Phoenix: Damages ruled taxable as Treasury Board refuses to cooperate

May 3, 2021

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.