# 2024-007 Pay and Benefits, Canadian Armed Forces Relocation Directive, Recovery of Overpayment, Relocation, Relocation Benefits

Case summary

F&R Date: 2024-09-20

The grievor challenged the terms of the Canadian Armed Forces Relocation Directive (CAFRD), which does not provide for a tax waiver for the reimbursement of certain benefits related to a directed move during military service. The grievor deemed it unfair to have to pay tax on the reimbursement of mortgage default insurance taken out when she relocated to Quebec. The grievor considered that the Canadian Armed Forces (CAF) should educate the Canada Revenue Agency (CRA) about the realities facing members in order to adapt tax policies accordingly. Finally, the grievor pointed out the complexity of having to consult numerous references and perform separate tax calculations to understand the eligibility for the reimbursement of each expense during a relocation. As redress, the grievor requested that the CAF propose that the Treasury Board (TB) revise relocation directives so that all eligible and reimbursable expenses are tax exempt. 

The Director General Compensation and Benefits, acting as Initial Authority (IA), found that the grievor had not been aggrieved and refused to grant the redress requested. According to the IA, the choice of residence, the location of the residence and the financial provisions surrounding the purchase are considered to be personal decisions. Since acquiring mortgage default insurance is not mandatory in all cases involving a relocation, the reimbursement of this benefit is taxable and the grievor could not have avoided the collection of tax.

The Committee concluded that the collection of tax on the reimbursement of the mortgage default insurance was justified and in accordance with applicable provisions. The Committee pointed out that mortgage default insurance is explicitly listed as a taxable benefit and that this information was broadly accessible to the grievor, namely, in section 2.8 of the CAFRD and in the tax implications guide on relocation benefits for military personnel published by the Chief of Military Personnel in January 2019. However, the Committee acknowledged that there may be some opportunities for improvement with respect to the administration of the taxability of relocation expenses. In this regard, the Committee recommended that the CAF continue its efforts with the CRA and the TB to obtain better tax exemptions for its members, given the specific conditions of military service.