CRA will not verify 24,000 suspected overpayment cases | COVID-19: everything about the pandemic

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The Canada Revenue Agency

The Canadian Press

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L'Agence du Revenue Canada (CRA) rules out conducting compliance audits on nearly 24,000 cases where a subsidy was awarded to businesses in the wake of the COVID-19 pandemic.

These cases are among more than 50,000 that were discovered by the Office of the Auditor General of Canada to validate that there was no overpayment or deliberate fraud. /p>

It is never the agency's intention to carry out an audit which nevertheless presents a significant burden both for the taxpayer and for the Agency if we do not believe that x27;there is a sufficient risk of non-compliance, Cathy Hawara, deputy commissioner at the CRA, said in an interview with The Canadian Press.

She argued that, according to an internal report on collection efforts, Ottawa comes to the conclusion […] that, in large part, the risk (which the Auditor General saw) did not materialize.

So, in fact, there remain almost 24,000 applicants who have been identified by the Auditor General. For the moment we are not proposing to carry out audits, said the deputy commissioner of the Compliance Programs Branch at the CRA.

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The report, expected to be released Monday, says more than 94 percent of the amounts reviewed were approved. The data put forward in the document gives a portrait of the situation as of the end of March 2023.

According to the &x27; analysis that was made, cases of overpayment concern small and medium-sized enterprises (SMEs) much more often than large employers.

More specifically, the issues identified in the report concern the Canada Emergency Wage Subsidy (CEWS), government assistance which aimed to prevent layoffs by entrepreneurs severely affected by the economic consequences of COVID-19.

Among the cases considered abusive, the ARC mentions the often noted intervention of third parties – or preparers – who helped companies to circumvent the eligibility criteria.

The report mentions CEWS requests that were made for fictitious employees.

In these specific cases of deliberate circumvention of the rules, who will have to reimburse the CRA for the amounts that should not have been collected: the company or the third party?

When we issue a new assessment – ​​if we refuse or when we conclude that certain amounts should not have been paid (by the government) – it is the applicant, therefore the employer, who is responsible to make the repayment and pay the debt, replies the Deputy Commissioner.

The report also highlights that, in addition to recovery, the vast majority of penalties imposed (86% or $12.2 million) concern files related to preparers.

Moreover, she maintained that the ARC is aware of the budgetary challenges experienced by several SMEs which are still having difficulty recovering from the horrors of the pandemic .

Ms. Hawara said that entrepreneurs will have the ear of the CRA, suggesting a certain flexibility in recovery deadlines of funds.

We are very, very aware of the current situation and it is certainly not our intention to make the situation worse for these employers.

The CEWS, a program that is no longer in effect, paid $100 billion to 460,000 employers across the country. Ottawa estimates that this helped five million Canadian workers.

The CRA recalls in its report that certain automated checks were carried out before the payment of subsidies. Others, more extensive, are still being done after the fact.

The preflight verification process can take several months or years, depending on the complexity of the file, explained the deputy commissioner. Therefore, we do not expect to close the books on CEWS-related audits before 2025.