Government announces new measures to help employees affected by Phoenix

OTTAWA, ONTARIO--(Marketwired - April 27, 2017) - Treasury Board of Canada Secretariat

Employees go to work expecting to be paid, and paid the right amount.

The Government of Canada takes its responsibility to pay its employees very seriously. That is why today, the President of the Treasury Board, the Honourable Scott Brison, announced additional measures to help the women and men who have been affected by Phoenix.

As part of the original 2009 implementation plan for Phoenix, the new pay system was supposed to generate savings across government departments. These departments were expected to transfer the savings they generated from Phoenix to the Government.

Given that employees need more support and departments need more resources to help resolve payroll issues, the Government will instead keep those funds within departments so they can ensure their employees receive the pay they are owed. This measure will keep the expected $70 million in departments, per year, over the next two fiscal years.

Recognizing the unfair financial burdens these pay issues have placed on some of our employees, the Government of Canada will also reimburse those who seek or have already obtained tax advice to address tax implications caused by problems with the Phoenix system. Employees who encountered Phoenix pay issues may seek up to $200 in reimbursement for tax advisory services in relation to their 2016 or 2017 income taxes.

Quote

"Our first priority is to help employees who have experienced pay problems because of Phoenix and to fix those problems as quickly as possible. We will ensure that everyone is treated fairly and that organizations have the resources they need to help our employees who have been affected by these issues."

- The Honourable Scott Brison, President of the Treasury Board

Associated Links

Phoenix pay system issues

Tax and repayment information for employees

Submit a claim for the reimbursement of tax advisory services

Transformation of Pay Administration Initiative

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BACKGROUNDER

New measures to help employees affected by Phoenix
Departmental funds available for resolving pay issues for employees

Pay system modernization and consolidation of pay centres were expected to result in additional savings in departments of roughly $70 million beginning in 2016-17. Most of these projected savings were based on direct reductions to departments' budgets. They also included cost recovery.

As issues with the Phoenix pay system are not yet resolved, departments are still incurring administration costs related to Phoenix. As such, there are no plans to reduce departmental budgets to contribute towards the potential savings of $70 million per year either in 2017-18 or in 2018-19.

The Government has taken the decision to leave this money with organizations so that these funds can be directed to resolving issues for their employees.

Departments and agencies will ensure that all expenditures made against this money are solely those needed to address pay administration issues.

Reimbursement of expenses for tax advice

Employees who have been overpaid or underpaid because of the Phoenix pay system and who require the assistance of an accountant or another qualified tax professional may seek up to $200 (including sales tax) in reimbursement for tax advisory services in relation to their 2016 or 2017 income taxes.

This process is similar to the existing claims process for the reimbursement of out-of-pocket expenses. Employees need to complete a form and submit receipts to their department. Each claim will be assessed on its own merits.

This process is retroactive. If employees have already filed their income taxes for 2016, but remain uncertain as to the potential current and future income tax impacts of the pay issues, they can still seek advice from an accountant or a qualified tax professional.

Tax advisory services include:

• Tax advice provided by a qualified professional to help the employee understand the impact of overpayment and/or underpayments as it relates to their 2016 or 2017 income taxes.
• Preparation of an individual's 2016 or 2017 income tax return in cases where the employee's income tax situation has been affected by pay issues related to the Phoenix pay system.
• Reconciliation of an employee's 2016 or 2017 tax slips against income amounts actually received by the employee.

The intent of this process is to reimburse employees for income tax advice and services that may arise due to errors to their employment income from the Phoenix pay system. It would not cover fees for tax advice related to other financial or business activities or investments.

Tax software and online tax services are not eligible under this process since they are not designed to offer advice regarding overpayments or underpayments of employment income.