# 2020-103 Pay and Benefits, Home Equity Assistance

Case summary

F&R Date: 2020-09-21

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 relocated from Cold Lake, Alberta in July 2019. The grievor's home in Cold Lake sold in October 2019 and he suffered an equity loss of $127,000. The grievor argued that he was put in a vulnerable situation for reasons beyond his control and that the amount he was compensated was grossly inadequate for the financial loss he incurred as a result of his posting. The grievor also complained that a portion of his reimbursement was taxed, effectively reducing the reimbursement he received.

The Initial Authority (IA) 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 considered the depressed market status. The IA denied the grievance, finding that the grievor's home sold after 18 April 2018 and could not be administered under the previous CFIRP Directive.

The Committee first considered whether the grievor had a vested right to be administered under the previous CFIRP Directive but found that he would have had to sell his house before 19 April 2018 to have locked-in a vested right. The Committee then referred to an interview given by the Director of Compensation and Benefits Administration (DCBA) to the Canadian Broadcasting Corporation in May 2018. In that interview, 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 advised the Committee that the “caveat” was CFIRP Directive, article 2.1.01. The Committee found that article 2.1.01 did apply to the grievor in that his issue was directly related to his relocation and the extent of his equity loss was exceptional in nature. The Committee agreed with the grievor that the HEA benefit should not be taxed as income. Noting that taxation is governed by the Income Tax Act, the Committee recommended that the CAF work with the TBS to reduce the tax burden on CAF members resulting from military relocation. Finally, the Committee recommended that the Final Authority direct DCBA to forward the grievor's claim for full reimbursement of his equity loss to the TBS with the full support of the CAF.

FA decision summary

The Chief of the Defense Staff (CDS) agreed with the Committee's recommendation that the grievor's request for 100% reimbursement of his loss of equity be submitted to the Treasury Board (TB) under CFIRP article 2.1.01 with his full support. The CDS agreed that the imposition of the 18 April 2018 cut-off date is of no relevance to the economic conditions present in Cold Lake at the time. The CDS was satisfied that the grievor made every effort to minimize home equity loss and sell of his home. The CDS also agreed with the Committee that the tax implications on HEA be addressed as HEA amount should not be taxed as income. As in his previous decisions, the CDS reiterated his belief that the Federal Government and the CAF have an obligation to protect members and their families from such devastating financial losses brought on by the exigencies of military service. The CDS wrote that he has already directed the Chief of Military Personnel (CMP), in cooperation with the TB, to review CFIRP HEA provisions with an aim of implementing some form of catastrophic loss protection and, in doing so, minimize the negative impacts on CAF families. In the interim, the CDS has also directed CMP, in accordance with CFIRP article 2.1.01, to ensure that a case is made to TB for all CAF members who have incurred catastrophic loss of equity over $30,000 since 18 April 2018.