In a letter, Revenu Québec’s Direction générale des particuliers has informed PSAC-Quebec that the lump sum payment for the Phoenix pay system debacle will now be automatically tax exempt.
“This exciting news is the culmination of extensive efforts to have the wrongs inflicted by Phoenix recognized and to secure a fair tax treatment,” said Sébastien Paquette, Executive Vice-President for PSAC-Quebec. “We’re pleased that Revenu Québec has come to a conclusion similar to that of the federal government, confirming that this portion of the lump sum is also exempt from provincial income tax.”
Under the agreement between PSAC and the Government of Canada, members received a payment of as much as $2,500, including:
- up to $1,500 in compensation for moral damages caused by Phoenix
- up to $1,000 in compensation for the late implementation of the 2014 collective agreement.
A 2024 agreement confirmed that the $1,500 portion for moral damages is non-taxable at the federal level. At the time, PSAC recommended that members file a notice of objection to obtain similar tax treatment at the provincial level.
Automatic correction at Revenu Québec
Revenu Québec will automatically apply the correction to all involved, regardless of whether they filed a notice of objection. To be eligible, members must have:
- worked in Quebec in the year they received the payment, or
- resided in Quebec but worked outside the province during that year.
Based on information provided by Public Services and Procurement Canada, Revenu Québec will begin applying the correction to tax files in June 2025. This work will continue through the summer. No action is required from eligible members.
Members can still consult PSAC’s 2024 statement on the federal income tax exemption.
More than nine years later, the Phoenix pay fiasco continues to have a huge impact on our members. We remain committed to fighting for the government to make it right.