A month after the Canada Revenue Agency restarted debt collections for overpayments of the Canada child benefit, some low-income parents say they’re still struggling to understand why they have a balance owing and have to set up repayment plans.
The Canada child benefit (CCB) is administered by the tax agency, which usually reduces or withholds CCB payments if it determines that a taxpayer has received an excess amount. But the agency temporarily stopped doing so for CCB, as well as some types of government debt, in May, 2020, as an extraordinary measure to provide financial relief during the pandemic.
The CRA then resumed collections for most kinds of debts in October and for CCB overpayments in March. At the time, some parents who saw their child benefit payments cut or reduced to zero said they didn’t receive any warning about collections or information about options to repay the funds.
Roughly a month later, some parents who didn’t see their benefits change in March said they were surprised to discover that their April payment would be much smaller than usual.
In Wasaga Beach, Ont. Caeleigh Stanley was alarmed to find she would only receive about $1,400 in April for her five children, half the amount she and her husband can normally count on.
When Ms. Stanley called the CRA to ask for a payment arrangement that would distribute the clawbacks over a longer period of time, she was told it was too late to do so for the month of April.
The Globe and Mail has previously reported parents facing a similar situation with their March payments.
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For Ms. Stanley, the reduction in the April payment comes as her family is already facing extraordinary relocation expenses.
“We’re moving to Saskatchewan and we depend on this money,” she said, adding that the move was prompted by soaring living costs in Ontario.
Documents reviewed by The Globe show that Ms. Stanley owes about $8,000 in child benefit overpayments, an amount that grew over the pandemic. But while she said she’s been aware of her large debt since June, 2021, she also believed much of it reflected an erroneous CRA reassessment that would be rectified.
She said her struggles with the CRA began in 2019, when she separated from her former common-law partner but he failed to update his marital status for that year. Further complicating matters, she married her current partner in 2020. Changes in marital status and custody arrangements affect child benefit entitlements.
The Canada child benefit is a tax-free monthly payment for families with children under the age of 18. Parents can receive up to $583.08 a month per child under six and as much as $491.91 a month for children between the ages of six and 17. The amount of the benefit is tied to family income, with additional payments available for children with disabilities or based on provincial and territorial programs. The CRA revises child benefit entitlements every July based on family net incomes.
But the agency does not reduce child benefit payments to recover taxes owing or most other types of government debt. It can only trim benefits to make up for previous CCB overpayments.
When the CRA determines that a taxpayer has a government debt, it notifies them by sending a notice of assessment, determination or redetermination, the agency said via e-mail.
“These notifications were issued throughout the pandemic and individuals were able to access their amounts owing even while certain collections activities were paused,” CRA spokesperson Anne-Flore Gnamaka said.
Taxpayers for whom the benefit offsets create “significant financial hardship” should contact the CRA to discuss their options, the agency said.
But NDP finance critic Daniel Blaikie criticized that approach, saying the CRA should have proactively reached out to taxpayers.
“Why not start with a letter that says, ‘Here’s what you owe. We want to talk to you about a payment plan,’ ” he said.
“Instead they’re leading with the clawback and then putting it on families to contact the CRA and try and work something out,” he added.
“By that point, for families that are on the financial margin, it’s already too late.”
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