Executive Summary: Key Legal and Evidentiary Issues

• CRA’s second-level review treated Mr. Cormier’s short-term cottage rental revenues as rental income from property rather than self-employment income, and therefore as non-qualifying income for CERB and CRB, resulting in a requirement to repay $38,600 in benefits.

• The Federal Court held that, applying the statutory $5,000 qualifying income thresholds and the reasonableness standard of review, the CRA officer could reasonably find that Mr. Cormier did not demonstrate sufficient eligible employment or self-employment income for CERB or net self-employment income for CRB.

• Information about a distinct “bed and breakfast” activity and amended 2019 tax documentation arose only after the CRA’s April 16, 2025 decisions and was not before the officer, so it could not be relied on in judicial review to challenge the reasonableness of those decisions.

• The Court confirmed that the 2021 Remission Order addresses only the confusion between gross and net qualifying self-employment income for CERB, does not change what constitutes qualifying self-employment income, and has no application to CRB.

• On the record, CRA had given Mr. Cormier multiple chances over almost two years to supply documents and explanations, and its letters and internal notes showed a transparent, justified and intelligible reasoning process that met the Vavilov standard of reasonableness.

• Although dismissing the application and with CRA’s requirement to repay $14,000 in CERB and $24,600 in CRB remaining in place, the Court indicated it would be desirable for CRA, if Mr. Cormier applies in writing, to consider a further review of his CERB entitlement and possible relief under the Remission Order based on his 2019 “bed and breakfast” income. 

Factual background and timeline of the dispute

Mr. Sylvain Cormier was, at the time of the relevant events, self-employed in housekeeping and also operated a short-term cottage rental business. He stated that the COVID-19 pandemic and public health measures led to the closure of his business and a significant loss of income.

In April 2020, Mr. Cormier applied for the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB). He received $14,000 in CERB for periods 1 to 7, covering March to September 2020, and $24,600 in CRB for periods 1 to 27, covering September 2020 to October 2021. The total amount received was therefore $38,600, which the CRA is now seeking to recover.

In his 2019 income tax return, filed in August 2020, Mr. Cormier reported gross rental income of $28,750 (line 12599) and net rental income of $5,941 (line 12600), all from short-term cottage rentals. He also reported gross business income of $11,150 (line 13499) and a net business loss of $4,516 (line 13500). At the hearing, he claimed this business income was from operating a “bed and breakfast,” but this characterization does not appear in the CRA tax documents.

In May 2021, he filed his 2020 income tax return, reporting gross rental income of $21,844 and net rental income of $2,922, again from short-term cottage rentals.

On May 9, 2023, the CRA wrote to Mr. Cormier advising that his file had been selected for review regarding CERB and CRB amounts and asking him to provide documentation relating to his 2019 and 2020 income within 45 days to demonstrate his eligibility. He did not provide documents in response.

In early 2024, CRA attempted to reach him by telephone several times. A call took place on January 12, 2024. According to CRA’s notes, Mr. Cormier said that COVID-19 had “closed his services,” that his 2019 self-employment income came from operating a “bed and breakfast” where he offered laundry, meals and activities, and that he could no longer recall the source of his other business income, possibly a maple grove. Because he was driving, he asked the officer to call back and leave a message specifying the documents needed.

On January 16, 2024, after another unsuccessful attempt to reach him, the officer recorded that Mr. Cormier was ineligible for CERB, noting that he did not seem certain of his 2019 income, that he had said he would call back and did not, and that a further attempt to contact him had failed.

On January 24, 2024, following this first review, CRA sent a letter advising Mr. Cormier that he was ineligible for CERB on the basis that he did not have sufficient employment or self-employment income in 2019. The letter informed him that a second review could be requested. On January 26, 2024, CRA sent a similar letter regarding his ineligibility for CRB.

On August 1, 2024, Mr. Cormier contacted CRA to request a second review. He reiterated that he had been mistrustful during the January 2024 call because of the questions asked and that this explained why he had not fully cooperated. In October 2024 and April 2025, his federal Member of Parliament’s office made representations to CRA regarding his CERB file.

On April 7, 2025, Mr. Cormier submitted a formal request for a second review in relation to both CERB and CRB. According to CRA’s certified record, the documents he provided for this second review included: a letter dated April 7, 2025 from his MP’s office requesting a review of the file; an explanatory letter from Mr. Cormier dated March 25, 2025; a letter dated April 1, 2025 from his accountant stating, notably, that short-term cottage rentals are not mere passive income but part of self-employment activities; and monthly statements from his joint account with his associate from January 2019 to December 2020.

On April 14, 2025, the reviewing officer (the Agent) spoke with Mr. Cormier by telephone about the business income he had declared.

The CRA’s second-level decisions on CERB and CRB

In a letter dated April 16, 2025, the Agent advised Mr. Cormier that, following the second review, CRA’s position remained that he was not eligible for CERB or CRB.

For CERB, CRA stated that he was ineligible because he had not earned at least $5,000 (before tax) in employment or self-employment income in 2019 or in the 12 months before his claim.

For CRB, CRA stated that he was ineligible because he had not earned at least $5,000 (before tax) in employment income and/or net self-employment income in 2019, 2020, or in the 12 months preceding his claim.

The Court explained that the reasonableness of these decisions had to be assessed in light of both the decision letters and the Agent’s internal notes dated April 14, 2025, recorded in CRA’s system. Those notes form part of the reasons and reveal the basis of the decisions.

The notes show that the Agent accepted that Mr. Cormier and an associate rented cottages on a short-term basis, with rental periods up to 30 days. Based on his information in the April 14, 2025 call, the Agent recorded that the rentals were “all-inclusive,” that firewood was provided, and that cleaning and general maintenance between rentals were performed, but that there were no included “activities” and no “meals” provided by Mr. Cormier. The Agent also noted that the “business income” he declared represented the profits generated at year-end, and she took stock of the amounts he declared as business and rental income in 2019 and 2020.

From his explanatory letter, the Agent noted that Mr. Cormier said he “must remain available” to maintain his rental cottages and that short-term rentals have an impact because he must do maintenance more frequently. In the decisions, the Agent concluded that his rental income was not admissible for the benefits and did not constitute income that could be taken into account for the eligibility assessment.

To determine whether his income qualified as self-employment income under the CERB and CRB statutes, the Agent relied in part on CRA’s internal guide “Confirmation of eligibility for COVID-19 benefits.” The guide states, in particular, that rental income is not a qualifying source for CERB or CRB. For “home-sharing” (e.g. Airbnb), it explains that such income is generally treated as rental income from property when the client provides only basic services (such as heat, water, parking, internet, laundry, and maintenance of the rental property and adjacent areas, as well as appliances and furnishings). It adds that income may be considered business income from self-employment if additional services are offered or made available (such as meals, security, cleaning during the stay, delivery service, transportation, or tours), and that the number, frequency and nature of such services must be examined to determine whether the rental operation could be considered a business. It further notes that the range of services must be such that the payment can be regarded as largely attributable to the services rather than to pure rental.

In Mr. Cormier’s case, the Agent determined, based on the evidence he provided, that he had not shown that he offered “additional services” in connection with his short-term cottage rentals.

The Court also observed that Mr. Cormier’s total gross income from short-term cottage rentals in 2019 was $39,900, for total net income of $1,425, which is below $5,000. His net rental income for 2020 was also below $5,000.

Legal framework: standard of review and eligibility thresholds

The Court applied the judicial review framework from Canada (Minister of Citizenship and Immigration) v Vavilov and subsequent Supreme Court decisions. Under that framework, the presumptive standard of review for administrative decisions is reasonableness, subject to specific exceptions. The Court noted that CRA’s decisions regarding CERB and CRB eligibility are subject to the reasonableness standard.

Although Mr. Cormier alleged procedural unfairness by arguing that CRA ignored a key element of the record and failed to provide clear, complete reasons, the Court found that these arguments related to the merits of the decisions rather than to true procedural fairness issues. The only applicable standard was therefore reasonableness.

When reviewing for reasonableness, the Court’s role was to examine the reasons of the administrative decision-maker and determine whether the decisions were based on an “inherently coherent and rational” analysis and justified in light of legal and factual constraints. The Court had to assess whether the decisions had the attributes of justification, transparency and intelligibility, and it was not to reweigh the evidence or conduct a de novo analysis. It would intervene only if CRA fundamentally misunderstood or ignored the evidence that had been placed before it.

The Court summarized the statutory eligibility conditions. For CERB, the legislation required, among other things, that employees or self-employed workers earn at least $5,000 in employment or self-employment income in 2019 or during the 12-month period preceding their CERB application, and that they stop working for COVID-19-related reasons for at least 14 consecutive days in the four-week period covered by the claim.

For CRB, the Court noted that employees or self-employed workers had to: earn at least $5,000 in employment income or net self-employment income in 2019, 2020, 2021, or in the 12 months before the first CRB claim; suffer a 50% decrease in average weekly income for reasons related to COVID-19; and search for employment or self-employment work during each two-week benefit period.

The Court then addressed the 2021 Remission Order adopted in response to confusion over gross versus net self-employment income for CERB eligibility. It explained that, whereas the CRB legislation clearly referred to net income from the outset, the CERB legislation was originally silent on that issue. The Remission Order aimed to mitigate the effects of possible confusion about CERB eligibility and allowed self-employed persons who had at least $5,000 in gross qualifying self-employment income and who filed their 2019 and 2020 returns by December 31, 2022 to keep CERB payments even if their net income from self-employment was below $5,000.

However, the Court emphasized that the Remission Order does not make a taxpayer eligible for CERB and does not change what constitutes qualifying self-employment income for CERB purposes. It also applies only to CERB and emergency EI benefits and has never been extended to CRB.

Treatment of new evidence and the late “bed and breakfast” explanation

Before turning to the merits, the Court dealt with objections raised by the Attorney General of Canada concerning evidence that Mr. Cormier filed in the judicial review but had not provided to CRA.

The Court recalled that, as a general rule, judicial review is limited to evidence that was before the administrative decision-maker, and that its purpose is to review decisions rather than to conduct a trial de novo on the basis of new proof.

New documents may be admitted only in narrow circumstances, such as when they provide general or contextual information that helps the Court understand the issues, demonstrate procedural defects or breaches of procedural fairness, or show that the decision-maker had no evidence at all on a particular point.

The Attorney General objected to Mr. Cormier’s reliance on: a June 20, 2025 email exchange between him and a trainee in the Attorney General’s office then handling the court proceeding; and certain pages from what Mr. Cormier said was his corrected 2019 tax return. The Court also noted that his memorandum stated he had made corrections to his 2019 return in 2025, including corrections to his gross and net self-employment income.

The June 20, 2025 email post-dated the April 16, 2025 decisions and indicated that a corrected 2019 tax return was being prepared and might be filed before the hearing. The attached pages to his affidavit were annexes to his amended 2019 return, which the Agent had never seen. Mr. Cormier acknowledged at the hearing that the Agent did not have this information when she decided the second review.

The Court held that these materials, created after the decisions, did not fall within any of the recognized exceptions and were therefore inadmissible. They could not be taken into account in determining whether CRA’s decisions were reasonable.

The Court then addressed Mr. Cormier’s oral contention that, for 2019, a distinction must be drawn between income from short-term cottage rentals and income from his “bed and breakfast,” where, he said, he prepared daily meals and therefore provided additional services. He stated that the “business income” declared in 2019 came from the bed and breakfast and that this income did not appear in later years because he had sold that business.

In response to the Court’s questions, however, Mr. Cormier admitted that he had not explained this distinction to the Agent during their April 2025 call. The Court further noted that his accountant’s letter, which was sent to CRA for the second review, referred only to short-term cottage rentals and did not mention any bed-and-breakfast activity.

Mr. Cormier added that he would have provided that information if the Agent had asked, but the Court stressed that the burden was on him to establish, on a balance of probabilities, that he met the eligibility criteria for CERB and CRB. The Court pointed out that CRA had asked him to provide documents and information demonstrating his eligibility and that nearly two years had elapsed between CRA’s initial May 2023 contact letter and the April 2025 decisions, during which he had the opportunity to consult professionals and furnish the requested material.

Because he did not explain the difference between his two income sources—short-term cottage rentals and the bed and breakfast—it was impossible for the Agent, on the basis of the information provided, to know that his 2019 income came from two distinct activities.

The Court remarked that the situation was unfortunate because it might have allowed his gross income from the bed and breakfast to be recognized as eligible self-employment income for purposes of his benefit applications. It noted that he would “probably” have had strong arguments to show that his gross business income of $11,150 was from operating a bed and breakfast in 2019, that this income would be qualifying self-employment income for CERB purposes, and that he would therefore have the right to keep the $14,000 in CERB under the Remission Order. Nonetheless, the Court concluded that it had no power in this proceeding to reduce his debt.

Reasonableness of CRA’s classification of rental income and denial of benefits

The core question was whether Mr. Cormier’s short-term cottage rental income came from “employment” or “work he performs for his own account” within the meaning of the CERB and CRB statutes (i.e., “employment” or “self-employment” in the English versions).

The Court held that CRA could reasonably conclude that his rental income did not constitute self-employment income for eligibility purposes. The Agent’s notes enabled the Court to follow CRA’s reasoning, and the analysis displayed transparency, justification and intelligibility.

During the April 2025 call, Mr. Cormier indicated that most of his services consisted of cleaning and preparing the accommodations for the next guests. These services related to maintaining the property and were considered basic services under CRA’s guide rather than “additional services.” He acknowledged that he did not offer services such as meals, security, transportation, or city tours in connection with the cottage rentals.

The Court also emphasized that, for 2019, 2020 and 2021, Mr. Cormier himself declared the income from this activity on the rental-income lines of his tax returns (lines 12599 and 12600), as “rental income.” Given this, the Agent could follow the CRA guide and treat those revenues as rental income from property, not business income from self-employment.

Although his 2019 return also showed separate “business income,” the Court observed from the Agent’s notes that, in his discussions with her and in the documents submitted for the second review, he consistently spoke only about short-term cottage rental income, with no further details of other income sources.

The Court found the Agent’s reasoning consistent with tax jurisprudence distinguishing income from property (generally passive) from business income (requiring greater activity). The jurisprudence indicates that the more intensive the services provided, the more likely the income is from business; conversely, lower levels of activity and services point to income from property. To qualify as business income, the services must go beyond what is normally provided in a rental, and rent from real property is presumed to be income from property unless a substantial part of the rent is paid for services supplied by the landlord.

The Court also noted that in several earlier decisions, it had upheld CRA determinations that income from renting immovable or movable property (for example via “Airbnb”) was income from property, not self-employment income, and thus not eligible income for CERB and CRB.

In light of all this, the Court considered it reasonable for the Agent to conclude that Mr. Cormier was not eligible for CERB or CRB because he did not have qualifying self-employment income. The Court emphasized that this did not mean he acted dishonestly in seeking the benefits; it meant only that he had not shown that the Agent misunderstood the evidence or made unreasonable decisions on the record before her.

The limited role of the Remission Order and potential future relief

Mr. Cormier further argued that the Agent failed to apply the Remission Order. At the hearing, however, he admitted that he had never raised this issue with the Agent and had not, up to that point, sent a written request to the Minister to benefit from the Remission Order.

In those circumstances, the Court could not find that the Agent erred by not analyzing whether the Remission Order applied to his situation.

The Court reiterated that the Remission Order has a specific and limited scope. It applies only to CERB and emergency EI benefits and simply allows gross income to be considered when determining whether a recipient must repay CERB. Even then, the gross income in question must be qualifying employment or self-employment income.

Since the Remission Order has never been extended to CRB, its possible application could only affect CRA’s decision on the CERB amounts. As for CRB, the Remission Order does not apply, and CRA is entitled to seek repayment of $24,600 in CRB benefits, because at no time did Mr. Cormier declare net self-employment income greater than $5,000.

The Court stated that it is not for the Court to decide whether the Remission Order applies to Mr. Cormier’s circumstances, as Parliament has entrusted that responsibility to CRA and the Minister. However, the Court did note that, according to Mr. Cormier’s statements at the hearing, his gross “business income” of $11,150 for 2019 would be income from operating a bed and breakfast and could constitute qualifying self-employment income for CERB purposes, given the additional services involved.

The Court therefore invited Mr. Cormier to write to the Minister to determine whether the Remission Order can apply to his situation and to provide CRA with all relevant information and documents concerning his 2019 bed-and-breakfast activities, so as to distinguish that activity from his short-term cottage rentals. The Court observed that CRA has often agreed to consider a third review in CERB cases, even though this option is not expressly mentioned in the statute or CRA’s guide.

Nevertheless, the Court stressed that in a judicial review, its role is to assess whether the decisions under review are reasonable in light of the evidence and arguments presented to CRA, not to decide eligibility or to declare that a third review must be offered. Here, Mr. Cormier had not shown that the Agent’s second-review conclusions were affected by any error justifying intervention.

Outcome, successful party, and financial consequences

The Federal Court dismissed Mr. Cormier’s application for judicial review. It found that CRA’s decisions on his CERB and CRB eligibility were based on an inherently coherent and rational analysis and had the attributes of transparency, justification and intelligibility required under the reasonableness standard.

As a result, CRA’s decisions stand, including its requirement that Mr. Cormier repay a total of $38,600, comprised of $14,000 in CERB and $24,600 in CRB. The Attorney General of Canada, representing CRA, was the successful party.

However, the Court was not persuaded that an award of costs was appropriate and, exercising its discretion, decided that there was no reason to order Mr. Cormier, who was self-represented, to pay costs.

In closing, the Court stated that, in the circumstances, it is desirable, for reasons of justice and fairness, that CRA agree to review Mr. Cormier’s CERB file in light of all of the facts he specified during the hearing and, if appropriate, use its discretion and the mechanisms provided in the Remission Order to partially relieve his tax burden. No monetary award of damages. No costs ordered in favour of either party.