The Public Service Alliance of Canada (PSAC) says it may take legal action after the Canada Revenue Agency (CRA) ruled that damages paid to Federal employees in connection with the troubled Phoenix pay system are taxable.
The Alliance, the country’s biggest Public Service union, said the payments were part of a contract settlement dealing with the financial, mental and emotional harm caused to Government employees who were overpaid, underpaid or not paid at all through the Phoenix system.
Payments of up to $C2,500 ($A2,650) each were issued in March to Public Servants affected by the damages agreement, minus applicable income taxes and other deductions.
In a letter sent to the union, the tax Agency turned down the union’s request to review the taxation issue.
In part, the CRA said the Treasury Board, the Agency responsible for paying Public Servants, and the union, did not provide the agreed-upon information needed to conduct a review.
“After numerous requests for Treasury Board’s cooperation, and direct appeals to [President of the Treasury Board Jean-Yves] Duclos, they have refused any and all cooperation on the matter,” the union said in a statement.
Later, Chair of the PASC, Chris Aylward accused the Treasury Board of acting out of spite.
“It’s clear they’re still angry that PSAC forced them to deliver a better deal for our members,” Mr Aylward said.
“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,” he said.
Treasury Board officials were not immediately available to respond to a request for comment.
Ottawa, 6 May 2021
