# 2024-268 Pay and Benefits, Canadian Forces Housing Differential

Case summary

F&R Date: 2025-09-18

The grievor disputed his disentitlement from the Canadian Forces Housing Differential (CFHD) allowance since their mortgage lenders were related to them. The grievor asserted that there was a lack of transparency about the arm's length transaction policy and claimed that the arm's length mortgage policy is discriminatory towards service members who rely on financial assistance from their family. The grievor further argued that the intent of the CFHD allowance is to support members facing financial challenges due to postings in high-cost areas, regardless of the source or nature of their mortgage financing.

The Director General Compensation and Benefits, acting as the Initial Authority (IA), explained that per Compensation and Benefits Instructions for the Canadian Forces 205.453, an arm's length transaction is one between individuals not connected by blood or marriage and there is no entitlement to the CFHD if the mortgage, lease, or rental agreement is not an arm's length transaction. Since the grievor's mortgage commitment letter is with his parents, it does not qualify as an arm's length transaction, and therefore, he does not meet the conditions for the CFHD entitlement. As such, the IA concluded the grievor was treated in accordance with the policy and denied redress.

The Committee found that the grievor was not entitled to receive the CFHD allowance. The Committee explained that the requirement for an arm's length transaction ensures allowances are provided in a fair and transparent manner. A personal loan may distort the natural effects of a free market, as illustrated by the grievor's situation, in which he is not subject to the typical financial burden of housing in a high-cost area. The Committee also pointed out that Canadian Forces General Message 054/23 – INTRODUCTION OF THE CANADIAN FORCES HOUSING DIFFERENTIAL, was issued prior to the grievor's receipt of his posting message and found that he ought to have made arrangements accordingly. On the issue of whether the policy is discriminatory, the Committee determined that the grievor did not establish a prima facie case of discrimination. The Committee recommended that the Final Authority not afford redress. 

The Committee observed that many Canadian Armed Forces (CAF) members rely on financial assistance from their family to enter the real estate market. In light of this, it suggested that the CAF consider adding a Frequently Asked Questions section to clarify how the “arm's length transaction” requirement applies to mortgage arrangements.