Executive summary: key legal and evidentiary issues

• Serge Ruel sought judicial review of a Canada Revenue Agency (CRA) decision declaring him ineligible for the Canada Emergency Response Benefit (CERB) across four benefit periods in 2020.

• The CRA agent treated $40,250 in dividends from Ruel's restaurant company as employment income, spreading it evenly over the company's fiscal year to calculate weekly earnings of $774.04.

• Reasonableness was the applicable standard of review, requiring the decision to meet thresholds of justification, intelligibility, and transparency per the Vavilov framework.

• While dividends can reasonably be classified as employment or self-employment income for CERB purposes, attributing dividends paid by January 2020 as prospective income for March–May 2020 was found unreasonable.

• Evidentiary objections arose over seven exhibits filed by Ruel, with two financial statement extracts excluded as not before the decision-maker, while government website excerpts were admitted.

• Period 4 ineligibility was upheld on separate grounds, as Ruel's salary payments alone exceeded the $1,000 nominal income threshold during that period.

Background and the parties involved
Serge Ruel is the owner of a restaurant in Lévis, Quebec, through a company of which he is a shareholder. His company compensated him in two ways: an employment salary and irregular dividend payments issued once or twice per year. In 2019 and 2020, Ruel received dividends from his company, with the last payment received in January 2020. When the COVID-19 pandemic struck in March 2020, Ruel was forced to close his restaurant for several weeks and did not receive any salary from mid-March until early June 2020. He applied for and received the Canada Emergency Response Benefit (CERB) for four consecutive four-week periods spanning March 15 to July 4, 2020. He also applied for the Canada Recovery Sickness Benefit (CRSB) after contracting COVID-19, though that benefit was not at issue in this proceeding.

The CRA review and contested decision
In June 2024, the CRA informed Ruel that his account had been selected for review regarding his CERB eligibility. Following an initial determination and Ruel's request for a second-level review, an agent issued a decision dated July 23, 2025, finding Ruel ineligible for the CERB on the basis that he had earned more than $1,000 in employment or self-employment income during the applicable periods. The agent's reasoning, recorded in internal case notes, revealed that she had treated the $40,250 in non-eligible dividends Ruel received as employment or self-employment income and had divided that sum evenly across the company's full fiscal year (June 1, 2019 to May 31, 2020). This resulted in a weekly income attribution of $774.04 for every week of the fiscal year, including the weeks from March 15 to May 31, 2020, which fell within CERB Periods 1 through 3. For Period 4 (June 7 to July 4, 2020), no dividends were attributed because that period fell outside the company's fiscal year; however, Ruel's salary payments during Period 4 independently exceeded the $1,000 threshold.

The CERB eligibility framework
Under the Canada Emergency Response Benefit Act, workers residing in Canada could receive income support of $500 per week for up to 28 weeks. To qualify, applicants needed to demonstrate at least $5,000 in employment or self-employment income in 2019 or the preceding 12 months, they had to have ceased working for COVID-19-related reasons for at least 14 consecutive days within the relevant four-week period, and they could not have received more than $1,000 in employment or self-employment income during the consecutive days on which they had ceased working. This $1,000 cap, known as the "nominal income" threshold, was established under section 6(1)(b)(i) of the Act and section 1 of the Regulations on Excluded Class of Income.

Evidentiary issues and admissibility of exhibits
Ruel filed his own affidavit along with seven documentary exhibits. The Attorney General objected to all seven, arguing they were not before the decision-maker. The Court sustained the objection with respect to two exhibits — extracts from the company's unaudited financial statements — which had not been submitted to the CRA during the review process. However, the Court admitted three exhibits consisting of Government of Canada website extracts about the CERB and taxable dividends, reasoning that the agency responsible for determining benefit eligibility cannot claim that publicly available government information about that very eligibility was not "before" the decision-maker. The agent's own affidavit confirmed she was aware of the facts referenced in those web pages. Two additional exhibits containing dictionary definitions of "dividend" were treated as interpretive aids rather than evidence, similar to legal authorities, since the nature of a dividend was not in dispute.

Whether dividends qualify as employment income under the CERB
Ruel argued that dividends are investment income, not employment or self-employment income, citing the Income Tax Act's distinction between the two. The Court acknowledged that dividends are generally a form of investment income paid to a person by virtue of their shareholder status. However, relying on established Federal Court jurisprudence, the Court noted that the concept of "income" for pandemic-related statutory benefits is not necessarily identical to that under the Income Tax Act. Non-eligible dividends can be treated as employment or self-employment income for CERB purposes where the evidence shows the dividends were actually paid and linked to work performed. This broader interpretation serves both the government and applicants: it allows small business owners who compensate themselves through dividends to meet the $5,000 minimum income requirement for eligibility, while the same definition applies consistently to the $1,000 nominal income cap during benefit periods.

The unreasonable attribution of dividends to future periods
Although the Court accepted that classifying dividends as employment income was reasonable, it found that the agent's method of spreading the January 2020 dividend across the entire fiscal year — including weeks in March, April, and May 2020 — was unreasonable. The statutory language requires that income be received "in respect of" the consecutive days on which the worker ceased working. Dividends represent distributions of profits already earned by the company; profits must be generated before they can be distributed. The agent's notes offered no explanation for how a distribution of profits earned before January 2020 could reasonably be characterized as income "for" days occurring two to four months later, during which Ruel was not working. The CRA's own website states that income is considered earned "when the work is performed and not when the payment is received." Treating a dividend as income earned during a period when the worker performed no work, simply because the dividend was paid once or twice annually, was inconsistent with both the statutory text and the CRA's own published guidance.

Ruling and outcome
The Federal Court, per Justice McHaffie, granted the judicial review in part. The CRA agent's decision dated July 23, 2025, was set aside with respect to CERB Periods 1, 2, and 3, and Ruel's eligibility for those three periods was referred back to a different agent for redetermination. The decision regarding Period 4 was upheld as reasonable, since Ruel's salary income alone exceeded the $1,000 nominal income threshold during that period, independent of any dividend attribution. Costs were awarded in favour of Ruel, the self-represented applicant, in the fixed amount of $400, all-inclusive. No exact total amount of CERB benefits at stake was specified in the decision.