Ottawa should cancel the debts of low-income Canadians who applied for COVID-19-era benefits in good faith but were later found ineligible, a new report says.
“This recovery regime is no longer justified — economically, administratively, or morally — and should be ended through a structured wind-down,” says the report, released in August by the Maytree Foundation.
Canada is the only country that still requires low-income individuals to repay overpayments of pandemic-related benefits they applied for in good faith, the research organization’s report says.
“Two things can be true at once,” the report says. “The emergency response was necessary, and the recovery regime that followed is now producing injustice.
“The federal government helped create the conditions in which error became inevitable. It cannot now treat every resulting debt as though it were solely the fault of the individual recipient.”
‘Turned crimson’
The federal government created the Canada Emergency Response Benefit (CERB) in 2020 to help Canadians who lost work because of the pandemic.
CERB, which ran from March to September 2020, provided $2,000 a month to eligible individuals. To be eligible, individuals must have earned more than $5,000 in 2019 and earned less than $1,000 for 14 consecutive days during a set period.
CERB was later replaced by the Canada Recovery Benefit (CRB), which ran from September 2020 to October 2021. It first provided eligible Canadians with $500 a week, and then $300 a week starting July 2021.
To be eligible for the CRB, individuals needed to still be out of work because of the pandemic, or have lost at least 50 per cent of their regular earnings because of it.
These eligibility criteria were not always clearly communicated, the report says, and changed frequently in the program’s early days.
John Stapleton, a policy analyst and report co-author, remembers the confusion well.
After CERB was announced, he told several individuals who were on social assistance that honorariums, such as those given out for completing work training programs, were considered income for the purpose of calculating CERB eligibility — information he had read on the government’s website.
But years later, he learned from reading court decisions that honorariums did not count as income for the purpose of calculating CERB eligibility.
“My face turned crimson,” he said in an interview.
‘Fully absorbed’
Unclear eligibility criteria is not the only problem some benefit recipients have faced.
Individuals were often not told they had incorrectly received pandemic benefits until months — sometimes years — after the benefits ended.
Paying back these overpayments can be a challenge, especially for recipients whose provincial social assistance payments were reduced because they received CERB or CRB.
Provincial social assistance payments were not adjusted upwards if individuals later learned they would have to repay their pandemic benefits.
“In these cases, individuals are not simply being asked to return money they retained,” the Maytree report says.
“They are being asked to repay federal benefits that had already been partially or fully absorbed by another level of government.”
Stapleton says the benefits’ design created some of these problems.
Unlike many federal benefits, which are determined based on an individual’s tax filing, pandemic benefits were based on individuals simply telling government they had met the eligibility criteria.
‘Compassionate approach’
The Maytree report says that, as of 2025, nearly 774,000 Canadians still owed money in repayments, with their outstanding debt totalling more than $10.3 billion.
Another $3.3 billion in overpayments had already been repaid.
The Canada Revenue Agency may recoup overpayments by reducing the amounts individuals receive in some other federal programs. People can also work out payment plans with the government.
Many people who rely on social assistance do not have any extra money to make repayments, says Leila Sarangi, national director of Campaign 2000, an organization that works to end child poverty.
The government thinks that enabling people to make small debt repayments — sometimes as little as $10 a month — responds to people’s needs, she says.
But some low-income individuals are being forced to forgo necessities to pay off these debts, she says.
“The impacts of even the most minuscule payment is not minuscule when you’re looking at somebody who just isn’t able to pay rent, pay for their meals, buy their clothing in a regular month,” she said.
Employment and Social Development Canada, which administers social benefits, told Canadian Affairs in an email that the Canada Revenue Agency “has taken a compassionate approach” to repayment.
The CRA helps individuals “find the payment arrangement best suited to their situation,” the statement said. This “may include deferral or write-off of the debt for those who are unable to repay.”
The department did not clarify whether any individuals have had their COVID-19 debts written off.
“Those who applied in good faith were not, and will not, be subject to interest or penalties,” the CRA’s statement said.
‘No leniency’
More than 4,500 individuals have taken their overpayment cases to court. About a quarter of them were not resolved as of March 2026.
Litigation can cost tens of thousands of dollars, far exceeding the amounts most people owe, says Stapleton.
“We’re willing to spend gargantuan amounts of money on our courts to continue to adjudicate these cases,” he said. “Our courts could be doing something different.”
In an email to Canadian Affairs, the Canada Revenue Agency said it completed about 875,000 eligibility reviews of COVID-19 benefits. Only 0.1 per cent led to court hearings, the statement says.
MacGregor Goodman, the other co-author of the Maytree foundation report, says the law that created CERB and CRB did not provide a pathway for debt forgiveness.
“There really is no leniency and there is no ability to have discretion later on,” she said, noting it would have made sense for some leniency to be built in.
Even judges who have denied debt forgiveness say the law is a problem.
In a 2022 decision, the Federal Court agreed with the CRA’s decision to ask a woman to repay nearly $5,000 in COVID-19 benefits, even though her 2019 income fell only $7.26 shy of the $5,000 needed to qualify.
The judge wrote that he “empathized” with the woman, but noted that, legally, he had no options.
“The court is only able to interpret [the law], not rewrite it,” the decision says, noting other tax laws do allow for concessions to be made.
Stapleton says the government’s strict enforcement of debt repayment contradicts the message Ottawa sent when these benefits were first created.
Canadians were told to apply because the government wanted to ensure everyone was cared for during an emergency, he says.
The government made applying for the benefits “so easy,” he said.
“Then [the government] turned around and on the back end of it made it one of the most restrictive programs we’ve ever seen.”
