Achingly close: Part 2

Usually a blog is a one-off –some thoughts on a subject – over and out – not a treatise.

The astonishing case of Amanda Coscarelli is not in that category.

Amanda deserves more.

And Canadians deserve more.

Amanda is a woman that I wrote about here:

I won’t reprise the argument. It’s all here for anyone to read along with the Federal Court case she lost – missing the yearly pandemic threshold income level of $5,000 by just $7.26.

So what’s new? What more is there to say about Amanda? After all, there are lots of income eligibility thresholds and cut-off points for various income security benefits in Canada. For example, Employment Insurance (EI) has variable entrance requirements on receipt of EI benefits.

Miss the eligibility threshold by a few hours?

Result: no benefits.

So why is Amanda’s case special?

The first difference is that pandemic benefits were not like other benefits.

No one knew pandemic benefits were going to come in.

No one knew there would be a pandemic.

And no one could arrange their affairs at the time to meet an eligibility threshold that did not yet exist.

If Amanda knew that she would need an extra half hour of work in 2019 – to qualify for a yet to be contemplated benefit – that would provide her with almost three times her 2019 earnings – do you think she might have worked an extra half hour?

And if she could not get work, do you think she may have volunteered almost anywhere that paid a minor qualifying honourarium to get the extra $7.26 she needed to get to the $5,000 threshold?

The obvious answer is ‘yes’.

In the case of qualifying EI hours, if someone needs an extra half hour of work to meet minimum qualifying hours, would they do almost anything to secure the extra half hour of work? Would a sympathetic employer give someone an extra half hour of employment?

Again, the answer is ‘yes’. The difference is that employees and employers know the EI rules in advance. Amanda had no knowledge and could not have had any knowledge of pandemic thresholds in advance. This alone makes her disqualification particularly cruel.

The second matter is that I can only wish CERB/CRB advocates had known about Amanda so they could have helped her with her case.

I wish I had been there to help.

The reason is that income from Honourariums counted toward the CERB/CRB thresholds and it just may be the case that Amanda volunteered somewhere – anywhere – in calendar 2019 and received as little as ten bucks in cash or maybe a gift card for helping in a Church basement or community hall.

That extra ten dollars added to her $4,992.74 in earnings would have been enough to qualify for the CRB.

But perhaps we will never know.

Our third issue is that the Federal Court has adjudicated a number of cases that concern establishment of the $5,000 threshold.

And they have been busy setting out – in lugubrious detail – what counts and what doesn’t for the $5,000. They have meticulously detailed what they will accept as documentary evidence of the $5,000 in cases like Lalonde[1] and Sjogren[2] .

What’s striking about these cases is the high standard of documentary evidence required.

No scribbled receipts on snippets of paper or handwritten records of cash payments are allowed in support of meeting the $5,000 threshold.

What CRA and the Courts need is carefully kept books and accounts- formally dated and properly organized.

But there are problems with this.

One is that low-income people are often employed for cash or receive payments in the form of gift cards. They are often considered to be self-employed (by their employers) meaning that they have to keep their own set of books. In many cases, such record- keeping may not meet an industry standard for accounts. Honourariums are often paid out of cash boxes receipted on flimsy bits of paper.

It is more than unfair to demand high standards of accounting and bookkeeping for low-income workers who do not have the expertise or the resources to meet the newly high evidentiary standards being established in the Federal Court.

But here’s the thing. The Canada Revenue Agency (CRA) itself does not demand nor require the reporting of Honourarium earnings of less than $500 from one source. Neither does it require the issuance of T4A slips for these smaller amounts.

So where am I headed? Stick with me here for just a bit longer.

It all means that the CRA would often not even know if a tax filer had Honourarium income – along with other earnings – sufficient to meet the $5,000 threshold. But they are now asking a tax filer to meet a standard of evidence and accounting that they do not require of themselves.

As an example, here is how the CRA sets out the tax filer’s responsibilities to report earnings[3]:

“Income such as tips, gratuities, or occasional earnings may not be shown on your T4 slips. If they are not included on your T4 slips, report them on line 10400 of your return. It is your responsibility to keep track of the earnings you receive through your employment.”

But keeping track of earnings is just the beginning. You are not just required to ‘keep track’ of casual earnings and gratuities, you also have to keep a set of books that meet  a new high standard of documentary evidence that is only now being established by the Federal Court in $5000 threshold cases.

And where is the onus? Neither the Federal Court nor CRA are helping people assemble the record of income they need to establish that they made the $5,000 needed to be eligible for CERB/CRB. That onus is all on the tax filer first to know about, then understand and finally to have kept past records at a new high standard that is only being articulated now.

Double standard, anyone?

Just imagine CRA disallowing casual earnings or tips to be reported at tax time. ‘Sorry – your documentation is insufficient – you’ll just have to leave them out of your return”.

Ha ha!

So where does this all leave Amanda Coscarelli?

We don’t know whether she received a few bucks in Honourariums in 2019 and God bless her if she did. But if she did, she would have had to record them in her personal accounts at a standard of documentary evidence that would satisfy the Federal Court.

What are the chances?

January 30, 2023

[1] para. 57

[2] para. 18