R v. Virani: Proof of Income under the Canada Recovery Benefit
As the Canada Revenue Agency (CRA) continues to audit taxpayers in relation to COVID-19 benefits received during the pandemic, it is important to understand how taxpayers should engage with the CRA to support their entitlements. This article will discuss the Canada Recovery Benefit and a recent Federal Court decision that demonstrates how deceptively difficult it can be to prove one’s eligibility requirements.
The Canada Recovery Benefit
The Canada Recovery Benefit (CRB) was a government program that provided support for employed and self-employed Canadians directly affected by COVID-19 but weren’t eligible for Employment Insurance benefits. In order to be eligible to receive this support one must have met the following conditions during the period applied for:
- Not employed or had a 50% reduction in weekly income due to COVID-19
- Not eligible for Employment Insurance Benefits
- Resided in and was present in Canada
- Was at least 15 years of age
- Had a valid Social Insurance Number
- Earned at least $5000 in 2019, 2020, or in the 12 months before the date of application
- Did not quit their job or reduce hours voluntarily after September 27, 2020
- Were seeking work and did not turn down reasonable work
- Were not self-isolating or in quarantining due to international travel
- Filed a 2019 or 2020 tax return
Virani v. Canada
Virani v. Canada deals with the issue of whether tax slips constitute sufficient proof of income for the purposes of the CRB. Mr. Virani received the CRB in October 2020. Months later, on July 19, 2021, Virani was informed by the CRA that he did not meet the eligibility requirements for CRB because he had not earned at least $5,000 in employment income. He appealed this decision with the CRA and received a second review. However, this review only confirmed the previous decision. He then appealed again to Federal Court.
At Court, Virani claimed his provided T4 and T4A slips for the 2019 tax year were sufficient third-party verification of his income. Justice Go disagreed, citing section 6 of the Canada Recovery Benefits Act which states “an applicant must provide the Minister with any information that the Minister may require in respect of the application.” In other words, though tax slips are sufficient proof of income in some contexts, taxpayers are still obligated to comply with any further requests from the CRA to prove their eligibility under the CRB. Since Virani did not provide any further documentation for reasons of confidentiality, Justice Go refused to direct the CRA to accept his slips as proof of income. Justice Go instead referred the matter back the CRA for redetermination, noting it was unfair that Virani was not given an opportunity to submit additional documentation, and that he should be given such an opportunity this time around.
Dealing with the CRA can be a challenging endeavour. The case of Virani shows how crucial it is to understand one’s obligations and proactively engage with the CRA to sidestep administrative hurdles and avoid unnecessary court proceedings that consume time and money. If you have received a letter from the CRA regarding COVID-19 benefits, or for any other reason, do not hesitate to contact us to seek professional advice.
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.