like the Canada Child Benefit (CCB).
Was tax filing an eligibility requirement for the CERB? No. The eligibility requirement was
You earned a minimum of $5,000 (before taxes) in the last 12 months, or in 2019…Government of Canada
Yah, guess what, you could have earned $0 in 2019 yet have earned $5,000 in 2020 and be eligible for the CERB. And guess what, WE HAVE NOT FILED 2020 TAX THIS YEAR! The filing deadline for 2020 taxes is currently set for April 30, 2021.
And guess what, you could have earned $5,000 in 2019 and not have filed and be eligible for the CERB. As noted above, tax filing was not a required eligibility criteria. And you can legally not have filed taxes for 2019 and still be eligible. And, you know what, CRA can determine all of this because of third party reporting. What you say? Yes! Hold onto your seats for this one!
CRA uses third-party information reported separately to CRA and matching techniques to verify the information. Third-party reporting, or matching, is a tax policy concept according to which a third party (i.e., neither the individual nor the tax authority) provides an impartial verification of income. For example, all employers are required to report to the tax authority on a T4 information slip the wage income of their employees, on or before the last day of February of the year following that to which the income information applies. While not all income is subject to such reporting, a significant amount is. This means that CRA actually already knows a fair amount about much, if not all, of the income earned by a significant number of tax payers. So yah, you can not file your taxes and CRA can still assess your eligibility for the CERB. It is almost like it is 2020.
The article also uses the sentence:
The CRA didn’t explain how non-tax filers could have claimed the benefit.National Post
Probably because people at CRA thought the question must be a joke. I mean, seriously, this is pretty straightforward from all the public information and a tick of knowledge. UPDATE: They’ve since responded, see the end of the post for their response.
The NP article also tries to use the notion that people with high incomes claimed the CERB but did not need and should not have gotten it. The CERB was not means tested. CERB was replacing lost income as the result of the pandemic. THAT WAS INTENTIONAL! Did they lose income? I bet they did. In fact, lots of self-employed people were hit pretty hard a few months in to the pandemic. Contracts were suddenly cancelled, invoices not paid, it was a serious disruption. To suggest such people should not have claimed a benefit they were eligible for while going through a dramatic income shock would also be suggesting that those hit pretty hard by the Oil shock, but who earned a lot money before that, should have been able to sustain themselves. I would hope the CPC MP cited in this article does not think such things. Then again Kelly McCauley is from Edmonton so maybe he does not really understand the Oil shock, after all I am told by the UCP most people in Edmonton are out of touch.
UPDATE: I’ve received two, no wait three (UPDATE: FOUR), emails from Tom Korski from Blacklocks, whose seems a bit befuddled by all this, and seems like a bit of a jerk TBH. Let’s look at the order paper that started all this, happily provided to me by another more reputable (fact checking on tax details) journalist. The question asked was:
With regard to recipients of the Canada Emergency Response Benefit what is the number of recipients based on 2019 income, broken down by federal income tax bracket?Government of Canada
Now, Tom is all perplexed because if CRA didn’t administer the CERB then why did CRA respond to this question, why were the data tabled in the House by CRA. *Pinches Bridge of Nose* because the question wanted to know the recipients by income. Only CRA has information on people’s income IF they filed their taxes.
Who else then would answer this question? Services Canada does not know your income, they do know your employment income if you had a job loss AND your employer issued an ROE, but that is not complete information about income. But to be eligible for the CERB you simply had to have reduced hours, or lost self-employment income, or reduce provincial benefit income or a job loss. I.e. you did not have to lose a job to qualify for CERB. So the question asked was answered by CRA because they are the only ones who could answer the question. I mean if you asked the same question about GIS, CRA would respond despite GIS being administered by Services Canada.
Tom then asks how would CRA verify $5,000 in employment income is not thru [sic] tax filings. Well see above. It is called third-party reporting. I mean our whole system while it is based on self-assessment it is also based on verification and third-party reporting is the main pillar of verification. CRA actually knows everything about a significant portion of Canadians that for them self-assessment is not needed and we, like many countries, can move to auto filing. What you say? Yes, and if you are interested you should watch the Canadian Tax Journal as a whole policy forum will be dedicated to this!
Tom then doubles down and asks “What is the mystery class of more than 800,000 workers with “employment income” who don’t file taxes?” And he asked this after I sent him a link to my blog. I mean, what is not exactly clear? I don’t know, but if you want to read more see my co-authored piece of tax filing, or Jen Robson and Saul Schwartz’s piece in CPP, or a similar piece in the McGill Law Journal.
Tom, incensed as I did not immediately respond to the aforementioned email, emailed me again with this
Dear Dr. Tedds: no answer, but I won’t hector you further. Knowing your keen expertise in tax issues, you may find it interesting to observe CRA filings indicating, for instance, 1 in 4 Yukoners claimed CERB benefits. That’s 25% of the total population: school-age children, people at the remand centre, hermits, infants, you name it.
In BC claimants outnumbered jobless five to one. I suspect these people may be part of the invisible army of “workers” with “employment income” who operate outside the tax system. I know MPs in all parties who keenly await an audit of this program. We’ll be sure to contact you for comment at the time.
Well, Tom again wants to believe you had to be JOBLESS to to claim the CERB. No, nope, nadda, not true. I mean, here are the eligibility criteria. The eligibility criteria is related to income loss. Yes it includes job loss, but that is not the sole distinction.
Do we have fraud with the CERB? Yes, see for example this. Do we have errors with the CERB? Yes. The eligibility criteria changed nearly daily before and after it was rolled out. Personally, I am following this case to see what happens. Did some idiot apply for CERB in the name of his horse? IDK, but if he did that would be fraud since you needed to meet the eligibility criteria and the horse clearly does not.
I”ll assume that Tom signed off his email as a form of a threat. But whatever, my writings and opinions on this matter are pretty clear and shared by the likes to Tammy Schirle and Jen Robson, so I am in very good company. In the meantime, Tom goes into the email folder called “Assholes.”
UPDATE 2: CRA provides a responsehttps://platform.twitter.com/widgets.js
UPDATE 3: After this blog was posted, the National post changed the headline of its article
Not dumping on NP.— Stephen Punwasi (@StephenPunwasi) November 19, 2020
Knowing the eligibility for government programs isn’t super straight forward. The CRA even said they understand applicants may have made mistakes applying for it.
But like, dude. If you change the premise of the article, add a notice. It’s not a typo. pic.twitter.com/kJ0vIdusDZ
UPDATE 4: The National Post silently removes the article
UPDATE 5: I scanned all the Postmedia newspaper sites and sent emails to every editor of a Postmedia newspaper site that contains the story about 800,000 Canadians being ineligible for the CERB based on factually incorrect information. I have also submitted two complaints with the the National News Media Council, one related to PostMedia and one related to Blacklock’s. I encourage you all to do the same: https://www.mediacouncil.ca/complaint/