Background
Colleen Gurnsey, a self-employed esthetician, received the Canada Recovery Benefit for eight two-week periods between December 2020 and June 2021. After selecting her applications for validation, the Canada Revenue Agency requested documents showing that she had earned at least $5,000 in 2019, 2020, or the 12 months preceding an application.
Gurnsey eventually submitted tax forms, partial bank statements, appointment-calendar pages, and credit-card payment records. Her T2125 forms reported net business income of $0 for 2019 and $3,443 for 2020. A CRA officer therefore found her ineligible for the benefit. Gurnsey sought judicial review, arguing that her earnings and deposits exceeded $5,000 and that business-use-of-home expenses should not have reduced her qualifying income.
The Court’s Holding
The Federal Court dismissed the application. Under subsection 3(2) of the Canada Recovery Benefits Act, qualifying self-employment income means revenue less expenses incurred to earn that revenue. The statutory threshold therefore concerns net, rather than gross, self-employment income.
The CRA reasonably relied on Gurnsey’s tax information and T2125 forms, which showed net income below $5,000. Her bank deposits, appointment records, and payment summaries did not overcome that determinative evidence, and she did not establish that the CRA erred by accounting for her reported business-use-of-home expenses. The Court also excluded documents that had not been before the officer, although it said their admission would not have changed the result. It amended the style of cause to name the Attorney General of Canada as respondent and made no order as to costs.
Key Takeaways
- Canada Recovery Benefit eligibility for a self-employed applicant turns on net self-employment income, not gross receipts or deposits.
- The CRA may reasonably rely on an applicant’s tax returns and T2125 forms when assessing whether the $5,000 income threshold was met.
- Evidence not before the administrative decision-maker is generally inadmissible on judicial review unless a recognized exception applies.
Why It Matters
The decision underscores that self-employed benefit applicants cannot establish eligibility merely by documenting revenue exceeding $5,000. Their expenses must be deducted, and the resulting net income must satisfy the statutory threshold. It also illustrates the limited role of the Federal Court on judicial review: the Court assesses whether the CRA’s decision was reasonable on the record before it rather than reconsidering eligibility using new evidence.