The Canada Revenue Agency paid pandemic subsidies to 56,000 companies that owed the agency more than $700 million in unpaid tax, cabinet disclosed yesterday. Figures suggest the agency grossly underestimated the number of insolvent firms that received the Canada Emergency Wage Subsidy..“Five-hundred sixty-five were in arrears or had an amount owing related to GST remittances and 56,165 wage subsidy recipients were in arrears or had an amount owing related to other required tax payments when they received funding under the Canada Emergency Wage Subsidy,” said an Inquiry Of Ministry tabled in the Commons. Figures were requested by Conservative MP Kelly McCauley (Edmonton West), chair of the Commons government operations committee..According to Blacklock's Reporter, unpaid tax owed by subsidized companies totaled $723 million. The program overall cost $100.6 billion. The disclosure yesterday followed a 2021 audit that complained the Canada Revenue Agency failed to make cursory checks on companies applying for grants..“The agency had information where they could have vetted the eligibility of businesses,” Auditor General Karen Hogan testified October 5 at the Senate national finance committee..“They could have done some sort of screening before giving out wage subsidies and they didn’t use all the information available to them. They didn’t share information across divisions which would have facilitated the heavy labour that is now needed during post payment verification.”.Auditors in a 2021 report Canada Emergency Wage Subsidy warned tax arrears were a clear indication companies were insolvent. A May 16 Inquiry Of Ministry claimed only 787 insolvent firms received wage subsidies. Federal reports made no mention of 56,730 tax delinquents..“According to the agency’s previous research, employers with tax arrears also have a high likelihood of insolvency which means that giving the subsidy to these employers could present a risk,” wrote auditors..The wage subsidy program was passed by Parliament on April 11, 2020 as one of the first and costliest pandemic relief program. The revenue agency at the time said it was prepared to check and verify applications..“I think we are doing a very good job,” Assistant Revenue Commissioner Frank Vermaeten told the Commons finance committee at the time. “We definitely have been working very hard.”.Documents showed subsidies were paid to subsidiaries of foreign corporations, like the state-owned Bank of China, and Canadian companies that approved shareholder dividends while applying for taxpayers’ aid..“A number of companies availed themselves of wage subsidy support but clearly didn’t need it,” New Democrat MP Daniel Blaikie (Elmwood-Transcona, MB.) told the finance committee last December 14.
