Tax System Undermines Pay Equity Settlement

Raven, Cameron, Ballantyne & Yazbeck LLP/s.r.l. is currently representing the Public Service Alliance of Canada (“PSAC”) and Cathy Murphy before the Federal Court in an application for judicial review of a decision of the Canadian Human Rights Tribunal.

The Tribunal dismissed the human rights complaint filed by the PSAC and Ms Murphy that alleged that the Canada Revenue Agency (“CRA”) discriminated against individuals who had received lump-sum pay equity payments in the year 2000 and were taxed on the full amount that same year. Consequently, most individuals who received lump-sum awards paid more taxes than individuals who received their wages in the years they were earned.

Provisions in the Income Tax Act allowed individuals to spread the lump-sum award over past years but triggered the CRA to charge compound interest on the amounts that would have been paid, thus reducing the actual value of the payment ordered. The effect of CRA’s actions was to undermine full pay equity for thousands of PSAC members.

The application was heard on January 11, 2011 at the Federal Court. David Yazbeck is counsel. Justice Michel Beaudry reserved judgment.

In the Ottawa Citizen: Feds, public service union battle over pay equity back taxes