The Canada Revenue Agency has resumed collecting debts tied to overpayments of the Canada Child Benefit, a move that some parents say resulted in drastic reductions of their benefit payments for March.
The tax agency normally reduces or withholds tax refunds and benefit payments to offset a taxpayer’s debt but temporarily stopped doing so in May, 2020, in an effort to provide financial relief during the COVID-19 health emergency.
And while the CRA resumed offsets in October for most types of government debt, it wasn’t until this month that it began also withholding the child benefit payments for taxpayers who have a balance owing because of past overpayments.
While the CRA says it sent taxpayers notices to inform them of their debt, some parents took to social media saying the reduction came as a surprise and left them scrambling to pay for bills and groceries.
In Saint John, for example, Rhiannon Cormier, a single mother of two, said she was shocked to find out that her March child benefit payment would be $661.88, half of the $1,323.75 she received in previous months.
The clawback means Ms. Cormier, a cancer survivor who is on social assistance, wasn’t able to pay her power and internet bills on time this month. Her grocery budget also took a hit, she said.
“In a sense, you’re literally taking from my children’s mouths,” she said of the child benefit reduction, adding she receives less than $1,000 a month through social assistance.
The Canada Child Benefit is a tax-free federal monthly benefit administered by the CRA that is meant to help families with children under the age of 18. Parents can receive a maximum of $583.08 a month for children under 6 and up to $491.91 a month for children between 6 and 17, with the amount of the benefit tied to family income. Parents may also receive additional payments for each child with a disability or based on provincial and territorial programs.
Unlike with other benefits, the CRA cannot cut or withhold child benefit payments to offset a tax balance or most other types of government debt. It can only reduce payments to make up for previous overpayments.
“If a recalculation shows that an individual was overpaid CCB, the CRA sends a notice of redetermination that includes a remittance voucher to inform the individual of the balance owing,” Sylvie Branch, a CRA spokesperson, said by e-mail.
Taxpayers who are left in financial dire straits because of any benefit clawbacks should contact the CRA as soon as possible, Ms. Branch said. “We will work with Canadians to find a solution that works for their situation, even if there is already a payment arrangement in place.”
But Ms. Cormier said when she reached out to CRA for help about her March payment, she was told it was too late.
Ms. Cormier said it wasn’t until the beginning of this month that she saw, through her online CRA account, that her child benefit payment for March was set to be half the usual amount (the benefit is usually issued on the 20th of each month).
She said she immediately called CRA to see if it would be possible to set up a payment plan, hoping she could pay off her debt through a series of smaller benefit reductions over many months. But an agent told her the March benefit payment had already been set.
Ms. Cormier recalled that in 2020 her Canada Child Benefit payments were temporarily rerouted to a foster family who took care of her two children for four months while she underwent stem cell transplant for Hodgkin’s lymphoma, a type of cancer that affects the body’s immune system. But Ms. Cormier said she wasn’t aware of any outstanding overpayment issues for that year. She isn’t sure what else might have caused the overpayment.
Going back through the electronic correspondence she received from the CRA, Ms. Cormier spotted a July, 2022, notice indicating that she owed $1,065.91 in child benefits. The note about her debt was toward the bottom of a letter in which the CRA informed her about her child benefit entitlement for 2022-23 (the benefit amount is recalculated every July).
Ms. Cormier said she doesn’t know what her April benefit is going to be.
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Erica Alini