CRA Goes After Low Stake CERB Fraud but Ignores High Profit and Subsidized Montreal Companies

The Canada Revenue Agency will not look into a potential $15 BILLION in ineligible Canada Emergency Wage Subsidy (CEWS) payments, but Canadians ineligible for Canada Emergency Response Benefit (CERB) are forced to pay it back. Does the Canadian government's priorities lie with corporations making a profit during a global pandemic, instead of individuals experiencing higher rent and food prices? Local 514 looks into the CRA’s history of being lenient with corporations and which companies accessed CEWS in Montreal while paying large dividends to shareholders.

Air Canada, whose headquarters are in Montreal, had a cash reserve of $7.38 BILLION in 2019. CEWS subsidies paid for the company to hire 16,500 employees – but Air Canada was not required to make these positions full-time, meaning workers were at a loss, only paid for part time work and not allowed to access benefits. 

Shareholders in large corporations continued to have their investments returned during the pandemic, while almost 2 million Canadians lost their jobs in April 2020. CEWS provided an advantage to corporations – but not all shareholders were aware. 

Suncor Energy Inc., an oil company with a refinery in Montreal, received $358.2-million in CEWS. The company did tell shareholders CEWS was utilized, but it did not report just how much was accessed. Suncor’s amount of CEWS subsidies were not provided in its financial statements, but were instead found in an Alberta Lobbyist Registry form in a section reserved for entities to disclose amounts received from various levels of Canadian government

The CRA used to offer a registry identifying which companies accessed CEWS, but this database is no longer available, meaning we are unable to see which companies. The federal government has refused to release a full record of the subsidies paid by CEWS, stating it would violate privacy restrictions protecting tax filers.

Out of the total CEWS payments, a possible 14.9% are ineligible. More than 5 million companies received CEWS. In 2020, 68 companies that received more than $1 billion dollars in CEWS paid more than $5 billion in dividends to company shareholders. 

Finance Minister Chrystia Freeland said, “legally, the wage subsidy can only be used to pay employees” and “it can’t be used for any other purposes,” but restrictions to uphold this never existed.  

CEWS was not intended to line the pockets of shareholders, it was created to support payroll costs and prevent worker layoffs by helping companies experiencing considerable drops in revenues. But CEWS didn’t prevent layoffs. This allowed companies to take the money and lay off workers, all while providing salary boosts to executives.

CRA media relations officer Hannah Wardell told Local 514 that The CRA will always pursue cases of potential fraud and that wage subsidy applications were subjected to verification before the money was sent. She said the CRA will also conduct post-payment audits. Wardell said that audits have taken place and post-payment verification will also be conducted, adding that 200 audits have resulted in approximately $11M in gross negligence penalties.

There were few conditions in place for businesses with existing cash reserves or the level of profits made during the wage subsidy period – meaning that businesses could access CEWS and report record profits that year. To access CEWS, businesses did have to see a minimum decline in revenues by 15% in the first month and 30% in the second and third months.

Norma Rantisi, a professor in the Department of Geography, Planning and Environment at Concordia University said there needs to be support for workers, but it's difficulty to have oversight and transparency in how the money is being used. She said it would be more beneficial to provide funds directly to workers instead of companies.