Pandemic tax period could be more problematic as urgent requests rise and CERB confusion continues
In October last year, newly named Taxpayers’ Ombudsman François Boileau promised he would keep a close watch on how the Canada Revenue Agency (CRA) treats Canadians as they grapple with the financial pain from the COVID-19 pandemic. Now, a new report from his office suggests that this tax season will be marked with more complications and hiccups than usual.
This past December, Boileau said the number of taxpayers’ complaints about the CRA received by his office has spiked 93% compared to the same month in 2019, reported the Canadian Press. Urgent requests, submitted by those in dire financial straits, have gone up 120% since the start of the pandemic.
Calls for the CRA to improve its services are not new, but Boileau said the statistics suggest an even greater need for the agency to step up this tax season.
One notable widespread issue, he said, involves Canadians who last year received the Canada Emergency Response Benefit (CERB) only to find out later that they might not have been eligible and might now have to repay some of the aid. While the Liberal government has sworn people who will have problems paying the money back will be treated leniently, there’s no clarity yet as to what their options are.
Boileau expressed concern the CRA will be unable to meet response-time standards in the weeks leading up to tax season this year, noting that complaints from Canadians who waited at least five hours or more to speak with an agent are still pouring in.
“They are preparing for it,” he said. “They know what's going on and they're taking all the necessary steps.”
Aside from previous questions about self-employed Canadians and inadvertent double-dippers, the CRA is reportedly looking to clear up confusion over the tax treatment of artistic grant money with respect to CERB.
As reported by Global News, the agency has apparently backtracked on its original guidance that grants to artists don’t count toward the eligibility threshold for receiving CERB, which is $5,000 net income in 2019 or in the 12 months prior to their application.
“Artists and writers may receive a grant in the course of their business or employment, depending on the artist’s situation, that is considered employment or self-employment income (business income) for tax and benefit purposes,” CRA spokesperson Pamela Tourigny said in an email to the news outlet.
According to Global News, the CRA would consider grant money as income for the purposes of relief benefits if the recipient is paying themselves to undertake a project. Grant income, the agency added, would be considered earned at the time the work is performed.
For the purposes of CERB eligibility, qualifying income from artist grants is based on the total of the grant less the expenses the recipient has paid or will be paying to other people or businesses for work on the project.
“In certain circumstances, where it is determined that the amount an artist or writer has received is neither business income nor employment income, the amount may be characterized as something else for income tax purposes,” Tourigny said, emphasizing that grants may qualify “on a case-by-case basis.”