# 2020-168 Pay and Benefits, Home Equity Assistance Program

Case summary

F&R Date: 2020-11-02

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 June 2019 with an equity loss of approximately $137,000. The grievor was reimbursed $30,000 from the Core funding envelope. The grievor argued that since the 2018 revision to the CFIRP Directive, the housing market in Cold Lake had only further declined.

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 HEA policy, which no longer contained the depressed market compensation benefit. The IA denied the grievance, finding that the grievor's home sold after 18 April 2018 and that it could not be administered under the previous CFIRP Directive.

The Committee noted an interview given by the Director of Compensation and Benefits Administration (DCBA) to the 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. The DCBA staff later advised the Committee that the “caveat” referred to was the CFIRP article 2.1.01. The Committee found that CFIRP article 2.1.01 did apply 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 serves to reduce the benefit received by the grievor. Noting that it is governed by the Income Tax Act, the Committee recommended that the CAF and TBS pursue a reduction in this tax burden on military members. The Committee recommended that the Final Authority (FA) direct DCBA to forward the grievor's claim for full reimbursement of the equity loss to the TBS with the full support of the CAF.

FA decision summary

The Acting Chief of the Defence Staff (A/CDS) agreed with the Committee's findings and recommendation and directed that the grievor's case be brought before TBS with a recommendation that he be afforded HEA for 100% of the financial loss incurred with the sale of his home in Cold Lake. The A/CDS also directed that the tax implications on HEA be addressed because he agreed with the Committee that none of the reimbursed HEA amount should be taxed as income. This should include a discretionary mechanism to deal with undue financial hardship in unique situations such as the grievor's. In reviewing the grievor's file, the A/CDS noted that his case was not unique and that, as explained by the Committee, the current CFIRP HEA policy does not address the harm being caused to the small segment of CAF members who suffer catastrophic loss of home equity on relocation. For those individuals and their families, the HEA benefit remains inadequate as they should not be expected to absorb such severe home equity losses as a result of them serving in the CAF. Therefore, the A/CDS also directed the Chief of Military Personnel (CMP), in accordance with CFIRP article 2.1.01 (Authorities), to ensure that a case is made to TBS for all CAF members who have incurred catastrophic loss of equity over $30,000 since 18 April 2018. Notwithstanding his direction, the A/CDS observed that TBS is external to the CAF and there is no guarantee that CMP staff will be fully or partially successful in the grievor's case. Additionally, it is important to note that the future TBS decision on this file is not grievable. Consequently, irrespective of the outcome, once TBS has made its decision on the case, the grievor's file will be closed.