25 September 2023

CANADA: Jobless man fined for Agency’s error

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A jobless Canadian man, Zbigniew Kazmierczak (pictured), was ordered to pay tax on funds a Government Department incorrectly deposited in his account — even though he recognised the error and made no attempt to access the money.

Service Canada paid about C$14,000 (A$15,200) of Employment Insurance (EI) to Mr Kazmierczak even though he was not entitled to jobless benefits until 2019 because he had received a severance package from his former employer.

Three days later, he was informed of the mistake and told by the Canada Revenue Agency he should return the money plus an extra C$2,077 (A$2,255) in taxes.

Service Canada said that was standard policy and it was required to collect income tax on EI payments — even those issued in error.

Representative of the Canadian Taxpayers Federation, Aaron Wudrick said Mr Kazmierczak’s situation was an example of bureaucratic rules that “defy common sense” and put the burden of fixing Government mistakes on ordinary Canadians.

He said in certain circumstances, EI recipients could apply to get the money back, but Mr Kazmierczak said that option was not offered to him until a journalist approached Service Canada.

Mr Kazmierczak paid the money to avoid penalties, then filed two appeals to try to get it back, but both were denied; however, the Agency reversed its position when the story broke in the media.

Service Canada spokesperson Amélie Maisonneuve said the tax reversal option was “overlooked” and “should have been considered” while Mr Kazmierczak was trying to resolve his issue.

“The Department is reviewing its practices and guidance related to this type of issue to avoid the repetition of this type of situation,” Ms Maisonneuve said.

She also said Service Canada charged the income tax on incorrect payouts because it had to comply with provisions in the Income Tax Act.

Mr Kazmierczak said he did not believe his situation would have been resolved if he hadn’t gone public.

Even after the refund was deposited into his account, he received a letter from the Social Security Tribunal of Canada telling him his final appeal was denied and he would have to pay the taxes.

He ignored that letter.

Ottawa, 9 October 2018

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