Ottawa mother loses thousands in child benefits thanks to CRA error

An Ottawa woman who discovered she's owed thousands of dollars in child tax benefits she never received because of an error the Canada Revenue Agency made a decade ago has been told not to expect to recoup the full amount — even though CRA has admitted its mistake, and someone else apparently pocketed the money.

Nicole Davoudi, a single mother of two teenage daughters, first applied for the Canada child tax benefit in 2006. She was also receiving the universal child care benefit (which was combined with the child tax benefit to form the Canada child benefit in July 2016). The tax-free benefits are intended to help families with the cost of raising children under 18.

Davoudi said that after applying for the benefits and seeing monthly deposits in her account, she never gave it much thought.

"I never really questioned the amounts," Davoudi said. "The money that I did receive, I thought that's what I was entitled to."

Paid to wrong account

But in late April, after speaking with a friend who earned a similar salary but who had been receiving more in child benefits, Davoudi called CRA to find out whether she was indeed receiving monthly child tax benefit payments.

"I asked [the agent] if I was receiving the benefit and she said, 'You are receiving it.'... $230.78 was the amount, I believe, and I said, 'I can assure you I have not received that amount.'"

Davoudi was eventually informed the child tax benefit payments that should have been going to her had instead been paid to someone else, because a CRA agent had mistakenly entered the wrong bank account — it was off by a single digit — when Davoudi first applied for the benefits.

"She did admit that it went into the wrong account. They didn't admit to any wrongdoing," Davoudi said.

Turned to minister's office

After numerous phone calls and a frustrating lack of information — at one point, Davoudi said, the CRA spent weeks tracing the wrong benefit — she turned to the office of National Revenue Minister Diane Lebouthillier.

In August, Davoudi finally began receiving back payments of varying amounts totalling just over $8,000, but only dating back three years. To complicate matters, some of that money appears to be linked to disability claims Davoudi made in 2013 and 2014 after leaving a high-paying job to care for her daughter, who was diagnosed with leukemia.

"Had I known about this money then, it would have helped immensely," said Davoudi.

Davoudi said her "point person" in the minister's office, case co-ordinator Jessica Henri, informed her 51 back payments have now been issued, though to date Davoudi has only received 36 deposits.

Benefits denied could total $11K

Davoudi said Henri also informed her CRA would not repay benefits earned between 2006 and 2010, an amount that is difficult to pinpoint due to Davoudi's fluctuating income and variances in the child benefits scheme, but which could total about $11,000.

"I mean it is their data entry error, and it seems that they have a limit as to how far they want to pay me back," Davoudi said. "So I'm getting frustrated, I feel like they owe me an explanation, they owe me some type of explanation as to how this happened, and what is the repayment plan."

Henri did not respond to the CBC's request for an interview.

Under the Income Tax Act, CRA cannot discuss taxpayers' accounts. But in an emailed statement to CBC News, the tax agency spokeswoman Jelica Zdero said it makes "every effort" to investigate and resolve situations such as Davoudi's.

"If the results substantiate that the payment was deposited into the wrong bank account, funds are recovered and the client is issued a new payment," Zdero wrote.

However, "payments older than six years cannot be validated because the Financial Administration Act prescribes [Public Services and Procurement Canada] to destroy payment records after six years."

Filed complaints with CRA, ombudsman

Davoudi has filed an official service complaint with CRA and complained to the taxpayers' ombudsman.

"It's not a common situation that we would receive a complaint on," said ombudsman Sherra Profit. "But it is important to us to make sure that benefit recipients get the benefits that they're entitled to, and to help them if they're having difficulties in the service they're receiving from CRA."

Alan Freeman, an honorary senior fellow at the University of Ottawa's graduate school of public and international affairs and a former financial journalist who was also head of communications for the Department of Finance, said he's never heard of a case quite like this one, where CRA appears to have picked an "arbitrary" cut-off date for reparations.

Freeman said he understands why the government would want to place reasonable time limits on some programs, but that doesn't appear to apply here.

"From what you've been telling me, she applied in good faith and it was the CRA that made the mistake," Freeman said, noting CRA would expect to be paid in full if the tables were turned.

"I really think this is a question of equity and common sense. The government made the mistake, the government should make this woman whole."