Working for Canada in a dangerous place? Here's your extra tax bill

Written By Unknown on Selasa, 31 Maret 2015 | 21.16

Civil servants representing Canada in the world's most dangerous places are being hit by a personal income tax hike, a possibly unintended consequence of the 2012 budget that senior government officials are struggling to reverse.​

Changes that took hold in 2013 began treating group sickness or accident insurance plans including accidental death and dismemberment policies for travel in war zones — as a taxable benefit.

Government employees assigned to high-risk travel are angry about paying hundreds or even thousands in extra taxes, just for the privilege of doing their jobs.

'Trips to these locations are no holidays.'—​ Chrystiane Roy, union spokeswoman

"The civil service is full of brave people with a strong sense of duty," said Scott Gilmore, a former foreign service officer who left to start his own non-governmental organization. "Some simply cannot afford to do something like that."

Because standard accident or life insurance policies may be void in conflict zones, a diplomat, immigration officer or humanitarian aid worker often needs extra coverage on certain assignments.

The cost varies, depending on the number of insured employees, the region, the nature of the work and the mode of transportation.

CBC News obtained stories from individuals serving in the Middle East, Africa and Central Asia who crunched the numbers on the tax slips they received this year and worked out how much their assignments cost them in extra income taxes:

  • Three days' travel to a country where Canada has no embassy: $240.​

  • Five months serving in a mission later evacuated due to a deteriorating security situation: Almost $900.

  • Occasional travel to another "high priority" country without a Canadian embassy, where the security situation is "extremely precarious": $700.

  • Posting to a country with sporadic violence and civil war: $1,500.   

And diplomats assigned to evacuate Canadian citizens from a dangerous region were first sent without knowing if they had adequate insurance, then were taxed on it.

Managers at Foreign Affairs report an extra $600 tax hit for their group policy.

'Fairness' nets taxman extra $105M

Documents released to CBC News under the Access to Information Act show tax policy experts from the finance department met with foreign affairs officials to "hear their concerns." Legal counsel was also present. Most of the notes are redacted.

Talking points from Finance explain the goal was fairness: all employment benefits — private, public or not-for-profit sector, in-cash or in-kind — are to be included in an employee's income to ensure people with comparable incomes pay comparable taxes.

Across all sectors, making group sickness or accident insurance plans a taxable benefit is expected to net the federal government an additional $105 million annually by 2016-17, according to a document tabled in the House of Commons in late January.

But the punitive effect on the government's key people abroad was not anticipated or well explained. Confusion over the change is evident in the documents.

CBC News made a detailed inquiry about the issue to both departments. David Barnabe, a finance spokesman, replied only that the department "does not comment or speculate on possible policy actions, or discuss what might be under consideration."

"Further to the response you received from Finance, [Foreign Affairs] does not comment on ongoing discussions," Nicolas Doire, a department spokesman, wrote the next day.

Concerns 'falling on deaf ears'

Chrystiane Roy, a spokeswoman for the union that represents foreign service officers, said members were both offended and caught off-guard by the tax hit.

"Trips to these locations are no holidays. They are deemed essential by the employer and could hardly be described as a benefit," she wrote to CBC. "No government should resolve its budget issues on the back of the safety and security of its employees." 

Some of her members found out about their extra taxes after accepting a posting or returning from a trip. Meetings to resolve the issue "seem to be falling on deaf ears," Roy said.

'One day the government will pay dearly.'— Ferry de Kerckhove, former diplomat

Collective bargaining now underway can't address the concerns. A change to tax law can only be fixed with another change to tax law — an exemption or change of interpretation.

An amendment to the Income Tax Act could quietly appear in a budget implementation bill later this spring. But if the Harper government really wanted to fix it in a hurry, cabinet ministers could change it with an order-in-council.

"In order to get the best people you have to treat them fairly," said ex-diplomat Gilmore. "The people who manage people are not the same people who manage money," he said.

"There's a huge disconnect between Treasury Board and Foreign Affairs," he said. 

'Diplomats don't sit in Vienna'​

In some ways, Gilmore said, things have improved in the decade since he left. 

When he volunteered to evacuate Canadians from East Timor, he was sent with no extra insurance and no hostile environment training. When he realized he'd landed in the middle of a shooting war, he borrowed body armour from a departing CNN crew.

Military deployments in Afghanistan, and more recently in northern Iraq, have been twinned with foreign aid announcements — requiring both boots and briefcases on the ground.

"Diplomats don't sit in Vienna anymore," Gilmore said.

Afghanistan offers a sad, cautionary tale about insuring for worst-case scenarios.

When diplomat Glyn Berry was killed by a car bomb in 2006, he did not have this extra insurance. His family negotiated a one-off settlement with the federal government to compensate for what his dependants might have received.

Ex-ambassador Ferry de Kerckhove, who was Berry's boss in Pakistan, said the late diplomat begged to go.

But the mentality in the foreign service is changing, de Kerckhove believes, and nickel-and-diming won't go over well with younger generations.

"The way the department is going is very sad," he says. "It's been deliberately emasculated, and one day the government will pay dearly."


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