This may affect a few people on this forum.
CANFORGEN 159/09 201743Z AUG 09
TAX RELIEF ISSUES
UNCLASSIFIED
REFS: A. CANFORGEN 117/08
B. CFAO 203-3
C. SUPERVISORS AIDE: OVERPAYMENTS AND RECOVERIES - EXTENSION AUTHORITY
SECTION ONE - TAX RELIEF CORRECTIONS. IN 2007, CANADA REVENUE AGENCY (CRA) PROVIDED A CLARIFICATION TO DND ON THE SUBJECT OF TAX RELIEF FOR DEPLOYED MEMBERS. AS A RESULT OF THIS CLARIFICATION, CORRECTIONS WERE PROCESSED FOR MEMBERS WHO HAD BEEN GRANTED TAX RELIEF FOR THE 2007 TAX YEAR. THE CORRECTIONS REFLECTED CRA POLICY THAT THE TAX DEDUCTION AMOUNT RECORDED ON A MEMBER S T4 SLIP MUST CORRESPOND TO THE TAX YEAR THAT THE MEMBER WAS ON THE MISSION, AND NOT THE TAX YEAR THAT TAX RELIEF COMMENCED IN CCPS. THE DETAILS OF THE CORRECTIONS WERE RELEASED AT REF A. THE MESSAGE DIRECTED UNITS TO MAINTAIN RECORDS IN DEBIT BALANCE FOR THOSE MEMBERS WHOSE T4 S WERE BEING AMENDED, AND TO RECOVER DEBIT BALANCES FROM THOSE NO LONGER ENTITLED TO TAX RELIEF FOR RETROACTIVE PAYMENTS APPROVED AND INPUT INTO CCPS AFTER THE MEMBER S DEPARTURE FROM THEATRE
ALSO INCLUDED AT REF A, WAS INFORMATION REGARDING THE PROCESSING OF AMENDED T4 SLIPS BY CRA. TO DATE, CRA HAS NOT PROCESSED, AS A PROJECT, THE AMENDED ELECTRONIC SLIPS SUBMITTED BY DND AND ARE UNLIKELY TO DO SO IN THE NEAR FUTURE. TO ADDRESS THE ISSUE OF DEBIT BALANCES FOR SERVING MEMBERS, DMPAP WILL PROVIDE AMENDED T4 S DIRECTLY TO AFFECTED MEMBERS. A COVERING LETTER WILL BE PROVIDED ALONG WITH INSTRUCTIONS REGARDING HOW TO SUBMIT THE T4 FOR REASSESSMENT. A LIST WAS PROVIDED TO EACH PAY OFFICE IDENTIFYING MEMBERS WHO MAY EXPECT TO RECEIVE AN AMENDED T4. IT SHOULD BE NOTED THAT MEMBERS WHO FILE THEIR TAXES ELECTRONICALLY WITH CRA CAN REQUEST A REASSESSMENT ON LINE, INSTEAD OF WAITING FOR DMPAP TO ISSUE AN AMENDED T4
MEMBERS WHOSE ACCOUNTS WERE DEBITED AS THE RESULT OF THE NON-ENTITLEMENT TO TAX RELIEF ON BACK PAYMENTS SHOULD ALREADY HAVE PAID BACK THE DEBIT. UNITS THAT HAVE NOT YET COMMENCED RECOVERY ACTION ON THESE MEMBERS WILL COMMENCE RECOVERY ACTION ON RECEIPT OF THIS MESSAGE. PROCEDURES FOR APPROVAL OF EXTENDED RECOVERIES ARE DETAILED AT REFS B AND C
SECTION TWO - ADMIN DELAY - IMPACT ON TAX RELIEF. CRA S CURRENT POLICY ON TAX RELIEF HAS THREE MAIN CONDITIONS:
MEMBERS MUST ACTUALLY BE IN TAX RELIEF STATUS (I.E. DEPLOYED WITH ELIGIBLE OPERATIONS) IN ORDER TO BE ENTITLED TO THE TAX DEDUCTION
THE TAX DEDUCTION MUST APPEAR ON THE T4 OF THE YEAR FOR WHICH THE MEMBER WAS IN THEATRE, NOT WHEN IT WAS APPROVED IN CCPS AND
RETROACTIVE BENEFITS GRANTED AND PROCESSED AFTER THE MEMBERS TOUR ENDS (SUCH AS RETROACTIVE PAY INCREASES) ARE NOT SUBJECT TO TAX RELIEF AS THE ENTITLEMENT DID NOT EXIST WHILE MEMBER WAS IN TAX RELIEF STATUS
WHILE THE CRA CLARIFICATION IS VERY LIMITING, DND HAS BEEN SUCCESSFUL IN OBTAINING RECOGNITION OF THE DIFFICULTY IN COMPLETING ALL ADMIN WHILE THE MEMBER IS ACTUALLY IN THEATRE. THIS RECOGNITION WILL PROVIDE DND SOME LEEWAY IN PROCESSING BENEFITS WITHIN A REASONABLE TIMEFRAME. THIS WILL ALSO ENSURE THAT MEMBERS ARE NOT DENIED THEIR ENTITLEMENTS SOLELY DUE TO ADMIN DELAY. AS AN EXAMPLE, A MEMBER WHO WAS PROMOTED WHILE SO EMPLOYED WHILE ON DEPLOYMENT WOULD BE ENTITLED TO A TAX DEDUCTION ON THAT SALARY (SUBJECT TO THE MONTHLY CAP) EVEN IF THE PROMOTION COULD NOT BE ACTIONED IN HRMS UNTIL AFTER THE MEMBER S DEPARTURE FROM THEATRE. HOWEVER A MEMBER WHO, WHILE IN THEATRE, FILLED A HIGHER RANK POSITION IN HIS OR HER NORMAL RANK AND WHO, AFTER DEPARTURE FROM THEATRE, WAS RETROACTIVELY GRANTED THE ACTING PAY OF THAT HIGHER RANK, WOULD NOT BE ENTITLED TO A TAX DEDUCTION ON THE BACKPAY. THE DIFFERENCE BETWEEN THESE TWO CASES RESTS ON THE FACT THAT IN THE FIRST CASE THE ENTITLEMENT WAS APPROVED WHILE IN TAX RELIEF STATUS AND THE DELAY WAS ADMIN IN NATURE. IN THE SECOND CASE, THE RAISE WAS APPROVED AT A TIME WHEN THE MEMBER WAS NOT IN TAX RELIEF STATUS, THEREFORE AN ENTITLEMENT TO THE TAX DEDUCTION DOES NOT EXIST
THE DECISION TO GRANT THE TAX DEDUCTION DESPITE AN ADMIN DELAY WILL BE ON A CASE BY CASE BASIS. AS SUCH, CCPS WILL NOT BE REPROGRAMMED TO AUTOMATICALLY PROCESS THE NECESSARY TRANSACTIONS. WHEN A UNIT BELIEVES AN ENTITLEMENT EXISTS, THE FOLLOWING PROCEDURES SHALL BE FOLLOWED BY THE ACCOUNTING OFFICER:
AN OBSERVATION WILL BE RAISED TO THE APPROPRIATE REGIONAL HELP DESK AT DMPAP
AN EXPLANATION DETAILING THE DELAY IN PROCESSING THE ENTITLEMENT WILL BE PROVIDED AND
SUPPORTING DOCUMENTATION CONFIRMING THAT THE ENTITLEMENT WAS KNOWN WHILE THE MEMBER WAS IN TAX RELIEF STATUS WILL BE ATTACHED OR FAXED
ONCE DMPAP HAS VERIFIED THAT AN ENTITLEMENT TO A TAX DEDUCTION EXISTS, CORRECTIVE ACTION WILL BE TAKEN IN CCPS. IT IS IMPORTANT TO NOTE THAT CORRECTIVE ACTION WILL BE LIMITED TO ENSURING THAT THE TAX DEDUCTION AMOUNT WILL BE REFLECTED ON MBR S T4. DMPAP WILL NOT CREDIT TAXES FOR SUCH CASES THROUGH THE MEMBER S PAY ACCOUNT. CRA/RQ WILL REIMBURSE THE MEMBER WHEN THE ANNUAL TAX RETURN IS PROCESSED, PROVIDING THAT THE MEMBER DOES NOT OWE CRA/RQ FOR OTHER REASONS. WHEN AN ADMIN DELAY RESULTS IN A CORRECTIVE ACTION BEING TAKEN IN A TAX YEAR DIFFERENT FROM THE ORIGINAL ENTITLEMENT, THE TAX DEDUCTION AMOUNT WILL APPEAR ON THE T4/R1 OF THE YEAR THE CORRECTIVE ACTION IS TAKEN. THIS IS THE ONLY EXCEPTION TO THE RULE REQUIRING THAT THE TAX DEDUCTION BE APPLIED TO THE YEAR WHEN THE MEMBER IS IN A TAX RELIEF SITUATION
SECTION THREE - TAX RELIEF ON POSTING ALLOWANCE. FROM TIME TO TIME MEMBERS POSTED DURING THEIR TOUR WILL ACTUALLY MOVE THEIR FAMILIES WHILE STILL DEPLOYED. IN SUCH A CASE, THERE MAY BE AN ENTITLEMENT TO A TAX DEDUCTION ON A PORTION OF THE MEMBER S POSTING ALLOWANCE. IN THIS CASE, THE FOLLOWING PROCEDURES SHALL BE FOLLOWED:
THE ACCOUNTING OFFICER WILL RAISE AN OBSERVATION TO THE APPROPRIATE REGIONAL HELP DESK AT DMPAP
DMPAP WILL PROVIDE THE UNIT WITH THE AMOUNT OF ROOM AVAILABLE UNDER THE MEMBER S MONTHLY CAP
THE ACCOUNTING OFFICER WILL PROVIDE THE INFORMATION TO THE MEMBER AND
THE MEMBER WILL FORWARD THE INFORMATION TO IRP FOR INCLUSION ON THE T4/RELEVE 1 ISSUED BY THAT ORGANIZATION. THE TAX DEDUCTION WILL NOT BE REIMBURSED BY IRP
THE NUMBER OF MEMBERS AFFECTED BY THE LATTER SITUATION WILL BE RELATIVELY SMALL. FIRST, MOST MEMBERS USE THEIR POSTING ALLOWANCE FOR INTEREST BUYDOWN PURPOSE, WHICH MEANS THE AMOUNT IS ALREADY TAX EXEMPT. SECOND, IT ONLY APPLIES TO THE PORTION OF THE ALLOWANCE THAT IS UNDER THE MONTHLY CAP, SO A MEMBER WHOSE TOTAL PAY AND TAXABLE ALLOWANCES EXCEED THE SALARY OF A CF CWO WILL NOT HAVE ROOM LEFT AGAINST WHICH TO APPLY THE TAX DEDUCTION
QUESTIONS REGARDING THE ABOVE MENTIONED DIRECTIVES MAY BE ADDRESSED TO DMPAP MIL PAY REGIONAL HELP DESKS, BY PAY OFFICES