Income Tax Refiling Expenses - CAF Mismanagement of Pay Accounts

Topic

Income Tax Refiling Expenses - CAF Mismanagement of Pay Accounts

Case Number

• 2020-177 (F&R date: 2021-11-03)

Description

Over the past ten years, the Committee has seen several members of the ACISS occupation

subjected to serious mismanagement of their pay accounts stemming from the ACISS amalgamation. Often, these initial errors have been followed by confusing, error-filled adjustments extending over multiple tax years. Similar pay mismanagement has also occurred to the pay accounts of CAF members in other occupations as well, and the Committee has observed that very little support is provided by the

CAF to assist and mitigate the harm caused to those personnel by CAF pay account mismanagement.

CAF members who experience pay mismanagement leading to significant recovery action frequently also suffer financial hardship. Often, in good faith, the affected members will have used the funds errantly paid to them for perfectly valid reasons such as on home repairs for example. Some of these members have even waited several months to make sure there were no mistakes before using the funds but to no avail.

The Committee has observed that in many cases, although the CAF members do not directly question that they were overpaid and must repay some amount, they are frequently uncertain whether the amount that they have been told they owe to the CAF is accurate.

In the Committee’s view, this uncertainty is quite understandable. In fact, the Committee noted that even the CAF grievance analysts have difficulty following and understanding the many transactions made to the pay accounts of these affected members.

In reviewing the complaint of a recent CAF grievor, the Committee noted there were several pay reviews and revisions that were extremely difficult to follow and understand. Indeed, the CAF pay experts at the Directorate of Military Pay and Allowances Processing (DMPAP) ultimately required a Compensation Team Lead to confirm that the amendments were correct. The Committee noted that the pay spreadsheet provided by DMPAP was complicated and hard to follow, and the Committee considered the explanation given to the CAF grievance staff by DMPAP to be equally difficult to understand. 

The Committee found it unfortunate that a CAF member had to use the grievance process in order to

obtain an acceptable explanation of the adjustments that were made to his pay account. The Committee concluded that detailed, but easy to understand, explanations should be provided to all affected CAF members whenever any nonstandard adjustments are made to their pay. The Committee expressed the view that CAF members should not have to fight for this courtesy. Rather, looking after the welfare of CAF members requires that it be proactively offered by CAF pay authorities.

Based on the DMPAP explanation of the tax adjustments made to the grievor’s pay in the present case, it appears that the grievor effectively paid tax on his back pay twice. The Committee noted that DMPAP staff suggested that when the grievor submitted the amended 2017 and 2018 T4 forms to the Canada Revenue Agency (CRA) in revised income tax filings for both years, he should receive a tax credit that should help offset what he owes the CAF as a result of their mismanagement of his pay. However, the grievor advised the Committee that he submitted those T4 forms but received little in return from the CRA.

The Committee is concerned that in trying to handle complicated taxation matters on his own, the grievor may not have benefitted from the tax refiling process to the extent that DMPAP indicated that he should.

The Committee notes that properly re-filing one’s annual income tax submission is not a simple undertaking at the best of times. It is especially difficult when there are significant errors and adjustments made to one’s pay over multiple tax years as is sometimes taking place in the case of CAF members. In such cases, the Committee is of the view that CAF members should receive the assistance of a tax filing specialist in order to properly re-file their affected taxation years with the CRA. Given that this expense would not exist were it not for the mismanagement of the member’s pay account by the CAF, the Committee concludes that the CAF should be accountable to reimburse affected members for this expense.

Drawing on the history of the overpayment recovery files reviewed by the Committee over the

years, the Committee recommended that the Final Authority consider directing the CAF to adopt the following mitigation protocol in cases where CAF members experience significant pay account mismanagement. In that event, the following services should be provided automatically to the affected CAF member:

• A detailed but easy to understand explanation from DMPAP following any pay account adjustments made necessary in order to correct pay account errors;
• Amended T4s if the adjustments are made after the original T4 has been issued; and
• In cases where the affected CAF member finds it necessary to re-file their taxes, reimbursement of the expenses they incur obtaining the services of a tax professional in order to ensure that taxation errors caused by the CAF are properly rectified.