Statutory Limitation Periods for Debt Recovery

For questions or comments, please contact us: NC-CFOB-Financial_Policy_Questions_Politique_Financière-GD

Effective Date: 2004-08-25

Please Note: This policy/document is currently under review and is being updated to reflect new procedures and terminology associated with the implementation of myEMS (SAP)

Please note that this policy will apply to both Service Canada and Human Resources and Social Development Canada (HRSDC) hereinafter referred to as the "Department" or "Departmental".

Table of Contents:

  1. BACKGROUND
  2. POLICY OBJECTIVE
  3. STATUTORY LIMITATION PERIODS
  4. RECORDS RETENTION
  5. ROLES AND RESPONSIBILITIES
  6. COMPLIANCE
  7. REFERENCES

1. Background

This document provides a summary of the statutory time limits for the collection of debts owed to the Department. It is relevant to the activities of National Collection Services and provides background information for the Payment Distribution Policy.


2. Policy Objective

To ensure compliance with statutory limitation periods in the recovery of debts owed to the Department.


3. Statutory Limitation Periods

3.1 General

There are various legal authorities which govern the period of time the department has to recover a particular debt or to pursue legal action to enforce the recovery of a debt.

3.2 Employment Insurance

Employment Insurance (EI) debts have a 72-month recovery period under program legislation after which the legislation does not permit a payment to be accepted. This period begins on the notification date, that is, the date that the debtor was informed of the overpayment in writing. The time limitation period is suspended while an appeal relating to the debt is pending. In accordance with procedures established in consultation with Legal Services, a client may waive the EI time limitation. National Collection Services can provide further information on this process.

3.3 Canada Pension Plan and Old Age Security

Canada Pension Plan (CPP) and Old Age Security (OAS) debts are governed by program legislation which provides for recovery at any time.

3.4 Canada Student Loans Program

Canada Student Loan Program (CSLP) legislation provides for a time limitation of 6 years after the amount becomes due and payable with regard to recovery action but permits set-offs from amounts owing to the client by the government at any time. Debts which were extinguished by provincial legislation before the coming into effect of the CSLP time limitation in August, 2003, cannot be set-off. CSLP debts generally become due and payable when the student defaults on the loan repayment agreement.

The CSLP limitation period may be extended by a partial payment or by a written acknowledgement of debt signed by the borrower or his or her representative. The acknowledgement of debt may be after expiry of the limitation period and will start a new limitation period. The limitation period is extended during any time that recovery action is prohibited such as during bankruptcy proceedings.

3.5 Provincial Statutes of Limitation

In accordance with the Crown Liability and Proceedings Act, provincial statutes of limitation generally apply to debts when there is no federal program legislation governing time limitation. This includes CRF-funded grant and contribution overpayments, supplier and other administrative-type debts, and Labour Program debts.

The chart below summarizes the various provincial limitation periods for initiating court action to recover a debt. In certain circumstances, limitation periods may be extended if the debtor acknowledges the debt or makes a partial payment. A valid acknowledgement provides a fresh limitation period of the same duration as the original limitation period.

In order to be valid, an acknowledgement must be in writing and be signed by the debtor or someone authorized by the debtor to act on his or her behalf. The acknowledgement must also have an identifiable date. A voluntary payment towards a debt constitutes an acknowledgement of liability. As the criteria for a valid acknowledgment varies from province to province, National Collection Services or Legal Services should be consulted in specific cases.

The department will initiate court action to extend the recovery period as allowed by provincial legislation when there is potential for repayment and the cost of the court action is expected to be recovered. Once a judgement has been obtained, the provincial limitation period for the enforcement of the judgement applies. This period varies by jurisdiction from 10 to 20 years and, depending on the jurisdiction, may be extended by acknowledgement or by the court.

Debts are extinguished when they reach the statute bar in British Columbia, Quebec or Newfoundland which means they no longer exist. In other provinces, the debt becomes legally unenforceable when it reaches the statute bar but does continue to exist so voluntary payments and other credits may be applied (see the Payment Distribution Policy).

3.6 Statutory Limitation Periods

PROGRAM LIMITATION PERIOD
Employment Insurance

Employment Insurance Act, s. 47(3), (4) and 65.2(3)		 72 months
Time limitation suspended during appeal.
Client may waive time limitation prior to expiry.
Canada Pension Plan

Canada Pension Plan Act, s. 66(2)		 No limit
Old Age Security

Old Age Security Act, s. 37(2)		 No limit
Canada Student Loan Program

Canada Student Loans Act, s. 19.1, 19.2
Canada Student Financial Assistance Act, s. 16.1, 16.2		 6 years for recovery action
Time limit extended by partial payment or valid acknowledgement of debt and revived by acknowledgement after expiry (except debts extinguished under provincial law before August 1, 2003).
Time limitation suspended during bankruptcy.

No time limit on set-offs.
CRF-funded grant and contribution overpayments

Other Labour Program debts

Other debts not governed by program specific time limitation legislation		 In accordance with provincial statutes of limitation. Very generally, the period for commencing court action is:

Alberta - 2 years
Ontario - 2 years
Quebec - 3 years
Other provinces and territories - 6 years

4. Records Retention

In accordance with the Financial Records Retention Policy, financial records relating to accounts receivable are generally retained for six years (exceptions do apply, see the policy for details). In addition, privacy legislation requires personal information used for an administrative purpose to be retained for a minimum of two years from the last administrative action.


5. Roles and Responsibilites

National Collection Services is responsible for initiating court action for the recovery of a debt and for obtaining a waiver of the time limitation relating to an EI debt.


6. Compliance

6.1 Duty To Accommodate

This policy is compliant with the Treasury Board Secretariat Policy on the Duty to Accommodate Persons with Disabilities in the Federal Public Service.

7. References