Federal Court Quashes CRSB Benefit Determination

OUTCOME: Allowed in Part

Date: 20260629 Docket: T-1923-25 Citation: 2026 FC 877 Ottawa, Ontario, June 29, 2026 PRESENT: Madam Justice Sadrehashemi BETWEEN: [APPELLANT] Applicant and CANADA REVENUE AGENCY Respondent

REASONS AND

JUDGMENT I. Overview [ 1 ] In 2021 and early 2022, the Applicant, [APPELLANT], applied for and received the Canada Recovery Benefit ( “CRB” ) for eighteen two-week periods, the Canada Recovery Sickness Benefit ( “CRSB” ) for a three one-week periods and the Canada Worker Lockdown Benefit ( “CWLB” ) for four one-week periods. [ 2 ] Approximately three years later, the Canada Revenue Agency ( “CRA” ) conducted a validation review and found Ms. [APPELLANT] ineligible for several of the CRB, CRSB and the CWLB benefits she had already received. This meant that Ms. [APPELLANT] is required to pay back those benefit amounts she had received. Ms. [APPELLANT] challenged the ineligibility decisions on judicial review. At the hearing, Ms. [APPELLANT] conceded that she was required to pay back the CWLB benefit; therefore, only the CRB and CRSB payments remain at issue. [ 3 ] Ms. [APPELLANT] argues that in determining her CRB eligibility, the [NAME] conducting the [NAME] review ([NAME]) only considered her 2020 income instead of her 2019 income, which was more advantageous to her. She also challenges the manner in which [NAME] calculated her average weekly income. At the hearing, Ms. [APPELLANT] also raised arguments about the amounts that ought to have been considered in [NAME]’s calculations relating to the CRB determination. Lastly, Ms. [APPELLANT] argued that [NAME]’s determination of her CRSB eligibility, particularly as it relates to her hours of work at the time she contracted COVID-19, is not consistent with the evidence she presented. [ 4 ] With respect to the CRB benefit, I do not agree with Ms. [APPELLANT] that [NAME] relied on her 2020 income instead of her 2019 income, nor do I agree that [NAME] erred in their method of calculating the 50 percent reduction in income, or that her expenses and other deductions should not have been considered with respect to her self-employment income. I do, however, agree that the CRSB eligibility determination is unreasonable. The application for judicial review is allowed with respect to the CRSB eligibility determination.

II. Procedural History and Background [ 5 ] In 2019, Ms. [APPELLANT] worked as a self-employed actress, a server and a bartender. Due to the COVID-19 pandemic, she experienced periods of reduced employment and, as a result, also began working on contract at the [COMPANY] ([NAME]) in October 2020. [ 6 ] Ms. [APPELLANT] applied for and received: (i) the CRB for the eighteen 2-week periods between October 11, 2020 and June 19, 2021, (ii) the CRSB for the three 1-week periods between December 12, 2021 to January 1, 2022 and (iii) the CWLB for the four 1-week periods between January 2, 2022 to January 29, 2022. [ 7 ] On July 10, 2024, the CRA sent Ms. [APPELLANT] a letter requesting that she provide documentation in support of her eligibility for the CRB, CRSB and CWLB benefits. Ms. [APPELLANT] submitted several documents including bank account deposit details, payroll information, and a positive COVID-19 test from December 16, 2021. [ 8 ] On November 26, 2024, a [NAME] notified Ms. [APPELLANT] that she was ineligible for several CRB, CRSB and CWLB benefit periods for which had applied and received payment. Approximately a week later, she requested a [NAME] review of her eligibility. [ 9 ] On May 14, 2025, [NAME] called Ms. [APPELLANT] and explained the eligibility criteria as well as additional documentation she could submit to support her eligibility, including her records of employment from [NAME] and the bartending job, tip amounts during the application periods and bank statements to show the deposit of her tips. [ 10 ] After receiving the new documentation from Ms. [APPELLANT], [NAME] conducted the [NAME] review and found that Ms. [APPELLANT] did not meet all the eligibility criteria for the CRB, CRSB and CWLB periods. The CRA notified Ms. [APPELLANT] by letter on May 23, 2025, of her ineligibility for the CRB, CRSB and CWLB periods.

III. Preliminary Issue: New Evidence [ 11 ] The Respondent asked the Court not to consider a chart filed in the Applicant’s Record. The Respondent argues that the document is not properly before the Court because it was not before the CRA when they made their eligibility decision. [ 12 ] In general, it is not appropriate to consider evidence on judicial review that was not before the decision-maker. There are exceptions to this general rule, including to demonstrate a procedural defect, to provide general background information to assist the Court, and to demonstrate the absence of evidence in the record for a particular finding ( Association of Universities and Colleges of Canada v [NAME] (Access Copyright) , 2012 FCA 22 at para 20). [ 13 ] Ms. [APPELLANT] is arguing that the chart at issue is not new evidence because it consolidates monetary amounts that were all before [NAME] into a more readable format. While it appears that much of the information in the chart was in the record before [NAME], it is challenging to determine whether all the amounts listed have counterparts in the record. Since the sole purpose of the chart is to be of assistance to the Court, I would prefer not to accept it into evidence at the risk that some of the information was not in the record before [NAME].

IV. Analysis A. CRB determination [ 14 ] The CRB was one of the federal government measures introduced in response to the COVID-19 pandemic offering financial support to employed and self-employed people impacted by the pandemic. Paragraph 3(1)(f) of the Canada Recovery Benefits Act, SC 2020, c 12, s 2 [CRB Act] sets out the 50% reduction of income requirement for the benefit: 3 (1) A person is eligible for a Canada recovery benefit for any two-week period falling within the period beginning on September 27, 2020 and ending on October 23, 2021 if 3 (1) Est admissible à la prestation canadienne de relance économique, à l’égard de toute période de deux semaines comprise dans la période commençant le 27 septembre 2020 et se terminant le 23 octobre 2021, la personne qui remplit les conditions suivantes : […] […] (f) during the two-week period, for reasons related to COVID-19, other than for reasons referred to in subparagraph 17(1)(f)(i) and (ii), they were not employed or self-employed or they had a reduction of at least 50% or, if a lower percentage is fixed by regulation, that percentage, in their average weekly employment income or self-employment income for the two-week period relative to f) au cours de la période de deux semaines et pour des raisons liées à la COVID-19, à l’exclusion des raisons prévues aux sous-alinéas 17(1)f)(i) et (ii), soit [NAME] n’a pas exercé d’emploi — ou exécuté un travail pour son compte —, soit [NAME] a subi une réduction d’au moins cinquante pour cent — ou, si un pourcentage moins élevé est fixé par règlement, ce pourcentage — de tous ses revenus hebdomadaires moyens d’emploi ou de travail à son compte pour la période de deux semaines par rapport à : (i) the case of an application made under section 4 in respect of a two-week period beginning in 2020, their total average weekly employment income and self-employment income for 2019 or in the 12-month period preceding the day on which they make the application, and (i) tous ses revenus hebdomadaires moyens d’emploi ou de travail à son compte pour l’année 2019 ou au cours des douze mois précédant la date à laquelle [NAME] présente une demande, dans le cas où la demande présentée en vertu de l’article 4 vise une période de deux semaines qui débute en 2020, (ii) in the case of an application made under section 4 in respect of a two-week period beginning in 2021, their total average weekly employment income and self-employment income for 2019 or for 2020 or in the 12-month period preceding the day on which they make the application; (ii) tous ses revenus hebdomadaires moyens d’emploi ou de travail à son compte pour l’année 2019 ou 2020 ou au cours des douze mois précédant la date à laquelle [NAME] présente une demande, dans le cas où la demande présentée en vertu de l’article 4 vise une période de deux semaines qui débute en 2021; [ 15 ] Ms. [APPELLANT] principally argues that despite the legislation permitting the 2019 income to be used as the comparison point for evaluating the 50% reduction income, [NAME] limited their review to her 2020 income. Ms. [APPELLANT]’ view is supported by a line in the decision letter which stated: “you did not have a 50% reduction in your average weekly income compared to the previous year due to COVID-19” . [ 16 ] As I explained at the hearing, throughout [NAME]’s notes that form part of their reasons, Ms. [APPELLANT]’ 2019 income is referenced. [NAME] explicitly stated: “For [applicant’s] CRB periods I compared her earnings during the periods to her 2019 income as that was the most advantageous” . While it is unfortunate that the language in [NAME]’s decision letter has caused understandable confusion for Ms. [APPELLANT], I cannot find it affected [NAME]’s eligibility determination. [ 17 ] Ms. [APPELLANT] also challenged the method [NAME] used to calculate her average weekly income which was used to demonstrate whether she experienced a 50% reduction in income. [NAME] explained that the 50% reduction in income is calculated by first selecting the base year most advantageous to her, calculating the bi-weekly average and dividing the average by two to determine 50% of her average bi-weekly income. [ADDRESS] has found this method of calculation to be reasonable and consistent with paragraph 3(1)(f) of the CRB Act in a number of cases (see [NAME] v. Canada (Attorney General) , 2025 FC 894 at paras 11-14; [NAME] v Canada (Attorney General) , 2024 FC 648 at para 14; [NAME] v Canada (Attorney General) , 2025 FC 75 at para 43; [NAME] v Canada (Revenue Agency) , 2024 FC 2069 at para 16; [NAME] v Canada (Attorney General) , 2024 FC 1913 at para 18; [NAME] v Canada (Attorney General) , 2024 FC 1481 at para 8). [ 18 ] Ms. [APPELLANT] also argues [NAME] erred by considering her net as opposed to her gross self-employment income from her acting jobs. She also argues that [NAME] failed to consider her RRSP withdrawals as eligible income. I do not agree. [ 19 ] For the purposes of determining “income” under subsection 3(1) of the CRB Act, subsection 3(2) of the CRB Act states that “income from self-employment is revenue from the self-employment less expenses incurred to earn that revenue” . Eligible income for self-employment is assessed on net self-employment income and not gross self-employment income ( [NAME] v Canada (Attorney General) , 2022 FC 305 at para 20, aff’d 2022 FCA 187). [ 20 ] With respect to Ms. [APPELLANT]’ RRSP withdrawal being considered as part of her 2019 income, eligible income as defined under section 3(1) of the CRB Act does not include funds withdrawn from an RRSP (see also [NAME] v Canada (Attorney General) , 2025 FC 559 at para 15 ). [ 21 ] Overall, I see no basis to interfere with the CRB eligibility determination. Ms. [APPELLANT] has not established any sufficiently serious shortcoming in [NAME]’s analysis of her eligibility for the CRB in light of the facts and the law. B. CRSB Benefit: Work Week [ 22 ] [NAME] found Ms. [APPELLANT] was not eligible for the CRSB Period (December 12 to December 19, 2021) as her scheduled work week was not reduced by 50% on account of self isolation for reasons related to COVID-19. During the CRSB Period, Ms. [APPELLANT] was employed as a bartender at a [NAME], and she was also employed at [NAME] on contract. [ 23 ] Ms. [APPELLANT] indicated in a letter to the CRA that the [NAME] where she was employed shut down on December 15, 2021, due to a COVID-19 outbreak amongst staff. In her request for re-evaluation to the CRA, Ms. [APPELLANT] wrote that: (i) on December 14, 2021, she took two rapid COVID-19 tests and tested positive; (ii) on December 15, 2021, she visited a [NAME] where she had a PCR COVID-19 test; and (iii) on December 16, 2021 she received a positive PCR COVID-19 test result. She also included her test results from the [NAME] with her request for re-evaluation. [ 24 ] To determine the hours Ms. [APPELLANT] worked during the CRSB Period, [NAME] used her Record of Employment which indicates that Ms. [APPELLANT] worked 44 hours between December 13 and December 19, 2021. [NAME] used the Record of Employment to determine Ms. [APPELLANT]’ work hours for the week of the CRSB Period, despite the fact that the range of dates in the Record of Employment (December 13 – December 19, 2021) differs from the range of dates for the CRSB Period itself (December 12 - December 19, 2021). [ 25 ] In [NAME]’s notes, they acknowledge that Ms. [APPELLANT] “contracted COVID [on] December 16, 2020” and she “applied for the CRSB as one of [her] workplaces was shut down by the [NAME] due to a high volume of staff becoming infected” . [NAME] determined that Ms. [APPELLANT] was not eligible for the CRSB Period because she worked a total of 44 hours at the [NAME] and zero hours at [NAME] and to be eligible, she needed to have worked less than 28.67 hours. [ 26 ] In her oral submissions, Ms. [APPELLANT] argues that she only worked 24 hours during the CRSB Period as she was self-isolating beginning on December 16, 2021. [NAME] failed to grapple with the following points: (i) Ms. [APPELLANT] was self-isolating for at least half of the CRSB Period; (ii) the [NAME] where Ms. [APPELLANT]’ worked was closed for at least half of the CRSB Period and; (iii) the evidence on the record, including screenshots of a tip calculation application, demonstrates that she worked on only two days of the Record of Employment pay period, December 14 and December 15, 2021. [ 27 ] [NAME]’s finding that Ms. [APPELLANT] worked 44 hours in a two-day period requires further explanation given the evidence in the record and common sense as to what could be a plausible number of working hours. Despite accepting Ms. [APPELLANT]’ evidence about the [NAME] shut down and her contraction of COVID-19, [NAME] does not explain how this can be reconciled with her also having worked 44 hours in the CRSB period. Given that the hours worked in this period are central to determining Ms. [APPELLANT]’ eligibility for the benefit, this was not a minor misstep but a significant issue for the eligibility analysis. As such, Ms. [APPELLANT]’ eligibility for the CRSB benefit for the week of December 13th requires redetermination.

V. Disposition [ 28 ] The application for judicial review is allowed, in part. Ms. [NAME] challenge to [NAME]’s eligibility determinations of the CRB and CWLB are dismissed. The CRA’s eligibility determination with respect to the CRSB benefit is quashed and sent back to be redetermined. The style of cause is amended to substitute the Attorney General of Canada as the Respondent. The Respondent does not seek costs and no costs are awarded.

JUDGMENT in T-1923-25 THIS COURT’S

JUDGMENT is that The application for judicial review is allowed in part; The decision dated May 23, 2025, finding that Ms. [APPELLANT] ineligible for the CRSB is set aside and sent back to be redetermined by a different decision-maker; The decisions dated May 23, 2025, finding Ms. [APPELLANT] ineligible for CWLB and the CRB are confirmed; The style of cause is amended with the immediate effect to name the Attorney General of Canada as the proper Respondent; and No costs are ordered. Blank "Lobat Sadrehashemi" Blank Judge FEDERAL COURT SOLICITORS OF RECORD Docket: T-1923-25 STYLE OF CAUSE: [APPELLANT] v. CANADA REVENUE AGENCY PLACE OF HEARING: VIA VIDEOCONFERENCE DATE OF HEARING: FEBRUARY 11, 2026

REASONS FOR

JUDGMENT AND

JUDGMENT: [APPELLANT] J DATED: JUNE 29, 2026 APPEARANCE : [APPELLANT] FOR THE APPLICANT (ON HER [APPELLANT]) [APPELLANT] [NAME] For The Respondent SOLICITORS OF RECORD : [NAME] Department of Justice Canada Toronto, Ontario For The Respondent