Tax reprieve for Canadians reporting Phoenix overpayments

By on 10/01/2018
Robyn Benson, president of the Public Service Alliance of Canada (Image courtesy: CCPA Monitor).

The Canadian government has promised that civil servants overpaid by the beleaguered Phoenix system will not be required to undergo a lengthy tax reclamation process – as long as they report the overpayment by the end of January.

Many civil servants have accidentally been given extra payments, with the tax deducted at source. They were then being asked to repay the gross amount, subsequently claiming back their consequent tax overpayment – a system that would have left them out of pocket for a period. But the government has now agreed to let those officials who notify the authorities of overpayments by 31 January pay back only the net sum, sparing them a lengthy tax reclamation process.

In a further concession, it has promised that those officials who miss the deadline will be able to reclaim the tax element of the gross repayment due before handing over the money, ensuring that they’re not left out of pocket at any point.

The moves represent concessions to public sector unions and MPs, who have argued that public servants should not be asked to pay back money that they had not received. The Public Service Alliance Canada (PSAC) called on the government to recover only the net overpayment from all employees accidentally given too much money by Phoenix.

Claw back

Those who miss the deadline will have to repay the gross amount, including tax deducted at source, “since there was no opportunity in 2017 to make the remittance adjustments”, according to guidance issued by Public Service Procurement Canada. In these cases, the government will have already provided tax figures to the Canada Revenue Agency: the 2017 tax slips will reflect employees’ actual earnings, including overpayments and related tax deductions, and they will receive a tax refund.

But the government’s latest concession means that it will delay collecting repayments from these employees until the Canada Revenue Agency has processed their tax returns and they have received tax refunds.

It’s your mess…

However, PSAC called the government’s response a “half-measure” that falls “disappointingly short”, and said it will continue to push for a full exemption from gross repayments for all affected employees.

“It is absurd that our members are forced to pay the government back more money than they received in overpayment and hope that everything works itself out during tax season,” said PSAC president Robyn Benson, as reported by www.ipolitics.ca

In a statement released on 21 December, PSAC said it had been told by the government that overpaid employees who report the amount to the centralised call centre by 15 January will only have to repay the net amount.

But on 4 January, PSAC issued another statement saying that agents at the call centre had been unprepared to take calls from its members, and the Treasury Board, which had issued the information, had told the union that call centre staff had not been briefed about the plan.

On 5 January, the union issued a statement saying the government had told it that overpaid employees whose pay was administered by the Miramichi call centre must report their overpayments to the centre by 19 January 2018 to qualify for recovery of net pay.

“PSAC shares the scepticism and frustration of our members as a result of the continuous blunders on the part of this government when it comes to payroll problems,” it said. “That said, PSAC encourages our members to make every effort to report any overpayments by January 19, 2018 to avoid having to repay the gross amount.”

The date now appears to have been extended to the end of January – but the government’s apparent confusion means that the picture remains unclear.

Documents leaked in August 2017 showed that the government was dealing with some 28,000 overpayment cases, the second largest type of error caused by Phoenix, according to www.ipolitics.com. By November 2017, the backlog of all cases had risen to 619,000. And late last year, union leaders called for the government to scrap the whole system.

Footnote: this story has been edited to clarify the situation facing different groups of civil servants.

About Liz Heron

Liz Heron is a journalist based in London, who specialises in international news. She worked on daily newspapers for 16 years, reporting extensively on both general news and education. She was Education Editor of the South China Morning Post in Hong Kong and has contributed to a wide range of British media including The Independent, The Guardian and the BBC.

One Comment

  1. Gail Clark

    10/01/2018 at

    The Comp Call Centre advises me on 8 Jan that even though I first reported my overpayment 19 Oct again 7 Nov, that the centre has to calculate, verify and record my overpayment before 31 January if I am to only payback the NET. So what exactly has to happen by all parties befor 31 Jan to ensure only the NET is repaid???
    Thanks

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