# 2014-024 - Pay
F&R Date: 2014–05–30
The grievor argued that the Canadian Armed Forces (CAF) pay system inaccurately reported his income for 2010 and 2011, a portion of which time he was on Parental Leave and eligible for Parental Allowance. He disputed the accuracy of the T4 Statements of Remuneration Paid (hereinafter the “T4 slips”) issued by the CAF for 2010 and 2011, which he believed lead to him having to pay more income tax in 2011. The redress sought was in the form of financial compensation.
The Initial Authority denied the grievance stating that he did not have the authority to provide financial compensation and that, having considered the information on file, he determined that the grievor's T4 slips accurately reflected his income and that he had been taxed appropriately. He explained that the grievor received tax free advances against his pay account while on Parental Leave and that he was taxed accordingly at the time his Parental Allowance was processed in the pay system.
The Committee considered a message issued by the Director General Financial Operations to CAF Pay Offices in February 2010 regarding the appropriate time at which the CAF pay system must report income in order to comply with Canada Revenue Agency directives. The Committee found that the CAF reported the grievor's income on the T4 slip of the year in which his Parental Allowance was processed in the pay system, in accordance with the policy.
The Committee also reviewed the CAF policy regarding the administration of the Parental Allowance as set out in Chapter 17 of the Military Human Resources Records Procedures, as well as the Service Canada process steps outlined on the Employment Insurance (EI) Parental Benefits website. The evidence on file showed that the EI Parental Benefit could not have been calculated prior to the grievor commencing his leave at the beginning of October. An email on the file indicated that the grievor's EI slip was only provided to the CAF pay system four and a half months later, and processed at that time, which resulted in no income recorded for the final three months of 2010, and a higher income in February 2011.
It was noted that the grievor also received a second installment of his recruitment allowance in the same year, which ultimately bumped him into a higher tax bracket for 2011. Therefore, the higher tax payment in 2011 is only partially attributable to the lump sum payment of Parental Allowance which he received. The Committee determined that there was no justification to provide remedy in the form of an ex-gratia payment.
The Committee noted that the CAF had established a practice of providing advances against a member's pay account until all administrative formalities required to process the Parental Allowance in the CAF pay system had been completed. While beneficial to CAF members and well-intended, there is no policy provision allowing this practice and in the case herein, it served as a disincentive for the CAF member to provide the necessary paperwork in a timely fashion. The Committee recommended that the CAF obtain the proper authorization if it wished to continue the practice.
The Committee recommended that the Chief of the Defence Staff deny the grievance.
FA Decision Summary
The FA agreed with the Committee's finding and recommendation that the grievance be denied.
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