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Les Leyne: Ombudsman finds COVID benefits clawback unfair

He released a report on how midstream changes to the B.C. Emergency Benefit mean thousands of people are being asked to return $1,000 grants.
Ombudsperson Jay Chalke says thousands of people in ­British Columbia saw their $1,000 COVID‑19 benefits unfairly clawed back by the provincial government. CP FILE

At the same time Premier David Eby is asking the federal ­government to go easy on recovering some COVID-19 benefits, his own government is clawing back relief on the basis of a retroactive, unpublicized legal change.

“Ironic,” said Ombudsperson Jay Chalke on Tuesday. He released an investigative report on how midstream changes to the B.C. Emergency Benefit mean the Finance Ministry is chasing tens of thousands of people — possibly far more — to get back $1,000 grants handed out during the pandemic.

The cornerstone benefit was thrown together quickly during a crisis, so glitches could be expected. But there is no explaining the unreasonable, unfair policy of declaring that people broke a rule they didn’t know existed. Same goes for the government’s refusal to follow Chalke’s urging to back up and fix the problem.

The Finance Ministry’s explanation following Chalke’s findings doesn’t wash.

The benefit program went live in May 2020 and was instantly swamped with takers — 600,000 applicants in two months.

The $1,000 direct deposit was for B.C. residents who lost income due to COVID or qualified for a similar federal grant (CERB) and had filed a 2019 tax return, or at least agreed to file one.

Two months later, after most of the applications were in and being processed, a bill was introduced that redefined the benefit as a tax credit. The open-ended requirement at the outset to “agree to file” a tax return was changed to include a January 2021 deadline for filing. It applied to everyone who had already applied.

But Chalke said the ­ministry didn’t tell anyone about the change, or the impact. People who got the grant but didn’t file tax returns by the new deadline were suddenly subject to ­repayment. An audit began in 2021 and the government started demanding the money back from thousands of people.

The ministry issued one vague notice about the change and Chalke said it was unreasonable to expect people to understand the implications.

A self-employed single parent was told 16 months after getting the benefit he had to pay it back, despite never having been told of the filing deadline. There was no appeal or review opportunity.

Another applied the day after it was first offered. She got the money a week later. Her income losses continued and she missed the tax filing deadline. Chalke noted “she had no reason to know it existed.”

Two years later the ministry demanded the money back.

The ministry said there were 12,000 such demands by mid-2022. Chalke said there are tens of thousands more and they stem from new requirements that the ministry did not take reasonable steps to make known.

The audit started in October 2021 is still underway and is scheduled to conclude next month.

The Finance Ministry defended the notification process, telling Chalke that it had an information bulletin service to which anyone could sign up.

But when the ombudsperson staff reviewed all the bulletins, “none of them addressed the tax filing deadline.”

The ministry’s website featured a post headed “How the Eligibility Requirements have Changed.”

But it made no mention of the crucial change — if you missed the filing deadline, you have to give the money back.

The change was debated in the legislature, but it was a sub-clause in a lengthy, technical bill and Chalke said people couldn’t be expected to investigate details of legislation.

Chalke said the added-on requirement was justified, but the crucial unfairness was that no one was told about the change.

The government has a huge communications department and the ministry had an opportunity to use it, but failed, he said.

The grant was publicly described as a “one-time, tax-free $1,000 payment.” But technically, it was a tax credit or a tax refund for 2019.

The Finance Ministry said it has improved communications but refused to follow Chalke’s recommendation to revisit the problem.

Finance Minister Katrine Conroy said both the individuals cited in the report got warning letters and have had two years to file tax returns. Failure to file returns on time is one of the main issues, she said.

The ombudsperson’s report came a month after B.C. asked Ottawa to extend the time to repay some federal pandemic loans.

Chalke said: “It appears the province expects the federal government to show leniency where its own Finance Ministry will not.”

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