Victims of fraudulent CERB claims left with higher tax bill until CRA can investigate

Data provided by the Canadian Anti-Fraud Centre shows there were more than 8,500 cases of identity theft related to CERB reported across the country by the end of January. But that number is likely to rise now that Canadians are doing their taxes.

Montreal teacher told it could be months before phony $8,000 claim is sorted

On paper, Hugo Hamel-Perron received $8,000 in CERB payments, but he never made the request. He expects to pay income tax on the money while the Canada Revenue Agency investigates. (Valeria Cori-Manocchio/CBC)

At first, Hugo Hamel-Perron did not understand why he received a form from the federal government showing that he had earned $8,000 in extra income last year.

The teacher at Marianopolis College in Montreal had been working through the pandemic, so he did not expect the call from his accountant telling him government records show he received that money through the Canada emergency response benefit (CERB).

That surprise quickly turned to frustration when he realized he had been the victim of fraud.

"I don't even know how you would request CERB," said Hamel-Perron. Those fraudulent CERB payments are, at least for now, costing him thousands of dollars in income tax. The investigation into what happened could take months.

"I'm not expecting that money any time soon," he said.

According to data provided to CBC News by the Canadian Anti-Fraud Centre, by the end of January there were more than 8,500 cases of identity theft related to CERB reported across the country.

But that number is likely to rise now that Canadians are starting to do their taxes.

Andrea O'Brien, an accountant based in Quebec City, says she was the one to inform her clients, including Hamel-Perron, that CERB payments were made in their name — when in fact they never applied.

"He does have to pay the taxes on it because right now it's associated to his SIN number," said O'Brien.

Hamel-Perron has spent hours on the phone with the Canadian Revenue Agency, Service Canada, the police, credit bureaus and other agencies trying to sort it all out.

"They did not seem surprised," he said of the brief conversations he's had with the CRA.

"I think they are all overwhelmed because there are thousands of similar cases right now."

In a statement, the CRA told CBC News that anyone who believes they are the victim of identity theft related to CERB payments should call them as soon as possible at 1-800-959-8281 and select the "report suspected fraud or identity theft" option.

"Taxpayers who are confirmed victims of identity fraud will not be held responsible for any money paid out to scammers using their identity and the CRA remains dedicated to resolving these incidents," wrote Sylvie Branch, a media relations officer with the CRA.

Once the fraud is confirmed, taxpayers need only declare the income they actually received. But it's unclear if these investigations would be concluded by the April 30 filing deadline.

O'Brien said seven of the 45 clients she's handled so far are victims of fraudulent CERB claims. But it's early in tax season, and she has hundreds of more files to go through.

'I didn't do anything wrong'

Eileen Addicott also received a T4A slip in the mail informing her that she received one $2,000 CERB payment.

Working at a church on Montreal's South Shore, her employer had taken advantage of the Canada emergency wage subsidy. But Addicott never applied for CERB.

She initially thought it was a mix up at the CRA, but then she heard from friends about cases of fraudulent CERB claims.

"I'm hoping that they take care of it," said Addicott, who hadn't yet contacted the CRA due to her apprehension about long wait times to get through.

"Maybe that's naive of me. I didn't do anything wrong."

As for Hamel-Perron, he has an idea of how his personal information was obtained. He was one of the millions of Desjardins customers whose information was stolen as part of a data breach in 2019.

And as a teacher, his personal information was also stolen in a breach of Quebec's Education Ministry's system a year earlier.

"I've done basically all that I can at this point," he said. "Now I have to pay taxes on it until the CRA can finalize its own inquiry."

The Canadian Anti-Fraud Centre advises suspected victims of fraud to contact their local police service. If they learn their social insurance numbers have been stolen, they should call Service Canada as well.

O'Brien says it's not immediately clear to everyone that box number 202 on T4A slip is referring to CERB. She says she's been making sure to double check with all her clients that they did, in fact, request the benefit.

"I think that it's the CRA's job to inform," O'Brien said.

"They need to make people more aware and vigilant.… For my clients, I'm the one informing them right now."

With files from Valeria Cori-Manocchio

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