Scamming The EI System

Employment Insurance Fraud Attempted For Mortgage Qualification

Last week, a thirty something young woman and her husband were in my office for a consultation. She was in the full bloom of pregnancy, and is expecting her second child in two months.

She confided in me that she has been “working” at a fictitious job for the past several months – with the sole view to creating an EI maternity benefit for herself after she gives birth to the baby.

This is not the first time I have heard this story – and it always amazes me how people come up with creative ways to beat the system, and make money from nothing – and we the tax payers are left holding the bag.

How it works I gather is fairly simple. In fact, it was her tax accountant who arranged everything for her. She was put on payroll at one of his clients’ companies several months ago, and is receiving monthly pay of around $3,000. Deductions are made at source, and she receives a pay check every week.

Whatever she is paid by the company, her husband simply pays back to the business owner with cash – leaving no paper trail.

To qualify for maximum maternity benefits, she only needs to have worked 600 hours in the previous year – roughly four months of full time “work”.

Making a fake EI claim is FRAUD.

Now before all my young clients rush out to ask their friends to put the young ladies on their payroll, let me be very clear – this scam is FRAUD and is completely illegal. I shudder to think what could happen to all involved parties if the matter is exposed to the authorities.

For all you know, the accountant and the employer company are already under scrutiny by CRA and EI – who knows how many times they have done this already? Perhaps their computer systems have flagged an unusual number of EI claims coming from one single employer with a relatively small number of employees.

There are any number of ways I could see this strategy boomeranging on the protaganists. To me, it is analogous to people cheating on their spouses. They live in denial, without really thinking through the consequences to their families, their children, their social structures, their finances, etc. if their actions are found out.

But if matters are exposed, and they often are, the result will be catastrophic, and certainly not worth the benefit they thought they were getting.

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​Ross Taylor
One of Toronto/GTA's Most Trusted and Knowledgable Mortgage Agents

Ross Taylor is recognized by his peers as one of Canada's pre-eminent difficult mortgage specialists. His ASKROSS blog and column ​ in Canadian Mortgage Trends are focused on the intersection between mortgage financing and personal credit.

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