# 2021-102 Pay and Benefits, Home Equity Assistance Program

Case summary

F&R Date: 2021-07-22

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 2020. The grievor's home in Cold Lake sold in June 2020 and he suffered an equity loss of $143,000. He requested that the Treasury Board (TB) approve 100% reimbursement of his equity loss through the use of article 2.1.01 of the CFIRP Directive due to exceptional circumstances. He also argued that his reimbursement should be tax exempt.

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 reasoned that the grievor's case cannot be considered to be exceptional circumstances because HEA reimbursement was clearly provided for in the CFIRP Directive and therefore dismissed the grievor's request to use article 2.1.01. 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 version.

The Committee noted that in an interview given by the Director of Compensation and Benefits Administration (DCBA) to the Canadian Broadcasting Corporation in May 2018, 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 CFIRP 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 found that HEA reimbursement 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 for full reimbursement of his 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 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 home 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 TB for approval with his full support. The CDS reiterated that he has already directed CMP, in cooperation with the TB, to review CFIRP HEA provisions 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 the grievor's one. Barring this and anticipating limited flexibility to address the lack of a catastrophic loss clause, the CDS would offer that — in future —should losses over $30K be anticipated by a CAF member, that a member's branch leadership should 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, to include remote virtual work potential as well as possible posting cancellations. As indicated by the CDS, these means, while not optimal, are within the CAF's capacity to influence. The CDS directed CMP to investigate a mechanism through which to implement this CAF-centric approach quickly, be that through a Canadian Forces General Message or similar order to ensure rapid, consistent implementation across the force.