B.C. musician confused after CRA warns he may need to repay CERB payments

A Kootenay composer has joined the chorus of self-employed Canadians who fear they may be forced to repay their Canada Emergency Response Benefit, following confusion over the COVID-19 support program's minimum income requirements.

"I have enough savings to cover one more month of bills," said Adham Shaikh, an Emmy and Juno nominated musician who lives in Slocan. "I want to do the right thing — but where are we supposed to get this money from if we're not allowed to work?"

The musician, who records and performs his own songs, and produces for other acts, applied for the benefit after his summer tours were cancelled due to the pandemic. He says he received payments from the government in April, June, July and August, with the belief that he met the requirement of making at least $5,000 (before taxes) in the previous year. 

In November, however, he and some 441,000 others received letters from the Canada Revenue Agency asking for more information to determine whether they in fact qualified for the payments they had already received.

The notices are not a final determination on an applicant's eligibility. Still, Shaikh worries he may be asked to repay as he failed to realize rental income was different than self-employed income. Shaikh rents out accommodation on his property. 

"Nowhere on the government website did it talk in deep detail about what the definitions were," he said.

Other self-employed Canadians have reported similar issues, saying they believed the $5,000 figure referred to all income, as there was no mention of expenses. The CRA, however, insists self-employment income is defined as "the net pre-tax income," or gross income minus expenses. 

In a statement, the revenue service clarified that the letters are "educational," indicating that while ineligible applicants will be expected to repay their CERB benefits, they are not required to do so by December 31.

Trudeau offers assurances

Prime Minister Justin Trudeau tried to reassure CERB recipients Thursday, saying they should not worry about repayment over the holiday season.

"The message that I'm giving to Canadians is, if that letter is causing you anxiety, don't worry about it," he told CBC's Rosemary Barton.

"We're gonna work over the coming weeks and months to make sure that there's a path forward that makes sense."

Trudeau went on to say that a "range" of options were being considered to help Canadians who may be asked to repay but he did not go so far as to say that forgiveness was on the table.

Federal government has no plans for forgiveness, yet

Federal NDP leader and Burnaby South MP Jagmeet Singh, meanwhile, argues the government is adjusting eligibility criteria after the fact.

"If someone has cheated the system, that's one thing," said Singh. "But people who applied in good faith, people who apply because they needed help, people who are self-employed, they should not be faced with any of these penalties."

The CRA maintains that all of the CERB income requirements are clearly stated on Canada.ca, and have not changed since the benefit was unveiled. The page, however, appears to have been launched two weeks after applications opened.

Liberal employment minister Carla Qualtrough said Wednesday she feels "bad," but adds Ottawa has no plans to forgive debt accumulated due to CERB confusion.

"For those who have to repay, CRA will work with them on a repayment schedule that they can afford," said Qualtrough.

Letters a grey area

Tax experts, though, advise self-employed CERB recipients to contact accountants as soon as possible to try to determine if they owe money.

"You need to talk to someone when you're in this sort of grey area," said Manning Elliott LLP tax partner Sheryne Mecklai. "Don't just sit there and stew on your own."

Mecklai adds that some recipients may have discretionary expenses they could go back and claim using a T1 adjustment, though those too may be subject to tax.