Question Period Note: COVID-19 ECONOMIC MEASURES –COMPLIANCE

What is the Canada Revenue Agency doing from a compliance perspective during the COVID-19 pandemic?

• The Canada Revenue Agency (Agency) is dedicated to ensuring that only eligible Canadians receive the benefits to which they are entitled.

• A full range of audit work has gradually resumed and the Agency is adapting practices to reflect the health and economic impacts of COVID-19 to protect the integrity of Canada’s tax system.

• The Agency is enforcing compliance in a thoughtful, well measured way to ensure it minimizes impacts on Canadians and maintain the health and safety of employees and the taxpayers with whom they interact.

• The Agency has prioritized high-risk cases involving aggressive and sophisticated taxpayers, significant compliance issues, cases approaching a major milestone such as statute-barred or treaty-barred date, or cases where the taxpayers requested a reassessment.

• The post-payment audit program for the Canada Emergency Wage Subsidy (CEWS) was launched in summer 2020. Results from the initial audits will help identify types and levels of non-compliance with CEWS legislation. These findings will inform future CEWS audit strategies.

• Canadians are encouraged to report any misuse of the COVID-19 related benefits to the National Leads Program.

The Government of Canada introduced a number of measures to respond to the COVID-19 crisis.

The Agency, in collaboration with other departments, worked diligently to administer benefit programs related to COVID-19 to deliver emergency payments quickly to Canadians who needed it most. This included the Canada Emergency Response Benefit (CERB), the Canada Emergency Student Benefit (CESB), and the Canada Emergency Wage Subsidy (CEWS).

As CERB and CESB begin to be phased out, on August 20, 2020, the Government announced plans to introduce a suite of 3 new recovery benefits to provide needed support to Canadians who continue to face financial hardship even as the economy starts to re-open. The 3 new benefits are the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and the Canada Recovery Caregiving Benefit (CRCB).

Compliance actions:

As with other benefits administered by the Agency, steps will be taken at a later time to verify that claimants were eligible to receive payments for any of the initial COVID-related economic measures. The Agency has records of those who received the CERB and for which period. These will be used, along with tax slips received from employers and other relevant information available to the Agency, to validate eligibility before next tax filing season begins. In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.

For the CEWS, the Agency uses an automated validation process and manually verifies certain elements of the claims when necessary. Manual verification can include contacting applicants directly. The Agency has also put procedures in place to identify fraudulent CEWS claims before it issues a payment. These procedures include intercepting claims from taxpayers associated with tax evasion or fraud. After the payment, the Agency will perform comprehensive reviews or audits.

The Agency launched the post-payment audit program for the CEWS in Summer 2020. Audits under this program focus on CEWS applications made for periods one to four. Risk assessment tools and random sampling methodology will be used to select a range of files for this phase of the audit program. The Agency will use results from this phase to identify types and levels of non-compliance with CEWS legislation. These findings will inform future CEWS audit strategies which will be launched in the fall of 2020.

In addition, there is nothing in the CEWS legislation that would enable the Agency to deny claims based on tax evasion or tax avoidance unrelated to the CEWS eligibility criteria.

Tabling of written question Q-6752 to Parliament on June 14 2021