The federal government might have won praise for how easy it is to apply for the Canada Emergency Response Benefit (CERB), but that hasn’t stopped at least one tax consultant from charging clients to help with the process, a development that has left some politicians and legal advocates concerned and disappointed.
Canada Tax Reviews, a Thornhill, Ont.-based tax consultancy, recently started offering a service that charges clients a fee of $160 to assist them with their CERB application.
Applicants are directed to fill out a form on the private company’s website that asks for personal details such as name and date of birth, followed by five questions pertaining to whether a person has lost employment income due to COVID-19. The questions are similar to those asked on the CERB application form available on the Canada Revenue Agency website.
“We have no upfront fee, you pay us only when you get your CERB payment,” the form states. “Due to these rough times, Canada Tax Reviews has reduced our fee from 33 per cent to an 8 per cent fee for this program.”
Successful CERB applicants — those who have lost their jobs or had their income levels drop below $1,000 per month due to COVID-19, as well as those who are sick with the virus or have to take care of a loved one stricken by COVID-19 — receive $2,000 every four weeks from the federal government until October, when the program is due to end.
But every four weeks, those who still have not found jobs, have to reapply for CERB, similar to Canada’s employment insurance system. Each time a person uses Canada Tax Reviews’ services to apply, a $160 fee is charged.
“That could mean $640 just in fees if you apply for CERB for the full four months of which the benefit is available,” said Jamie Golombek, a tax expert at CIBC Private Wealth Management who writes a regular column for the Financial Post. “It’s surprising to me that a company would even charge anything for a service like this.”
It’s surprising to me that a company would even charge anything for a service like thisJamie Golobmek
Canada Tax Reviews began offering the service “in response to numerous requests from our clients for assistance in navigating the CERB program, founder and president Avi Shomer said in an emailed statement to the Financial Post.
He said the company only collects a fee after an applicant has received the money from the federal government, and it does not dispense an equivalent loan of $2,000 upfront, which some tax services companies do when helping customers file tax returns.
“As you know, taxes can be complicated and many Canadians opt to engage tax preparers, accountants or other professionals,” Shomer said. “In this particular case, our service includes explaining the program, assessing qualification, assisting with application and providing free audit support in the event that the CRA objects or requires further information.”
Some tax service companies are providing clients help with CERB applications free of charge. H&R Block Canada Inc. said it has had many potential applicants come to them for help with navigating the CERB process, and it is doing so at no additional cost.
“Though this is not a major component of our business, we are here to support our clients when we can,” an H&R Block spokesperson said.
One potential client of Canada Tax Reviews found the company by searching Google on how to apply for CERB.
Derrick (not his real name), a contractor in Edmonton, said he temporarily lost his job due to the pandemic, but did not have an online CRA account so he did not know how to apply for CERB. Upon learning he had to pay Canada Tax Reviews $160 after receiving the benefit, he opted not to use the service.
He has yet to figure out how to apply for CERB, and the CRA’s 1-800 toll-free number had a busy signal for most of Monday.
John Lawford, executive director of the Public Interest Advocacy Centre, a non-profit that provides legal services on behalf of consumer interests, said Canada Tax Reviews is not doing anything illegal, though the idea of collecting fees from applicants for a government income support program made him “uncomfortable.”
“That is a failing on the part of the federal government if they do not provide information in multiple languages on how to apply for the benefit or have a support line that cannot be easily accessed,” he said.
The CERB application process has been generally praised for how simple it is (a three-step process), with applicants saying they received their $2,000 within days of applying.
But the CRA’s CERB instructions only exist in English and French, while the Ontario government benefit programs, for example, provide online and phone help in multiple languages.
Lawford said the federal government could have attached regulations to any COVID-19-related benefit program to explicitly make it illegal for third parties to collect application fees.
“Unfortunately, they were in a hurry and they did not write that in, so that was a mistake,” he said.
He points out that under the Bank Act, no financial institution may make a charge for cashing federal government cheques. “That, I would think, is the right ‘spirit’ of federal payments.”
Cheryl Gallant, Conservative MP for Renfrew-Nipissing-Pembroke, who was instrumental in introducing and passing Bill C-462, the Disability Tax Credit Promoters Restrictions Act, which restricts the amount of fees third parties can charge people applying for the disability tax credit, said she was “disappointed, but not surprised” that some are making money from the pandemic.
The federal government should have foreseen this, and set out a restriction from the outsetCheryl Gallant, Conservative MP
“With the disability tax credit, what we found was if the government audited the applicant and determined that they in fact did not qualify, the person would have to give all that money back, and still pay fees to the promoter,” she said.
Gallant said it was now too late to put forward a similar bill pertaining to CERB, but “the federal government should have foreseen this, and set out a restriction from the outset.”
Employment and Social Development Canada, the federal department in charge of consumer protection did not respond to a request for comment.