Canada Revenue Agency opens snitch line to information about federal COVID-19 aid program fraud

OTTAWA — The Canada Revenue Agency is opening up its snitch line to tips about fraud in COVID-19 federal aid programs amid reports of illicit applications and double dipping.

In an update to its website Monday, Canada Revenue Agency says its National Leads Program — a.k.a. its snitch line — is now accepting information regarding the Canada Emergency Response Benefit (CERB), the Canada Emergency Student Benefit (CESB), and the Canada Emergency Wage Subsidy (CEWS).

The Leads Program collects reports of tax cheating such as not declaring all income, accepting “under the table” cash payments or setting up a fake business to claim losses and thus reduce taxes.

“If you suspect a potential misuse of the COVID-19 emergency benefits and programs, the National Leads Centre is currently accepting leads on these programs,” now reads the update on the National Leads Program website.

Specifically, the agency says it’s looking for information regarding people who are receiving either CERB or CESB who are ineligible, or businesses or charities that are “misusing” the wage subsidy program.

An official at Service Canada told parliamentarians two weeks ago that the department had identified at least 200,000 double dippers who had applied and received twice the amount of CERB they were entitled to since the beginning of April.

The decision to go after cheaters marks a turning point in the government’s desire to take on fraud of COVID-19 emergency aid programs.

In a statement to the National Post in mid-April, a CRA spokesperson dissuaded Canadians from snitching on potentially ineligible CERB recipients. At the time, CRA said its focus was on “getting crucial (CERB) payments to those who urgently need it now.”

“While taxpayer tips do assist some of our compliance activities, we are not asking Canadians to report fellow Canadians who have applied for CERB at this time. Those who received a payment to which they weren’t entitled will be required to repay the amount in due course,” CRA spokesperson Etienne Biram said via email at that time.

Since then, the National Post has reported on a series of internal government memos that told civil servants to process CERB applications even if they suspected fraud.

One said Employment and Social Development Canada (ESDC) staff should approve payments and not refer cases to the Employment Insurance integrity branch if they detect potential abuse.

Another set of instructions told ESDC staff Canadians should still receive CERB even if records indicate the applicant quit voluntarily or was fired for possible misconduct — seemingly in contradiction to the legislation.

Two weeks ago, Prime Minister Justin Trudeau responded that “getting that help to the 99 per cent of Canadians who needed it quickly and rapidly — even if it meant accepting that one or two per cent might make fraudulent claims — was the choice that we gladly made” over rigorously checking every application.

We are not asking Canadians to report fellow Canadians who have applied for CERB at this time

In the Leads Program website update, CRA assures that some verifications are done proactively to ensure that CERB, CESB and the wave subsidy are paid only to eligible recipients.

Any business or individual who is caught receiving money they aren’t entitled to will be ordered to reimburse it.

In the case of the wage subsidy, a business that falsifies documents in order to claim the benefit can face penalties up to 225 per cent of the amount received through the program.

“The CRA and Service Canada have records of all individuals who’ve received payments for the CERB and CESB, and are verifying to make sure the payments were correctly allocated. Similarly, various pre-payment verifications and post-payment reviews are being conducted by the CRA for the CEWS,” the agency said.

If someone wants to snitch on a potential fraudster, CRA warns that it needs a substantial amount of information about the suspect.

Depending on the program they may have falsely claimed, the agency could require details on the suspect’s work situation (CERB and CESB), their schooling situation (CESB) or their employer’s number of employees and total payroll (CEWS).

According to Toby Sanger, director of Canadians for Tax Fairness, opening up the snitch line is a good but small step towards detecting fraud of these billion-dollar social aid programs.

“There may be a whole lot of tips from people complaining on their neighbours. But I do think that that will be fairly small potatoes compared to other opportunities for fraud and misuse of a federal government funds. There should be much greater transparency requested from companies asking for the wage subsidy, for example,” Sanger said.

– With files from Tom Blackwell

Source: National Post