# 2021-016 Pay and Benefits, Home Equity Assistance Program

Home Equity Assistance Program (HEAP)

Case summary

F&R Date: 2021-05-20

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 August 2018. The grievor's home in Cold Lake sold in November 2018 with an equity loss of approximately $80,000. The grievor was reimbursed $30,000 from the Core funding envelope. However, the grievor argued that the changes to the HEA benefit were unfair, causing excessive financial and psychological stress, and requested to be reimbursed under the previous Directive.

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, finding that the grievor's home sold after 18 April 2018 and, as such, 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 the house would have had to be sold before 19 April 2018 in order to have locked-in a vested right. 

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. 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 had the effect of reducing the compensation received by the grievor. Since this issue falls under the Income Tax Act, the Committee recommended that the CAF and the 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 Chief of the Defence Staff (CDS) agreed with the Committee's findings and recommendation. The CDS determined that the grievor had been aggrieved. However, since he did not have the authority to grant redress, he directed, in accordance, with CFIRP Directive article 2.1.01, that the Chief of Military Personnel refer the grievor's request (for 100% reimbursement of the loss of equity from the sale of his residence in Cold Lake) to the TBS for approval, with the CDS’ support. The CDS stated that, based on previous direction on this matter, the TBS and the DCBA had been in consultation to discuss the situation affecting CAF members who sold their residences at a loss in Cold Lake. The CDS explained that as a result, the TBS directed DCBA to initiate a market study assessing the periods of 2014-2018 and 2018-2020. As of late September 2021, the study is still ongoing.

Anticipating limited flexibility to address the lack of a catastrophic loss clause for the CAF, the CDS proposes the following: if, in the future, a member is likely to suffer losses in excess of $30,000, the member's branch leadership be mandated to explore and implement alternate active posting season courses of action to negate the potential for long-term financial impact to the CAF families, including remote virtual work potential as well as possible posting cancellations.

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