B.C. unfairly clawed back COVID-19 benefit to thousands, ombudsperson's report says

Ombudsperson Jay Chalke speaks at a news conference in Victoria, B.C., in an April 2017 file image. THE CANADIAN PRESS/Chad Hipolito

Thousands of people in British Columbia saw their $1,000 tax-free COVID-19 benefit unfairly clawed back by the provincial government, says an ombudsperson report.

So far, 12,000 people have been told to repay their B.C. Emergency Benefit that the government said was for workers who had been affected by the pandemic, Ombudsperson Jay Chalke said Tuesday.

He said his report, "No Notice, No Benefit," examined how retroactive changes by the provincial government, requiring applicants to meet a deadline for filing their 2019 taxes to be eligible, saw people having to pay back the benefit.

The claw back resulted because the government didn't properly communicate the deadline and by the time it was announced retroactively, 90 per cent of applicants had applied for the cash, Chalke said at a news conference.

He said the original benefit application when the program started in May 2020 did not set any firm deadline for people to have filed their 2019 income taxes, only that they had either filed or agreed to file.

Legislation introduced eight weeks later set a Jan. 1, 2021, deadline for filing the tax return.

But applicants were not told the retroactive change made them ineligible, said Chalke, who recommended the government give those people 90 days to file their 2019 taxes, allowing forgiveness of the debt or return of the benefit.

“As we said in the report, the ministry didn't tell people the change would apply in that first (application) window, 90 per cent of the applicants by the way,” he said. “Not only did government not tell people who had already agreed to the early, open-ended tax filing requirement, but when the ministry audited the program thousands of people ended up having to pay back the benefit.”

The B.C. government announced the one-time, tax-free benefit in March 2020, paying out $653 million.

Chalke said he found it “ironic” the B.C. government, along with other provincial governments, recently called on the federal government to extend the repayment deadline for the federal Canadian Emergency Business Account pandemic loan program for small businesses, but rejected similar extension recommendations by the Office of the Ombudsperson.

A response in the report from Heather Wood, the deputy minister of finance, said the government won't be implementing the recommendation because the benefit is an income tax refund for 2019, regardless of whether people understood that.

The statement said filing a 2019 income tax return was a requirement of the benefit.

“The ministry does not agree with the Ombudsperson that this requirement can reasonably be understood to be an open-ended promise that could be met at any time in the future as determined by each individual applicant,” said the statement.

Chalke said he's “astonished” the government is not agreeing with his recommendation to allow the early applicants who have since filed their 2019 taxes or agree to within 90 days to keep the payment.

This report by The Canadian Press was first published Nov. 21, 2023.