November 2018

The federal government has discovered a massive accounting blunder that has deprived more than 270,000 veterans of their disability payments. Veterans Affairs Canada has claimed that the CA $165 million shortchange is due to a miscalculation.

After the Veterans Ombudsman’s office uncovered the massive shortfall, Veterans Affairs Minister Seamus O’Regan explained the error had been caused by disability pension adjustment calculations between 2003 and 2010.

He said the error was a result of not subtracting the provincial basic tax credit in their income tax calculation. Had Veterans Affairs monitored the pension payments accurately, the veterans would have earned personal income tax exemption for this.

Ombudsman Guy Parent uncovered the 8-year error, triggering the clamor for an immediate reimbursement to those affected. He said they will receive the backdated compensation to which they are entitled by 2020.

"The Department has secured a source of funds of up to $165 million for retroactive payments. Most individuals will receive a few hundred dollars, while the maximum amount to be paid would be a couple of thousand dollars," O'Regan said.

Parent also suggested prioritizing repayment to low-income veterans as soon as possible. "They're alive and they are in need, so hopefully their plan of action will include some kind of a priority for those people," he said.

For those who have returned from war, many experience physical limitations which have limited them from attaining gainful employment in other careers. In addition, most of the affected veterans are unaware of their tax and legal rights, so they are generally content with whatever small payments they receive from the government.

Of the Second World War and Korean War veterans affected by the fiscal error during the period, some 120,000 have now passed away; which means the payment will be made to their benefactors. These cases involve a complicated process for calculating payment amounts and require more time administratively to deliver the compensation.

The fiscal calamity reflects the careless supervision by the respective department ministers for nearly a decade and highlighted the need for thorough investigations by ombudsmen into all sectors, both public and private.

In particular, ombudsmen and defense critics are justified in questioning why the miscalculation was identified in Veterans Affairs department in 2011 but no action was taken to reimburse veterans. The department has, as yet, remained mute about their gross mistake.

Sean Bruyea, an advocate for veterans, raised his concern about the department attempting to disguise the snafu. "They were waiting for someone to hopefully not find this information," he said. "And when it was found, the fact that they're not being agile and responsive to get this solved, paints a picture of a department that's sorely out of touch with how it impacts veterans," he added.

In total, the erroneous tax calculations lasted for eight years, plus another eight years of with no signal of intent of refunding the affected. Thanks to the ombudsmen’s inspection, the veterans are finally being treated fairly and will duly receive the benefits they deserve.