News Release

FREDERICTON (CNB) – The provincial government, as part of efforts to improve its finances, is ramping up collection of overdue accounts.

"The provincial government is headed toward a more focused, efficient system of program and service delivery through its renewal process," said Finance Minister Blaine Higgs. "At the same time, we need to make sure that we are doing an adequate job of collecting money owed to taxpayers."

The recovery process will expand the use of a refund set-off program allowing the Canada Revenue Agency to apply an income tax refund or tax credit against certain Crown debts owed to the provincial government. Any amounts set-off by the agency will be forwarded to the appropriate provincial department to be put against the debt until the balance has been paid in full.

"These collection measures are needed given that the balance of the programs approved for Canada Revenue Agency set-off was about $200 million as of March 31, 2011," said Higgs. "In light of the provincial government's difficult financial situation, we have an obligation to recover these funds on behalf of taxpayers.

Recent fiscal updates for 2011-12 project the provincial government's deficit to reach $514 million and its debt to exceed $10 billion.

The provincial government will expand the use of the set-off program in the following areas:

●    Agricultural Development Act loans (Department of Agriculture, Aquaculture and Fisheries);
●    Fisheries and Aquaculture Development Act loans (Department of Agriculture, Aquaculture and Fisheries);
●    veterinary services account receivable (Department of Agriculture, Aquaculture and Fisheries);
●    NSF cheques (Department of Agriculture, Aquaculture and Fisheries) ;
●    motor vehicle fines (Department of Public Safety);
●    social assistance overpayments (Department of Social Development); and
●    court fines (Department of Justice and Consumer Affairs).

The set-off program has been used successfully in other provinces for many years.

"In terms of how much we think we can recover, as an example, we have managed to collect about $10 million since February 2009 by applying set-offs to defaulted student loans as well as an additional $2 million in voluntary payments after informing debtors that we intended to use the set-off program,” said Higgs. “It is an effective program."

The provincial government is required to try to collect overdue accounts before referring them to the Canada Revenue Agency. The Office of the Comptroller has communicated this requirement to the administrators of the programs involved. If there is doubt whether the provincial government has tried to collect a debt, it will send letters advising the debtors involved of the balance owing and requesting payment.

"Every effort will be made by departments to work with debtors in developing repayment arrangements," said Higgs. "If it is not possible for them to make the necessary repayment arrangements, the provincial government has approved the use of the set-off program."

Debtors will receive a notification letter to advise them that the agency may withhold their income tax refund or tax credit payment to recover an outstanding Crown debt. This will provide individuals with an additional opportunity to contact the provincial government to make repayment arrangements and avoid potential set-offs.

It is not the intention of the recovery process to impose financial hardship on low-income individuals. In some instances, such as cases of social assistance overpayments, debtors may request consideration from the provincial government for financial hardship. If their request is approved, then their account will be removed from the set-off program until their circumstances improve.