Executive Summary: Key Legal and Evidentiary Issues

• Karine Ouellet challenged a CRA second review decision finding her ineligible for Canada Recovery Benefit (CRB) payments received from October 11, 2020 to July 17, 2021.

• The CRA calculated her average weekly income by dividing total 2019 earnings by 52 weeks, concluding her income reduction did not meet the 50% threshold required under paragraph 3(1)(f) of the CRBA.

• Ouellet argued her average weekly income should be divided by 43 weeks (the period she actually earned salaried income in 2019), not 52 weeks, contending the CRA's method was contrary to the ordinary meaning of the word "average."

• Eleven exhibits submitted by the applicant with her affidavit were ruled inadmissible as they were not part of the evidentiary record before the CRA agent at the time of the decision.

• Her weekly income exceeded the eligibility threshold by only $31.66, yet the Court held that subjective disproportionality is not a mitigating factor under the legislation.

• The Federal Court dismissed the judicial review application, finding the CRA's decision reasonable, with no costs awarded.

Background and facts of the case

Karine Ouellet is an entrepreneur who built her own business in the field of relocation and settlement services for newcomers to Canada, operating from January 2014 to March 2019. She began receiving a salary from her own company as an employee starting in March 2019. When the COVID-19 pandemic struck in 2020, the closure of Canada's borders negatively impacted her business, halting contracts and work for the enterprise. Believing in good faith that her employment income had decreased by more than 50% compared to her 2019 earnings, Ouellet applied for the Canada Recovery Benefit (CRB) in October 2020. Her application was initially accepted without examination by a CRA benefits validation agent, and she received CRB payments for periods 2 through 21, spanning from October 11, 2020 to July 17, 2021.

The CRA eligibility review and notification issues

In 2024, the CRA selected Ouellet's file for an eligibility review and sent her a letter dated March 21, 2024, requesting supporting documentation within 45 days. However, this letter was sent only electronically to her "My Account" portal, with no physical copy mailed. The 45-day deadline expired without Ouellet providing the requested documents. On November 19, 2024, the CRA determined she was ineligible for the CRB for all requested periods on the basis that she had not responded to the March 21, 2024 letter. This decision was also communicated solely through her online account. Ouellet did not become aware of either the letter or the decision until January 2025, when she accessed her CRA "My Account" to prepare her 2024 tax return. On or around January 17, 2025, she requested a second review of her eligibility and submitted additional documents, including annotated pay stubs and other records related to her 2019 and 2020 employment income.

The second review decision and the income calculation method

The second review agent calculated Ouellet's 2019 income by adding her T4 employment income and T5 dividend income, then dividing the total by 52 weeks to determine her average weekly income for the reference year. The agent also calculated her eligibility based on income earned in the 12 months preceding her application. Both calculations showed that her average weekly income during the CRB claim periods exceeded the eligibility threshold by $31.66 for all periods except the first. The agent determined that Ouellet had not experienced the requisite 50% reduction in average weekly income due to COVID-19 for the period from October 11, 2020 to July 17, 2021, compared to the reference income established for 2019 or the 12 months preceding her application. On March 11, 2025, the agent and Ouellet communicated by telephone, during which the agent invited her to consult the Government of Canada website regarding the CRB eligibility calculation method. The CRA communicated its final decision of ineligibility on March 14, 2025.

The statutory framework at issue

The key legislative provision in dispute was paragraph 3(1)(f) of the Canada Recovery Benefits Act (CRBA), SC 2020, c 12, s 2, which requires that an applicant demonstrate a reduction of at least 50% in their average weekly employment or self-employment income for the relevant two-week period, compared to their total average weekly income for 2019 or the 12 months preceding the application. The provision does not prescribe a specific method for calculating the average weekly income, nor does it distinguish between salaried employees and self-employed individuals, as both are covered by the provision. It is also recognized by the Federal Court that CRA agents have no discretion to modify the eligibility conditions set out in the CRBA.

Admissibility of new evidence

The defendant raised a preliminary objection to eleven exhibits (P-1 through P-11) filed by Ouellet with her affidavit. Exhibits P-1 through P-9 were copies of correspondence between Ouellet and her Member of Parliament. Exhibit P-10 was a duplicate of a document already in the evidentiary record bearing an annotation by the applicant. Exhibit P-11 was an incomplete screenshot with annotations by the applicant. The Court ruled all eleven exhibits inadmissible, applying the principle from Access Copyright (2012 FCA 22) that on judicial review, the evidentiary record is generally limited to what was before the administrative decision-maker, subject only to limited exceptions that did not apply here.

The applicant's arguments and the Court's analysis

Ouellet advanced several arguments challenging the reasonableness of the decision. She argued that the CRA's repayment claim was tardy and disproportionate, asserting that a delay of more than four years after receiving benefits to present a repayment claim was excessive. She also argued during the hearing that the CRA had examined her eligibility in a tardy fashion, more than three years after she received benefits, and that this delay was unjust. On the timeliness argument, the Court noted that while it was sympathetic, a regrettable delay in assessing eligibility creates no legal right, and the CRBA imposes no deadline before which the Minister must determine whether a person is ineligible for benefits received without entitlement. The Court also noted that the CRA's repayment claim was not at issue in this proceeding, as Ouellet was seeking judicial review of the eligibility decision and not the repayment claim itself. On disproportionality, the Court held that subjective assessments of the disproportion between the overpayment amount and the $31.66 gap do not render the decision unreasonable, as the CRBA does not recognize subjective disproportionality as a mitigating factor. Regarding the calculation method, Ouellet contended that dividing her total income by 52 weeks — including periods when she had no employment income — was contrary to the ordinary meaning of the word "average," and that her income should instead be divided by 43 weeks, representing only the weeks during which she actually earned salaried income in 2019. The Court rejected this argument, relying on established Federal Court jurisprudence confirming that using 52 weeks as a divisor — thereby including periods of zero income — is a reasonable interpretation of "average weekly income" under the CRBA. The Court further held that even where a statutory text may receive two reasonable interpretations, it is for the administrative decision-maker, and not the Court, to choose between them. The Court also rejected the argument that the absence of public instructions specifying that zero-income weeks must be included in the calculation rendered the decision unreasonable, reaffirming that applicants bear the responsibility to inform themselves of eligibility criteria for each benefit and to prove that those criteria have been met.

Ruling and outcome

The Federal Court, presided by Justice Benoit M. Duchesne, dismissed Ouellet's application for judicial review on April 10, 2026. The Court found that the CRA's second review decision was reasonable, transparent, intelligible, and justified under the Vavilov standard of review. The second review agent was found to have been attentive and responsive to the applicant's evidence and arguments. Ouellet, who represented herself, failed to discharge her burden of demonstrating that the decision was unreasonable. The Attorney General of Canada, represented by Valentina G. Danielova, was the successful party. No costs were awarded, as the defendant did not seek them. No specific monetary amount of the overpayment to be returned was determined in the judgment itself.