# 2018-029 Pay and Benefits, Allowances and Benefits

Case summary

F&R Date: 2019-03-29

The grievor complained that he was subjected to an audit and a multi-year tax re-assessment by the Canadian Revenue Agency (CRA) regarding the Rent and Utilities allowance benefits he received from the Canadian Armed Forces (CAF) while posted outside Canada (OUTCAN). As a result, he incurred considerable legal expenses in the process of successfully defending himself. The grievor sought CAF advice and intervention with CRA but with no result. As redress, he sought reimbursement of his related expenses.

The Initial Authority, the Acting Commander Military Personnel Command, found that the grievor had not raised an act, decision or omission by the CAF and so he found the grievance to be invalid.

The Committee found that there were no CAF or Treasury Board policy provisions under which the grievor could be provided with legal assistance, and so he could not be reimbursed for his legal expenses in that manner. However, the Committee found that as the employer, the CAF should have done more to assist the grievor with addressing CRA's concerns about the tax implications of the OUTCAN rent allowance. The Committee concluded that once it became apparent that the CAF's approach to the tax implications of the rent allowance was different from the CRA position, the CAF ought to have attempted to reconcile that difference, in some manner.

The Committee recognized that although the CAF was not liable for the unfortunate and needless expense incurred by the grievor, he was nonetheless harmed during the course of his military service OUTCAN in a way that would not have happened had he not been posted there. As such, the Committee found that redress should be granted and recommended that the Chief of the Defence Staff compensate the grievor using his ex-gratia authority.

FA decision summary

The Chief of the Defence Staff (CDS) agreed with the Committee's finding that the grievor was not eligible for legal assistance under any Treasury Board or CAF policy provisions. However, the CDS disagreed with the Committee's conclusions that the CAF should have done more to intervene at an institutional level to resolve the dispute and that the grievor had been aggrieved. The CDS equally disagreed with the recommendation that the grievor be granted an ex gratia payment.

The CDS noted that the CAF had provided the grievor with administrative assistance, that he received advice from various CAF members and that he received CAF support in drafting documents for use in the dispute with the CRA. The CDS also noted that there was no indication of any systemic problems concerning other CAF members' tax treatment arising out of the OUTCAN rent allowance. As such, the grievor's tax problems remained a personal matter, the CAF's efforts to support him were appropriate, and the grievor was not aggrieved.

Finally, the CDS commented that even if the grievor had been aggrieved, the CDS could not offer an ex gratia payment because there was another mechanism by which the grievance could be remedied: the grievor was entitled to a tax deduction for amounts he paid for legal fees in the year he paid them. The fact that this alternate mechanism to remedy his grievance was in place meant the CDS had no authority to make ex gratia payment in the circumstances.