Notice to PSAC Federal Public Servants:

The Canada Revenue Agency has reached a settlement regarding the taxation of the lump-sum payment received by PSAC members under the 2020 Phoenix pay system damages agreement.

Under the terms of the settlement, the portion for stress and damages (up to $1,500) has been deemed non-taxable.

This decision means that PSAC members who file or have already filed a notice of objection regarding the taxation of Phoenix damages will be reimbursed the taxes that should not have been deducted from their damages payment in 2021. The value of the tax reimbursement will vary based on your individual tax profile for the 2021 tax year.

To benefit from the settlement, you must file a notice of objection disputing the taxation of this amount by April 30th, 2024.

How to File an Objection Online – PSAC Guidance



We encourage all PSAC members to review the following information to learn more about this recent decision and understand how to take action to request reimbursement.

                PSAC Notice of Decision – Feb 23, 2024

                How to File an Objection Online – PSAC Guidance

                Canada Revenue Agency’s Guidance

                Outline of Initial 2020 PSAC Damages Settlement – July 9, 2020


Impacted by Phoenix Pay Issues - Not a Member of PSAC?

Please note that the recent CRA decision is specific to the settlement between the Government of Canada and the Public Service Alliance of Canada (PSAC) members.

Other agencies and unions signed similar Phoenix damages agreements and it would be reasonable to think that those agreements would receive similar tax treatment. At this time, it is unclear how they will be impacted by this decision. If you were a Public Service employee working under a different agency or union at the time, we encourage you to reach out to your respective association to ask about how you may be impacted by the PSAC ruling.

Please reach out to us if you need assistance or if you have any questions regarding filing the objection.

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