Federal Court upholds CRA’s denial of COVID-19 benefits to woman who didn’t meet income threshold

The Connaught Building in Ottawa, headquarters of the Canada Revenue Agency. Photo: Google Streetview

In a recent Federal Court ruling, a worker’s application for judicial review against the Canada Revenue Agency (CRA) was dismissed relating to her eligibility for COVID-19 benefits.

LZ had sought judicial review of the CRA’s decisions denying her eligibility for the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB). The CRA had found her ineligible due to her not meeting the income requirements and for not having reduced work hours due to COVID-19.

LZ, with a background in patent agent and engineering work, had contended that she met all eligibility criteria for the CERB and CRB. Her claims were based on her work for Jinan Jingkong Electrical Equipment Co. Ltd., for which she was to be paid $6,200 USD. However, after accounting for business-related expenses, her net income fell below the eligibility threshold. Later, she amended her tax return, which increased her net income above the required threshold, but the CRA still denied her benefits.

The Court, applying the reasonableness standard established in Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65, found the CRA’s decisions to be logical and consistent with legal and factual constraints.

The Court noted that the CRA had thoroughly considered her arguments and the evidence she submitted, including a detailed analysis by the CRA agent who conducted the reviews.

The Court observed that LZ failed to provide sufficient evidence to establish that she had received the claimed self-employment income. It also noted that amendments to her tax return made for the sole purpose of qualifying for the CERB or CRB did not alter the factual finding of her net business income being below the $5,000 threshold.

Additionally, the Court dismissed LZ’s claim of violation of procedural fairness. It found no merit in the argument that the same individual conducted both the initial and secondary reviews of her file. The Court emphasized that LZ was given multiple opportunities to provide additional evidence and information, and her case was handled with due procedural fairness.

In conclusion, the Federal Court deemed the CRA’s decisions as reasonable and transparent, effectively upholding the agency’s denial of COVID-19 benefits to LZ. As a result, her applications for judicial review were dismissed without costs.

For more information, see Zhang v. Canada (Attorney General), 2023 FC 1761 (CanLII)

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