# 2021-064 Pay and Benefits, Home Equity Assistance Program

Home Equity Assistance Program (HEAP)

Case summary

F&R Date: 2021-06-30

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 June 2018. The grievor's home in Cold Lake sold in June 2018 and he suffered an equity loss of $65,500. Subsequently, he was denied 100% HEA reimbursement. The grievor argued that he began his relocation before the amendments to the CFIRP Directive came into effect. The grievor also argued that a portion of his reimbursement was taxable, effectively reducing the amount of the reimbursement.

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 that no longer considered the depressed market status. The IA denied the grievance, finding that the sale of the grievor's home, which took place after 18 April 2018, could not be administered under the previous version of the CFIRP Directive. 

The Committee first considered whether the grievor had a vested right to the application of  the previous CFIRP Directive, but found that he would have had to sell his house before 19 April 2018 to have locked-in that  vested right. The Committee then cited an interview given by the Director of Compensation and Benefits Administration (DCBA) to the Canadian Broadcasting Corporation in May 2018 in which, 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 Directive. DCBA staff advised the Committee that the “caveat” was CFIRP article 2.1.01. The Committee found that CFIRP Directive article 2.1.01 did apply to the grievor in that his issue related directly to his relocation and the extent of his equity loss was exceptional in nature. The Committee agreed with the grievor that HEA should not be taxed as income but also that it is governed by the Income Tax Act and recommended that the CAF and the TBS seek to reduce the tax burden due to military relocations. The Committee recommended that the Final Authority direct DCBA to forward the grievor's claim to the TBS for full reimbursement of his equity loss, 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 to afford the grievor redress. The CDS found that there was no vested right afforded to CAF members, such as the grievor, who sold their homes after the 19 April 2018 deadline. Since the CDS was unable to grant redress, he directed that Chief of Military Personnel (CMP) ensure the grievor's request for 100% reimbursement of the loss of equity from the sale of his residence in Cold Lake be submitted to the Treasury Board (TB) for approval with his full support. The CDS reiterated that he has already directed the CMP to review CFIRP HEA provisions, in cooperation with the TB, with an aim to implementing some form of catastrophic loss protection and, in doing so, minimize the negative impacts on CAF families. This should include a discretionary mechanism to deal with undue financial hardship in unique situations such as that of the grievor. In light of this and possible limited flexibility to address the lack of a catastrophic loss provision, the CDS offered a consideration for the future. If CAF members are likely to suffer home equity losses in excess of $30,000, their branch leadership should be responsible for putting measures in place, during the active posting season, to prevent possible long-term financial impact, including the offer of telework and cancellation of a posting. As indicated by the CDS, these means, while not optimal, are within the CAF's capacity to influence. The CDS directed the CMP to investigate a mechanism through which to implement this CAF-centric approach quickly, be that through a CANFORGEN or similar order to ensure rapid, consistent implementation across the CAF.

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