# 2021-105 Pay and Benefits, Home Equity Assistance Program

Case summary

F&R Date: 2021-08-31

The grievor relocated from Cold Lake, Alberta in March 2018. On 19 April 2018, revisions to the Canadian Forces Integrated Relocation Program (CFIRP) 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's home in Cold Lake sold in March 2019 and he suffered an equity loss of $75,000. He requested 100% reimbursement of his equity loss, but this request was denied. The grievor argued that his initial decision to buy the home in Cold Lake was based on the protection offered by the 100% HEA reimbursement benefit and that removing it unjustly placed the risk of a depressed market on him. He argued that his case was an exceptional circumstance and therefore the use of CFIRP Directive, article 2.1.01, was appropriate.

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 an exceptional circumstance because HEA reimbursement was clearly provided for in the CFIRP Directive. Therefore, the IA dismissed the grievor's request to use CFIRP, 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 version.

The Committee first considered whether the grievor had a vested right to be administered under the previous CFIRP version but found that he would have had to sell his house before 19 April 2018 to have locked-in a vested right. The Committee then 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 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 also found that HEA reimbursement should not be taxed as income and recommended that the CAF and the TBS seek to reduce the tax burden on CAF members 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. He determined that the grievor was aggrieved, and in accordance with article 2.1.01 of the CFIRP Directive, 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 is submitted to the TBS for approval with the CDS’ full support.

The CDS noted that based on previous direction on this matter, TBS and the Director Compensation and Benefits Administration (DCBA) have been in consultation to discuss the situation affecting CAF members who sold their residences at a loss in Cold Lake. As a result, TBS directed DCBA to initiate a market study assessing the periods of 2014-2018 and 2018-2020. The study remains ongoing as of March 2022. Barring this and anticipating limited flexibility to address the lack of a catastrophic loss clause, the CDS offered that - in future - should losses over $30K be anticipated by a CAF member, that a 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, to include remote virtual work potential as well as possible posting cancellations. The CDS directed CMP to investigate a mechanism through which to implement this CAF- centric approach quickly, be that through Canadian Forces General Messages or similar order to ensure rapid, consistent implementation across the force.