Auditor general: Ottawa wrote off $4.5 billion in COVID benefit repayments last year, up from $26 million

The federal government wrote off $4.5 billion tied to COVID-19 benefits in the last fiscal year, up sharply from $26 million the year before, according to an audit released Monday (November 9) by the Office of the Auditor General of Canada. Auditor General Karen Hogan's office also warns that a larger share of pandemic-era business loans will go unpaid. (Image: file image of Auditor General Karen Hogan.)

Written off only when recovery is not expected

The government tries to recover pandemic benefit payments when it determines someone was overpaid or ineligible. When repayment is not expected, it writes off the debt and removes it from its ledgers. The figure comes from the auditor general's audit of the federal government's consolidated financial statements for the last fiscal year.

Allowance for business-loan losses rises to $5.6 billion

The audit also found that the government's allowance for potential losses on Canada Emergency Business Account (CEBA) loans rose to $5.6 billion in the last fiscal year, out of $7.2 billion in loans outstanding — an allowance equal to nearly 80 per cent of the outstanding loans, signalling that the government expects a large share of the pandemic business loans will never be repaid.

Background: the auditor general warned about this in 2022

Hogan warned as early as December 2022 that $4.6 billion in COVID benefits had been paid to ineligible individuals, and that a further $27.4 billion in payments to individuals and businesses should be investigated; that report criticised the limited efforts to recover overpayments. Four years on, the latest write-off shows the problem flagged then is still unresolved.