Feds wrote off $4.5B in COVID benefit repayments in 2025: auditor general

The federal government declared $4.5 billion in COVID-19 benefits repayments uncollectible in 2025, according to Canada's Office of the Auditor General. The government had initially expected to recoup funds given to Canadians during the pandemic, but when it determined someone was overpaid or ineligible, it wrote off the debt. This sharp increase from $26 million the previous year highlights the financial strain caused by pandemic-related benefits.

In addition, the government's allowance for potential losses on business loans through the Canada Emergency Business Account (CEBA) rose to $5.6 billion in 2025-26, up from $5.4 billion the previous year. This represents a larger portion of the $7.2 billion in outstanding loans, with businesses facing potential interest accrual if they failed to repay by the deadline.

However, a final due date for all CEBA loans was set for the end of next month. The auditor general also noted the government's failure to clear pay issues from the former Phoenix pay system, which still has over 110,000 transactions pending from more than a year ago. Furthermore, the audit identified a $751 million understatement of the Department of National Defence's deficit due to inventory tracking errors, as well as issues related to Crown corporations and overall performance measurement.