Madam Speaker, when COVID-19 forced an economic lockdown in March, this Parliament took a team Canada approach to ensure that Canadians received the financial support they needed.

The government introduced the Canada emergency response benefit, CERB, in a hurry, and it passed with unanimous consent from all MPs and all parties. Speed was necessary under the circumstances, but it created a situation where eligibility requirements were unclear. This was particularly true for individuals who are self-employed.

In December, the Canada Revenue Agency sent out more than 441,000 letters advising some CERB recipients that they may not be eligible for the benefit and may have to pay back as much as $14,000. Many of the people who received the letters are low-income self-employed Canadians.

On the CERB application, the government did not specify whether eligibility would be based on gross or net self-employed income. The CERB Act did not define self-employed income, and did not mention expenses or deductions. The government website stated multiple times that income of at least $5,000 may be from employment and/or self-employment for CERB eligibility. There was no mention of gross or net income.

Immediately after the CERB act was passed, the finance minister stated, both in press conferences and in testimony before the Senate, that CERB eligibility would be based on earned revenue. Revenue, in business terms, means income before expenses, or gross income. It was not until late April, weeks after people started applying for the CERB, that the CRA quietly added a clarifying statement that eligible self-employment earnings were “net pre-tax income”, which is gross income less expenses. This clarification is buried in one of the frequently asked questions on the government website, near the bottom of the page.

There have been many reported examples of CRA agents providing incorrect information about whether eligibility was based on gross or net self-employment income. The union representing CRA workers stated that agents were not given clear directions. Even MPs from the governing party provided incorrect information to their constituents. Clearly the confusion was widespread.

The government has acknowledged that CERB eligibility guidelines, and government advice, failed to clearly specify that income for people who are self-employed meant net income after deductions.

Home-based businesses can write off a portion of house expenses, such as rent and utilities, against their business income. This helps people make ends meet. However, these home-based businesses were not eligible for the Canada emergency rent subsidy.

People who are self-employed or own small businesses will often incur additional expenses in one year versus another for capital improvements, to expand a product line or to start a new business. I have heard from a number of people who were in this situation.

During the pandemic, many large corporations used wage subsidy programs to pay employees at the same time as they increased shareholder dividends and CEO bonuses and as their wealthy owners raked in billions. This should not have been allowed.

If the government needs to recoup emergency benefits, it should be going after the wealthy who took advantage of these programs, not after self-employed Canadians. The government made a serious error, and it needs to own that mistake. Self-employed Canadians applied for CERB in good faith and should not be penalized. The government needs to retroactively allow self-employed Canadians to use their gross pre-tax income before business expenses when determining their CERB eligibility.

It is absolutely a matter of justice and fairness, and the government needs to own—

Paul Manly

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Adjournment Proceedings

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