New measures to help employees affected by Phoenix

Departmental funds available for resolving pay issues for employees

Pay system modernization and consolidation of pay centres were expected to result in additional savings in departments of roughly $70 million beginning in 2016-17. Most of these projected savings were based on direct reductions to departments’ budgets. They also included cost recovery.

As issues with the Phoenix pay system are not yet resolved, departments are still incurring administration costs related to Phoenix. As such, there are no plans to reduce departmental budgets to contribute towards the potential savings of $70 million per year either in 2017-18 or in 2018-19. 

The Government has taken the decision to leave this money with organizations so that these funds can be directed to resolving issues for their employees.

Departments and agencies will ensure that all expenditures made against this money are solely those needed to address pay administration issues.

Reimbursement of expenses for tax advice

Employees who have been overpaid or underpaid because of the Phoenix pay system and who require the assistance of an accountant or another qualified tax professional may seek up to $200 (including sales tax) in reimbursement for tax advisory services in relation to their 2016 or 2017 income taxes. 

This process is similar to the existing claims process for the reimbursement of out-of-pocket expenses. Employees need to complete a form and submit receipts to their department. Each claim will be assessed on its own merits.

This process is retroactive. If employees have already filed their income taxes for 2016, but remain uncertain as to the potential current and future income tax impacts of the pay issues, they can still seek advice from an accountant or a qualified tax professional.

Tax advisory services include: 

• Tax advice provided by a qualified professional to help the employee understand the impact of overpayment and/or underpayments as it relates to their 2016 or 2017 income taxes.
• Preparation of an individual’s 2016 or 2017 income tax return in cases where the employee’s income tax situation has been affected by pay issues related to the Phoenix pay system.
• Reconciliation of an employee’s 2016 or 2017 tax slips against income amounts actually received by the employee.

The intent of this process is to reimburse employees for income tax advice and services that may arise due to errors to their employment income from the Phoenix pay system. It would not cover fees for tax advice related to other financial or business activities or investments.

Tax software and online tax services are not eligible under this process since they are not designed to offer advice regarding overpayments or underpayments of employment income.