Tag Archives: phoenix

PSAC members urged to file individual tax appeals for Phoenix damages

Phoenix Banner

PSAC is encouraging members to fight for Phoenix general damages compensation to be tax-free by filing individual tax appeals to the Canada Revenue Agency this tax season.

By filing an appeal, you will force CRA to review the taxability of your personal damages payment. If we generate tens of thousands of tax appeals from members across the country, there is greater pressure to review the tax treatment of the damages for all PSAC members rather than ruling on thousands of individual appeals.

In 2020, PSAC negotiated $2,500 in Phoenix general damages for 165,000 PSAC members to compensate for the stress, aggravation and pain and suffering they endured because of the broken pay system.

Treasury Board treated Phoenix general damages as taxable income – deducting tax from the payment PSAC members received – but we maintain that these damages should be tax-free like just like other damages agreements.

Despite numerous appeals by PSAC, Treasury Board and the CRA have refused to revisit the taxability of Phoenix general damages. Unfortunately, time has run out to resolve this problem proactively.

Now, we’re urging PSAC members to formally object to the tax treatment of Phoenix damages once they file their 2021 tax returns and received their “Notice of Assessment” from the CRA, which you can expect to receive roughly two to eight weeks after filing your taxes.

File your Phoenix damages tax appeal

You can object to the taxability of Phoenix damages by completing a form T400A and filling out your personal contact information and the required details from your notice of assessment.

The form includes a section for issues, reasons and relevant facts. You can include the text provided below in that section to appeal for the Phoenix damages compensation you received to be non-taxable:

A portion of the income reported on the taxpayer’s T4 for 2021 represents general damages paid under a settlement agreement negotiated by the Public Service Alliance of Canada (PSAC) as compensation for stress, aggravation, and pain and suffering, payable to all members of PSAC in recognition of the effect of the Phoenix pay system and the delayed implementation of a collective agreement on the membership. The payment was not dependent upon or in any way related to any grievance previously filed by the taxpayer, or any demonstrated financial loss suffered by the taxpayer. Rather, the payment was compensation for the stress felt by all employees, regardless of their personal circumstances, due to the delays, confusion, and general chaos that resulted from the Phoenix implementation. As such, the amounts received as damages for pain and suffering should not have been subject to tax. The taxpayer asks that their 2021 tax return be reassessed to reflect the non-taxable nature of the general damages received.

We understand that everyone’s individual circumstances may vary, and PSAC does not provide legal advice on individual tax appeals. We encourage you to consult a professional tax advisor if you have specific questions about filing your income taxes.

Ongoing Phoenix damages compensation

PSAC will also begin the work of fighting for ongoing general damages for the Phoenix pay disaster as soon as possible. The damages PSAC negotiated were to compensate members for the hardships they experienced from 2016 to 2019, but the pay problems never stopped.

Since then, many PSAC members still haven’t been paid properly, and deserve additional compensation for the hardships they still endure. We will also work to ensure that the claims process negotiated in our last agreement for expenses and major losses also remain available to our members for as long as they continue to experience Phoenix pay problems.

Learn more about all our work to help PSAC members impacted by Phoenix as we look back on six years of the pay fiasco.

This article was first posted on the PSAC website.

Phoenix general damages finally open to retired and former members

Icone discussion PSAC-AFPC

After months of waiting, retired and former PSAC members finally have access to Phoenix general damages.

Any former member, legal representative of a former member or estate of a deceased member who worked for the federal public service between 2016 and 2020, and is eligible, can now claim the maximum lump sum of $2,500. This includes compensation for the late implementation of collective agreements during those years due to the Phoenix pay system. Entitlement to compensation is as follows:

2016–17 $1,000
2017–18 $500
2018–19 $500
2019–20 $500

These damages were negotiated in October 2020 by PSAC under the Phoenix pay system damages agreement.

To be eligible to claim each year of the financial compensation, a worker must have been a PSAC member, had their pay processed by Phoenix, and been on strength for at least one day in the applicable fiscal year. To clarify, “on strength” means  an employee who was actively working, on leave, on assignment, on long-term disability or otherwise not active, but remained employed.

To receive the amount you are entitled to, you must submit a claim, either online or by mail. Once the claim is evaluated, and you have agreed the government’s calculation of monies owed is correct, the amounts will be paid in one instalment. Please note that general damages payments are subject to overpayment recovery.

Submit your claim online

Submit your claim by mail

If you have questions or need help with the claim process, contact your departmental claims officer. If you have other concerns, please contact the Client Contact Centre.

For more information on Phoenix general damages for retired and former PSAC members please see our FAQs.

This article was first posted on the PSAC website.

Phoenix: Damages ruled taxable as Treasury Board refuses to cooperate

CRA sign

After months of waiting, the Canada Revenue Agency (CRA) has rejected our request to review the taxability of Phoenix damages. This is directly due to Treasury Board’s refusal to provide CRA with a joint statement of facts which corrects CRA’s understanding of the purpose of our damages settlement agreement.

In an April 27 letter from the CRA, the Agency states:

As discussed in our meeting on February 3, 2021, we consented to reconsider our position only if the Employer and PSAC provided us with an agreed-upon statement of facts. As this did not happen, we have not considered any of the assertions in your draft statement of facts.

After numerous requests for Treasury Board’s cooperation, and direct appeals to Minister Duclos, they have refused any and all cooperation on the matter.

“It’s clear they’re still angry that PSAC forced them to deliver a better deal for our members,” said PSAC President Chris Aylward.

“They’re frustrated that they have to honour the top-up clauses signed with the other unions to match our general damages agreement, and now they’re taking it out on PSAC members by sabotaging attempts to get a positive tax ruling.”

Tell Minister Duclos to stop blocking CRA from reviewing their decision!

Our union carefully worded the agreement to reflect a wide range of impacts suffered by PSAC members, including for “stress, aggravation, and pain and suffering” and for the late implementation of collective agreements. There is a strong precedent of damages for those purposes being deemed non-taxable by CRA. The tax treatment of the general damages should reflect the purpose of that compensation as outlined in the agreement.

It is unacceptable that Treasury Board refuses to affirm these facts. Instead they informed CRA that the agreement’s purpose is to resolve a policy grievance between the employer and the union – something that may be true for other unions, but not for PSAC’s damages agreement.

We will not let this stand without a fight.

While we continue to explore every legal avenue to appeal CRA’s decision, please take a moment to join our efforts by sharing your outrage directly with Minister Duclos and the Prime Minister.

Our goal is to ensure all PSAC members receive the full compensation they deserve and that we avoid any time consuming and complex tax disputes for individual members. We are also pushing Treasury Board to expedite the availability of the claims process for all former members and retirees who are still waiting to receive their Phoenix general damages.

We will provide additional updates to members about this ongoing work as we move forward.

For more information about Phoenix damages, please check out our FAQ.

This article has also been posted on the PSAC website.

Government rushing Phoenix damages payment without tax ruling

PSAC banner illustrating a conversation

Send a letter to Minister Jean-Yves Duclos and Minister Anita Anand that Phoenix damages shouldn’t be taxed.

The Liberal government has shamelessly chosen the 5th anniversary of the Phoenix pay system disaster to short-change thousands of PSAC members on their compensation for years of pay problems.

Even though PSAC is in the process of working with CRA to review the taxability of Phoenix damages, the federal government has confirmed that it intends to ignore these efforts and issue the up to $2,500 for our members, on March 3 – with taxes deducted. Treasury board provided no explanation for their actions.

“The government still has time to do the right thing,” said PSAC National President Chris Aylward.  “General damages should not be taxed, so we’re calling on key ministers to immediately intervene to fix this before payments are issued.”

The $2,500 settlement, even if taxed, is still greater than the five days of leave offered to PSAC members, but it represents a violation of the language we negotiated into the agreement. PSAC maintains that general damages paid to all employees for ‘stress, aggravation, pain and suffering’ and for the late implementation of collective agreements are non-taxable, as CRA has acknowledged other specific damages in the settlement should be treated.

“It’s a slap in the face to the tens of thousands of PSAC members who suffered years of pay problems, and then worked non-stop during this pandemic to deliver aid and benefits to millions of Canadians in crisis,” said PSAC National President Chris Aylward.

PSAC will pursue every legal route to secure the full compensation that our members are entitled to. This includes tax challenges that would retroactively see our members reimbursed should the payments be issued as planned on March 3, but our goal remains to avoid any time-consuming and complex tax disputes for our members.

“Phoenix short-changed PSAC members for years – the last thing they deserve is for the government to short-change them again,” added Aylward.

PSAC will continue to work to resolve this problem and updates will follow in the coming days.

The original version of this article was first posted on the PSAC website.