Executive Summary: Key Legal and Evidentiary Issues

• Applicant sought judicial review of a CRA decision finding her ineligible for CERB benefits for Periods 2 and 3

• Eligibility under the CERB Act requires workers to cease working for COVID-19 reasons and not receive more than $1,000 in income during the benefit period

• For Period 2, the Amended Record of Employment showed earnings of $10,108.58, exceeding the $1,000 income threshold

• Insufficient documentation was provided to verify the source and timing of $1,619 in other employment income and $20,056.71 in other income noted in the 2020 tax return for Period 3

• New evidence presented at the hearing was rejected as it was not properly before the Court and was obtained after the original Decision

• The standard of review applied was reasonableness, requiring the Applicant to demonstrate fundamental flaws in the Decision's rationale or outcome

Background and employment circumstances

Manuela G. Palanca was employed as a full-time property manager when she applied for the Canada Emergency Response Benefit (CERB), a program established under the Canada Emergency Response Benefit Act to provide financial support to Canadians affected by COVID-19. The CERB offered payments of $500 per week for a maximum of 28 weeks. Ms. Palanca received benefits for three CERB periods beginning March 15, 2020. Weeks later, she received notice that she was being temporarily laid off effective April 22, 2020, and this temporary layoff became permanent as of June 9, 2020. Ms. Palanca acknowledged that at the time she applied for the CERB, she was not eligible, though she stated she always intended to return a portion of the amounts she received. The Canada Revenue Agency (CRA) eventually clawed back the full amount of the CERB.

The eligibility requirements and income threshold

Under the CERB Act, a worker is eligible for income support if they cease working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they apply for the payment, and do not receive income from employment or self-employment during those consecutive days. The Income Support Payment (Excluded Nominal Income) Regulations created an exception allowing workers to receive some income from employment or self-employment, provided the total of such income received did not exceed $1,000 during the consecutive days on which they ceased working.

First and second level review determinations

A first-level review determined that Ms. Palanca was not eligible for the CERB since the officer was unable to ascertain the income actually earned by the Applicant and that she stopped working for reasons related to COVID-19, as she had not provided sufficient information and had been unresponsive. Ms. Palanca requested a second-level review and provided further documents. The second-level officer, in a decision dated April 23, 2025, again determined her to be ineligible for both Period 2 (April 12, 2020 to May 9, 2020) and Period 3 (May 10, 2020 to June 6, 2020).

Analysis of Period 2 ineligibility

For Period 2, the Officer determined that Ms. Palanca earned more than $1,000 in employment income based on her Amended Record of Employment, which showed earnings in the period April 11, 2020 to April 24, 2020 in the amount of $10,108.58, consisting of her gross pay, vacation pay, and pay in lieu of notice. Ms. Palanca submitted that the Decision was unreasonable as she did not exceed the income limit, pointing to her bank statement which shows that on April 24, 2020, she received the net amount of $834.09 in pay from her former employer, which is under the income limit. However, this ignored the amounts shown in her Amended ROE upon which the Officer relied in coming to the conclusion that she had exceeded the income limit in Period 2. Ms. Palanca also submitted at the oral hearing that she remembers asking the Officer on their call whether receiving severance amounts disqualified her for the CERB, and the Officer said that it did not. The Court found no support for this exchange in the T1Case notes, nor did the Applicant provide this evidence in her supporting affidavit, which means the Court could not consider it.

Analysis of Period 3 ineligibility

For Period 3, Ms. Palanca was deemed ineligible as she did not provide proof of the source and timing of $1,619 in other employment income and $20,056.71 in other income noted in her 2020 tax return, and therefore the Officer could not determine if her income exceeded the $1,000 income limit in the period. Ms. Palanca submitted that her other income should have been found to be ineligible income for Period 3 given that it was a payout of an employee profit sharing plan. She relied on a document that she asked to provide to the Court at the hearing, which was obtained only after the Decision and, according to the Applicant, provided an explanation from her former employer regarding the nature of the other income. The Court declined to accept the document as it was not properly before the Court and could not be used to challenge the merits of the Decision. The Officer had asked the Applicant what the source of the other income was and made a request for supporting documents; the Applicant did not provide a response to this request, and her explanation simply came too late.

The Court's ruling and outcome

Applying the standard of reasonableness established in Canada (Minister of Citizenship and Immigration) v Vavilov, Madam Justice Whyte Nowak found that the Applicant had not shown that the Officer's Decision regarding her eligibility was unreasonable; rather, the Decision was justified on the facts and the law that constrained the Officer. The Federal Court dismissed the application for judicial review, finding the Decision reasonable in finding the Applicant ineligible for Periods 2 and 3. The Attorney General of Canada was the successful party. No costs were awarded, as neither party sought costs.