Update: Phoenix damages taxability and deadline to object

In 2020, PSAC negotiated Phoenix general damages for approximately 165,000 PSAC members to compensate for the stress, aggravation and pain and suffering they endured because of the broken pay system. 

Treasury Board treated Phoenix general damages as taxable income – deducting tax from the payment PSAC members received – but the Union maintains that these damages should be tax-free like just like other damages agreements.

Initially, despite numerous appeals by PSAC, Treasury Board and the Canada Revenue Agency (CRA) refused to revisit the taxability of Phoenix general damages. That has changed, however, and the Minister of National Revenue has agreed to PSAC’s request to put a test case before the Tax Court to determine this issue. The joint reference was filed last week.

In the event that the damages payments are declared non-taxable, the CRA can re-assess the taxes of impacted individuals that make a claim at that time and reimburse them. However, we cannot guarantee at this time that they will do so.

In order to guarantee your right to the reassessment, as we recommended in our previous updates, we urge all those who received general damages for Phoenix to file an objection before the end of April 2023. If for whatever reason you cannot do so in time, we will send further updates in May on how you can request an extension to the time period to object.

It is not possible to determine the length of time the Tax Court will take to render their decision, but PSAC will provide an update to all members as soon as possible. For future Phoenix updates make sure to subscribe to PSAC’s e-newsletter and visit psacunion.ca/phoenix


April 6, 2023