The Canada Revenue Agency (CRA) has shifted gears from providing emergency relief to aggressively recovering overpayments. As of late 2025, the agency is chasing more than $10 billion in outstanding COVID-19 benefit payments. For millions of Canadians, this means the arrival of brown envelopes, confusing “Notices of Redetermination,” and the potential for financial disruption. If you received benefits like the CERB, CRB, or CEWS during the pandemic, the CRA’s recent enforcement push could directly impact your tax refunds and monthly cash flow.
The “Trust Then Verify” Aftermath
When the pandemic hit in 2020, the federal government prioritized speed over perfection. To get money into the hands of locked-down workers and struggling businesses quickly, they utilized an “attestation-based” system. This meant applicants simply had to tick a box promising they were eligible, and the money was deposited within days. The government was transparent at the time that verification would come later.
That “later” has arrived. The Auditor General previously flagged over $27 billion in payments that required further investigation. While many Canadians applied in good faith, complex eligibility rules regarding net income versus gross income, or specific dates of employment loss, have led to retroactive ineligibility. The CRA is now systematically auditing these accounts to recoup the difference.
Who Is Being Targeted?
The recovery efforts are broad, targeting both individuals and businesses. The largest group of affected individuals includes those who applied for the Canada Emergency Response Benefit (CERB) or the Canada Recovery Benefit (CRB) but arguably did not meet the income thresholds. A common trigger for a clawback is the “earned income” requirement; many self-employed individuals calculated their eligibility based on gross income rather than net income, inadvertently disqualifying themselves.
Double-dipping is another major focus. This occurs where an individual received Employment Insurance (EI) and CERB simultaneously for the same period. Since these systems did not communicate perfectly in real-time during the crisis, many received duplicate payments and are now being asked to return one set of funds.
By the Numbers: The Scale of Recovery
The sheer volume of money involved is staggering. The CRA has already recovered billions, yet a massive shortfall remains. The agency has made it clear that there is no statute of limitations on debts owed to the Crown, meaning they can—and will—pursue these amounts indefinitely until resolved
| Category | Estimated Amount / Count |
| Total Benefits Disbursed | ~$83.5 Billion |
| Outstanding Debt (Late 2025) | ~$10.35 Billion |
| Amount Flagged for Investigation | ~$27.4 Billion |
| Repayments Collected So Far | ~$3.3 Billion |
| Individuals Who Have Repaid | ~1.4 Million people |
How the CRA Collects What Is Owed
If the CRA determines you were ineligible, their collection powers are far stronger than those of a private debt collector. They do not need a court order to take action. The most common first step is withholding tax refunds or GST/HST credit payments. If you are expecting a refund this tax season, the CRA may automatically apply it against your pandemic debt.
If the debt remains unpaid and you ignore communication, the agency can escalate to garnishing wages (taking a portion of your paycheck directly from your employer) or placing liens on assets. Recent reports indicate the CRA is sending out “legal warning” letters more frequently, signaling the end of the voluntary repayment phase and the start of involuntary collection.
Disputing the Debt and Appeals
Receiving a notice does not always mean the CRA is correct. Taxpayers have the right to dispute the finding if they believe they were truly eligible. This process typically begins with a request for a second review. You must provide documentation proving your income and employment status for the relevant periods.If the second review is unsuccessful, the next step is filing a formal Notice of Objection. However, strict timelines apply—usually 90 days from the date of the notice. Missing this window can make the debt permanent, regardless of whether the original decision was flawed.
Financial Hardship and Payment Arrangements
The CRA acknowledges that many Canadians cannot afford to repay thousands of dollars in a lump sum. If you agree you owe the money but cannot pay, you should not ignore the letter. The agency is generally willing to set up monthly payment arrangements based on your ability to pay
Demonstrating financial hardship is key. You may need to provide a breakdown of your monthly income and expenses to prove that aggressive collection would leave you unable to meet basic living needs. While they rarely forgive the principal debt entirely, they may offer extended payment terms to prevent financial ruin.
Conclusion: Proactive Action is Essential
The era of “no questions asked” pandemic support is officially over. The CRA is under pressure to balance the books, and their recovery operations are fully active. If you receive a letter, the worst thing you can do is ignore it. Ignoring the problem will not make it go away; it will only accelerate the CRA’s use of legal collection tools like wage garnishment. Open the envelope, verify the claim, and either dispute it with evidence or arrange a payment plan immediately.
FAQs
Q1 Can the CRA take my house for CERB repayment?
While the CRA has the power to place a lien on your property, forcing the sale of a primary residence for pandemic benefit debt is extremely rare and usually a last resort for very large, fraudulent debts. They prefer garnishing wages or offsetting tax refunds.
Q2 Is there a time limit for the CRA to ask for the money back?
Generally, the CRA has a six-year window to audit income tax matters, but for debts owed to the Crown or cases involving suspected misrepresentation, they can pursue collection indefinitely. There is effectively no statute of limitations on government debt collection.
Q3 What if I spent the money and have zero savings?
You are still liable for the debt. However, you can contact the CRA to declare financial hardship. They can work with you to create a repayment plan that fits your budget, sometimes accepting very small monthly payments to keep the account in good standing
Disclaimer
The content is intended for informational purposes only. You can check the official sources; our aim is to provide accurate information to all users.
