# 2022-053 Pay and Benefits, Home Equity Assistance Program

Case summary

F&R date: 2022-08-08

On 19 April 2018, revisions to the Canadian Forces Integrated Relocation Program (CFIRP) Directive came into effect, removing the option to apply for 100% Home Equity Assistance (HEA) reimbursement from the Core envelope for homes sold in a depressed market area. The grievor's home in Cold Lake sold in May 2020 with an equity loss of approximately $110,000. The grievor was reimbursed the $30,000 maximum available from the Core funding envelope and argued that the 2018 changes to the HEA benefit were unfair. The grievor sought to be grandfathered under the previous CFIRP Directive and fully reimbursed for their loss. 

The Initial Authority (IA), the Director General Compensation and Benefits, found that on 17 July 2018 the Treasury Board Secretariat (TBS) declared that houses sold in Cold Lake after 18 April 2018 would be subject to the revised version of the CFIRP Directive HEA policy, which no longer contained the depressed market benefit. The IA denied the grievance, finding that the previous CFIRP Directive was no longer applicable given the grievor's home sold after 18 April 2018.   

The Committee first considered whether the grievor had a vested right to be administered under the previous CFIRP Directive but found that the house would have had to have been sold before 19 April 2018 in order to have locked-in that vested right.  

The Committee cited an interview given by the Director of Compensation and Benefits Administration (DCBA) to the CBC (Canadian Broadcasting Corporation) in May 2018, where the DCBA stated that the intent of the Canadian Armed Forces (CAF) was to address catastrophic home equity losses using a “caveat” found in the CFIRP Directive. DCBA staff later advised the Committee that the “caveat” was the article 2.1.01 of the CFIRP Directive. The Committee found that article 2.1.01 of the CFIRP Directive applied to the grievor's case given that the expense was directly related to the relocation and the extent of the equity loss was exceptional in nature.   

The Committee also observed that taxation of the current $30,000 HEA maximum reimbursement from Core serves to further reduce the benefit received by the grievor. Given that taxation is governed by the Income Tax Act, the Committee recommended that the CAF work with the TBS to pursue a reduction in this tax burden on military members. The Committee also recommended that the Final Authority (FA) direct DCBA to forward the grievor's claim for full reimbursement of the equity loss to TBS, with the full support of the CAF.

FA decision summary

The Chief of the Defence Staff (CDS) agreed with the Committee's findings and recommendation that, in accordance with CFIRP Directive article 2.1.01, the grievor is eligible to apply for 100% reimbursement of the catastrophic equity loss he incurred in selling his home, and therefore that his request for reimbursement be submitted for TBS consideration.

The CDS also observed that Director General Compensation Benefits (DGCB) had been in consultation with the TBS to discuss the situation affecting CAF members who sold their residences at a loss in Cold Lake. As a result, TBS directed DGCB to initiate a market study assessing the periods of 2014-2018 and 2018-2020. The market study is now complete and has been provided to the TBS for further consideration. All further deliberations by the TBS are considered Cabinet Confidences and require special protective measures to prevent their inadvertent disclosure and they are also protected from release under section 21 of the Access to Information Act.

In addition to the work described above, the CDS also directed Chief Military Personnel (CMP) to investigate a mechanism through which significant losses can be mitigated in the future. This mechanism should take effect where home equity losses over $30,000 are incurred by a CAF member. CMP has been directed to make a CAF-centric approach that can be implemented quickly, with notification to CAF members made through Canadian Forces General Messages, or similar order, to ensure the issue is addressed promptly, and consistently, across the force. Further, it has been suggested that CAF leadership be mandated to explore and implement alternate courses of action to negate the potential for long-term financial impact to CAF families, including remote virtual work possibilities or posting cancellations. These means, while not optimal, are within the CAF's capacity to influence in the short term.