A greater number of tax refunds could be subject to offsetting by the Canada Revenue Agency (CRA) in 2023, so much so that the CRA has issued a warning about the resumption of its debt recovery activities.
“The Canada Revenue Agency would like to remind you that it resumed its activities aimed at offsetting taxpayers’ debt last October,” they warn in a statement made March 22. “Offsetting involves proactively applying tax refunds and benefits payments, such as the GST/HST credit, to tax and other government debts” owing, they write.
Prior to May 2020 when it paused most offset mechanisms, it was the CRA’s standard operating procedure to collect outstanding debt. Since October 2022 it has resumed offsetting personal income tax refunds to recover outstanding debts – including those incurred collecting COVID-19 benefits.
“A greater number of tax refunds could be subject to this practice,” they state. “These deductions could apply, in particular, to debts related to COVID-19 benefits.”
The announcement goes on to state that government debt can result from overpayments, or a change in eligibility for benefits and credits.
In some cases, benefit payments, such as those related to some child benefits, can only be used to offset a debt related to that same benefit. Notably, they also state that offsets can still impact those who already have an established payment plan with the CRA.
