If you suspect your neighbour, your ex, or your (former) employer may be inappropriately receiving COVID-19 related government benefits, the tax man wants to know about it. This week, the Canada Revenue Agency updated its website to indicate that its “snitch line,” formally known as the “National Leads Program,” is now accepting tips from people who wish to report others who may be inappropriately taking advantage of the billions of dollars of government relief.
In terms of total numbers, the dollars involved and the number of claimants are massive. As of this week, the Canadian government has paid out over $43 billion in Canada Emergency Response Benefits (CERB) to more than 8.3 million people. It has paid $652 million to over 478,000 students by way of the Canada Emergency Student Benefit (CESB). And, nearly 200,000 unique employers have claimed over $9.3 billion of relief via the Canada Emergency Wage Subsidy (CEWS) program.
Since focusing this column on COVID-19 related relief during the past few months, I’ve heard from several readers asking how to report suspected cheats. One reader, Abe (not his real name), writes: “I have worked hard, obeyed the law, and paid taxes all of my life here in Canada. Recently, health reasons have forced me to take early CPP, so I am living in a subsidized, low-income apartment building.” He was upset that “a great many tenants continue to receive CERB benefits fraudulently. They are loud and proud of it!!” He was looking for a way to report these cheats to the CRA.
Another reader, Emily, writes that her “boss intends to apply for the free money (the CEWS) but we will not be working…. Many employers will take the 75 per cent but not pass it on to the employees as they cannot actually operate their business yet.” She wanted to know how she could report her former employer to the CRA.
On June 1st, the CRA updated its National Leads Program website to advise Canadians that the Leads Program can currently accept leads from Canadians who wish to report suspected fraudulent applications for the CERB or CESB but do not meet the eligibility criteria, as well as businesses or charities that are misusing the CEWS. Prior to the website update, the program had already received more than 600 leads relating to these three benefit programs.
The Leads Program gives you the opportunity to anonymously report suspected domestic tax evasion online via the website, or by phone, mail, or fax, all while protecting your anonymity. As the CRA does not track the identity of those who submit leads, it’s not able to provide the number of Canadians who have used the program to report suspected domestic tax evasion, nor the dollar amounts assessed related to these leads. The government did confirm, however, that the program receives more than 30,000 annually, and reviews all of them.
Unfortunately, unlike the Offshore Tax Informant Program (OTIP), which pays monetary rewards of between 5 per cent and 15 per cent of the federal tax collected to informants whose leads result in the collection of more than $100,000 of additional federal tax (excluding penalties and interest), there are no monetary rewards handed out for information about suspected cheating under the Leads Program. In the words of the CRA, “When you submit a (domestic) lead, you are supporting your community and the programs and services we all rely on to improve quality of life in Canada.”
In a normal year, the Leads Program typically has informants reporting on taxpayers who are not declaring all their income, creating false expenses or tax deductions, taking cash “under the table,” setting up a fake business to claim losses and reduce taxes, and falsely claiming tax benefits or credits. For 2020, those false benefits include inappropriate claims for the CERB, the CESB and the CEWS.
The CRA and Service Canada have records of all individuals who’ve received payments for the CERB and CESB, and are verifying to make sure the payments were correctly allocated. Similarly, various pre-payment verifications and post-payment reviews are being conducted by the CRA for the CEWS. If you suspect a potential misuse of these COVID-19 emergency benefits and programs, the CRA needs some specific details from you depending on which type of benefit you suspect may have been inappropriately claimed.
For the CERB, the CRA wants you to provide as much detail as you can about the individual’s work situation, their (former) employer and why they may not be eligible. For example, did they earn more than $1,000 in allowable income in the four-week eligibility period? Or perhaps they didn’t earn at least $5,000 in (self-)employment income in 2019 (or the prior 12 months). Are they receiving multiple CERB payments from both the CRA and Service Canada?
For the CESB, the CRA is asking for information about the student’s schooling situation, graduation, work circumstances (or lack thereof), employer and eligibility. For example, are they an international student? Did they earn more than $1,000 in allowable income in the four-week period?
For the CEWS, the CRA wants information about the employer (the business name and the legal name), the type of business, the number of employees affected, and whether workers are considered to be employees or subcontractors. While the CRA is encouraging employees to bring any CEWS concerns to their employer first, it seems unlikely that employees, who are either still working or who hope to be rehired by their employer in the future, would confront their own employer about suspected CEWS fraud, for fear of retribution.
Once you send in a lead, you cannot take it back. If you submit your lead online or by phone, you will be given a reference number and supporting documents you wish to submit can then be sent by mail or fax to the CRA using that reference number. Once received, the CRA will match your supporting documents to the lead you submitted. Examples of helpful documents may include: copies of e-mails with details that help identify the suspected tax or benefit cheat, invoices and/or receipts, cheques, financial statements and bank account numbers.
Curious if your ex ever got caught? Well, you won’t find out from the CRA. The government won’t provide any feedback or updates after you submit a lead because the CRA is not permitted to disclose personal tax information about other taxpayers to anyone other than the taxpayer and their authorized representative.