The federal government’s 2025 budget quietly ended the Underused Housing Tax — a measure that was meant to discourage vacant homes and foreign ownership in overheated markets. A separate tax was removed that applied to yachts and private aircraft.
The official reasons were straightforward: the programs were too complex and not cost effective. They tied up administrative resources, created confusion and yielded little in revenue. In other words, the compliance burden wasn’t worth it.
The decision made sense. But what’s striking is how that same reasoning is rarely applied when the burden of complexity falls on people at the other end of the income scale.
At the same time that Ottawa moved to relieve affluent property owners of poorly performing taxes, the budget provided new allocations to litigate pandemic benefit cases against low-income Canadians — cases that cost far more to pursue than the government could ever recover.
Take the typical Canada Emergency Response Benefit or Canada Recovery Benefit appeal now moving through the Federal Court.
In many of these files, the government is attempting to recover a few thousand dollars — sometimes less — from people who applied for pandemic relief in good faith, often while unemployed, under stress, and with little clarity about changing eligibility rules.
One such case, Leclerc v. Canada, released Nov. 6, shows how tangled the process has become. A modest dispute over a few thousand dollars of pandemic income support ended up in a full-fledged Federal Court hearing — with lawyers, registrars, translators and clerks all engaged.
By the time a case like this reaches judgement, the public cost of litigation can easily reach $75,000 to $200,000. That is what it costs taxpayers to take a single income-support file all the way to a written decision.
The typical amount at stake? Between $2,000 and $14,000. The highest possible amount is just over $34,000.
And the typical claimant? Someone living on social assistance, pension income or low wages — people from whom no repayment is likely to be collected.
The Federal Court has repeatedly chastized the Canada Revenue Agency and Employment and Social Development Canada for “unreasonable” decisions on pandemic benefits — citing inconsistent interpretations and procedural unfairness.
These aren’t frivolous appeals; they are citizens asking that the government apply its own rules correctly.
If Ottawa truly wants efficiency, it could start with a simple test before litigating any small-value benefit case:
- Is the amount at stake larger than the cost to collect it?
- Is the claimant capable of repayment?
- Is there genuine precedent value to litigating the matter?
If not, resolve it administratively, without litigation. If necessary, write it off, ensure the taxpayer learns from the error, and move on.
In policy terms, this approach would be consistent with budget’s goal of creating a “more efficient” public service. In moral terms, it would signal that government restraint applies evenly — not just to those with accountants and lawyers.
The Underused Housing Tax and luxury taxes were dropped because they complicated and yielded little return. Pandemic benefit cases meet the same description, only in reverse: they generate no return and inflict great harm.
If Canada’s public administration has the courage to walk away from enforcement that doesn’t work, then it should do so consistently — not just when the beneficiaries are the well-off.
Otherwise, “cost-effectiveness” becomes just another term for selective compassion.
There is a 4th question to ask before proceeding with investigation or litigation: 4. Who is responsible for improper distribution of funds in the first place, The government or the receiver? It it’s the issuer, writ it off and if the responsibility can be determined, a fine should be paid by that issuer, it be in money or work situation.
As far as luxury tax, if those who made more than #300,000.00 per year actually paid their FAIR share of taxes there would be no need for a luxury tax. Those who own “extra” or “vacant” housing should receive tax breaks in keeping with the amount of housing for the homeless they supply and the expense they realize from maintaining that housing.
The biggest problem in handing out these cheques to the low income is that, as well as welfare cheques, the applicants are never vetted well enough. I don’t dispute the fact that people needed help during the pandemic, but welfare needs a very thorough vetting, along with continuing reviews of receivers of government $’s We should go back to food stamps and not cash.
I do taxes for low “income” Canadians. Many of them have pandemic CRA debt they will never be able to repay. I see this as a class issue. Those who created the qualifying questions did not understand how the word “income” is interpreted by low “income” Canadians. We call them low “income” Canadians and yet when they answered the first question “income” to the CRA folks meant employment “income”. We all consider welfare or disability payments as income so did they. Similarly, many applied for the benefits thinking the government would deny the payments if they didn’t qualify. So just in case, they were encouraged to apply and let the government make the decision to pay or not. Imagine owing the government money and not having the means to pay – ever. A simple review of their income over a period of time would clearly show how long they have been low income and how likely repayment will be. We need to stop beating them up with CRA demand letters. They are under considerable stress with no way out – ever.
Why? Why do this? Forgive CERB recipients. It was the pandemic let it go…be kind to people struggling. Who cares if someone got an extra $,$$$. I know I was concerned that timing might be an issue as lots of part time staff receive their pay 2-4 weeks behind. Then were laid off…let’s just draw a line under and do better next time! Write it off!