# 2020-185 Pay and Benefits, Home Equity Assistance Program

Case summary

F&R Date: 2020-02-17

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 July 2019 with an equity loss of approximately $50,000. While the grievor was reimbursed $30,000 from the Core funding envelope, he contends that despite amendments to the CFIRP Directive in 2018, members already posted to Cold Lake should have been grandfathered to the CFIRP Directive in effect at the time of the purchase of their home so that it could be applied at the time of sale. As redress, the grievor sought reimbursement of the remaining equity 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 HEA policy, which no longer contained the depressed market benefit. The IA denied the grievance having found that the sale of the grievor’s house, which took place after 18 April 2018, could not be governed by the old version of the CFIRP directive. 

The Committee first found that the revised 2018 CFIRP Directive applied to the grievor's situation and that $30,000 from the Core envelope was the maximum reimbursement possible under the HEA benefit.  

The Committee cited an interview given by the Director of Compensation and Benefits Administration (DCBA) to the Canadian Broadcasting Corporation in May 2018 where the DCBA stated the intent of the Canadian Armed Forces (CAF) was to address catastrophic home equity losses using a “caveat” found in the CFIRP. DCBA staff later advised the Committee that the “caveat” referred to was the CFIRP Directive article 2.1.01. The Committee found that CFIRP Directive 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 reduced the benefit received by the grievor. Noting that the matter 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 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 Acting Chief of the Defence Staff (A/CDS) agreed with the Committee's findings and recommendation that the grievor be reimbursed 100% of his equity loss, which was over $30,000.00. The A/CDS directed the Chief of Military Personnel to ensure the grievor's file was submitted to TBS, in accordance with CFIRP article 2.1.01 (Authorities). The A/CDS also directed that the tax implications on HEA be addressed, agreeing with the Committee that none of the reimbursed HEA amount should be taxed as income. The A/CDS was also of the view that the 18 April 2018 cut-off date was selected so to align the termination of access to 100% reimbursement of qualifying losses on a home to the changes to the new HEA policy. It had no relevance to the economic conditions present in Cold Lake at the time. The A/CDS found it unacceptable that a member was liable for a catastrophic loss such as this.

The A/CDS intends to work with the Deputy Minister and her staff to articulate the challenges associated with HEA and other CFIRP Directive benefits and share these with the Minister of National Defence, TBS and others with a view to reinforcing the collective commitment to those who choose to serve and their incredible families.