Funding Envelopes

Probably one of the most confusing and frustrating parts of a posting under the CFIRP is trying to understand what can be reimbursed and where that reimbursement comes from.  Whether this your first move since enrolling, or it’s your final Release move, the financial process can be perplexing. 

One way to make this part of your relocation less stressful is to understand the different “sources” of funding, often referred to as “envelopes” or “components”.  There are 3 funding envelopes – Core, Custom and Personalized, and according to the definitions found in Article 1.2.02 of the Relocation Directive, the Core envelope is for things that the CAF has identified as essential to your relocation.  The Custom envelope is for things that the CAF has determined are enhancements to your relocation, and the Personalized envelopes is for things that are non essential but attributable to your relocation.  

What does that really mean though?

The CFIRP is designed to limit the amount of “out of pocket” expenses a Member must pay, but at the same time, Members are not meant to profit from the benefits either.  Every expense that is reimbursable is assigned a “funding envelope”. 

Core 

Core benefits are things that almost every Member will need for their relocation  Things like your House Hunting Trip (HHT) or your Travel to New Location (TNL) are Core. The costs related to registering your Primary Motor Vehicle (PMV) or changing your drivers’ license are also Core benefits.  When it comes to buying or selling your home, you can be reimbursed for things like an inspection, an appraisal, realtor fees (on a sale only), and lawyers/notaries fees from Core. 

If an expense must be paid for the majority of Members when they are posted, odds are those expenses are Core.

Who pays for Core expenses?  The CAF does. It doesn’t matter how many Core expenses are incurred in any one relocation – if the expenses are reimbursable, they are paid by the CAF.  Keep in mind that while there is no limit to how many different Core expenses you can incur, some Core expenses have maximum limits, or “caps”.  Using a typical Travel to New Location as an example – a posting from Esquimault to Halifax is expected to take Members 12 days of driving time.  Under the CFIRP, you can claim 11 nights in a hotel from Core. But – hotels are subject to a “city rate limit”. If you stay at a hotel that exceeds the city rate limit, even though hotels are a Core expense, you will only be reimbursed to the capped rate. 

Custom 

Custom benefits are a little different. They can be “enhancements” to Core expenses, or are similar – but not exactly the same – as Core benefits. To fully understand Custom, you have to understand both the Custom funding and the Custom benefits. 

Your Custom funding is unique to your specific situation. The CAF provides the Custom funding to you based on three things: 

  1. How much it will cost to “dispose of your residence” at origin. (Home Disposition allowance)  Will you be subject to a lease breaking penalty?  How much will a Realtor cost if you sell your house? These are costs related to “disposing” of your residence – the Custom funding formula calculates these costs and credits your Custom funding 35% of that amount.
  2. How much it will cost to move all your Household Goods and Effects  (Shipping allowance) Ever wonder why you have to provide the number of “qualifying” rooms when you register with BGRS?  It’s because the number of qualifying rooms is needed to calculate your Custom funding. The more qualifying rooms you have, the more it will cost to move your HG&E.  Again, the Custom funding formula calculates these costs and credits your Custom funding 35% of that amount. 
  3. How much it will cost for you and your dependents to travel from your origin to your destination. (Travel allowance) This is pretty straight forward – the Custom funding formula multiplies the distance in km by a basic kilometric allowance, and you are credited 35% of this total as well.

Example #1:

Member with spouse and one dependant

Own home at origin – appraised value = $400,000

Posted from Petawawa to Bagotville – 815 km

 

Home disposition allowance:

$400,000 x 3% commission = $12,000

$12,000 x 35% = $4,200

 

Shipping allowance: 

3 bedrooms, kitchen, dining room, living room, family room, garage 

8 qualifying rooms x $1,000/room = $8,000

$8,000 x 35% = $2,800

 

Travel allowance:

815 km x $0.55/km = $467 

$467 x 3 = $1,401

$1,401 x 35% = $490

 

$4,200 + $2,800 + $490 = $7,490

This member would have a total of $7,490 in Custom

 

Example 2:

Single-member 

Renter

Posted from Petawawa to Bagotville – 815 km

 

Home disposition allowance: 

Renters get $1,000 by default

 

Shipping allowance: 

1 bedroom apartment, kitchen, living, dining, storage locker

5 qualifying rooms x $1,000 = $5,000

$5,000 x 35% = $1,750

 

Travel allowance: 

815 km x $0.55/km = $467

$467 x 35% = $163.45

 

$1,000 + $1,750 + $163.45 = $2,193.45

This member would have a total of $2,193.45

(All the figures above are just for illustration and don’t represent actual Custom calculations.)

This is why your Custom funding amount is unlikely to be the exact same as someone else’s.  It s based on your unique circumstances.  And, it’s important to remember that when your Custom funds run out, no further Custom benefits will be reimbursed.

Understanding Custom benefits can be equally confusing.  

There are different reasons for an expense to be considered a Custom benefit.  Some are Custom because they aren’t something that every member will have to pay, but a majority of them will. If we go back to the Member on TNL from Esquimalt to Halifax, we know that the kilometric allowance will be paid from Core, because almost every Member has a car that must be relocated as well (if not driven, it can be shipped).   But, what if the Member has another vehicle? That won’t be covered as a Core entitlement (not every member has more than one vehicle) – but it shouldn’t have to be something a Member pays out of pocket.  All costs related to a second vehicle are reimbursed from the Custom envelope.

Another type of expense that will be reimbursed from the Custom funding is one that has a limit under Core.  A great example of this is the cleaning entitlement. You can claim cleaning costs at both your origin and your destination, but Article 3.4.04 states that only $100 (at each location) is covered from your Core Funding. The rest of your cleaning costs can be reimbursed from Custom.  

And, there are a few benefits that are paid from Custom only when it doesn’t meet the requirements required to pay it from Core.  The Mortgage Default Insurance benefit (CMHC fees) is the most common of an example of this. To qualify for reimbursement of MDI from Core, Members must apply 100% of the equity from the sale of their house at origin to the purchase of their house at the destination.  When they don’t, they can still claim the MDI, but it will be paid from Custom. Similarly, Members who rented at origin can claim the MDI benefit, but it is paid from Custom. (Article 8.3.10)

Personalized 

The third funding envelope mentioned in the Relocation Directive is the Personalized envelope.  The Personalized funding used to be made up of your “posting allowance”, the Movement Grant, and any incentives that you were eligible to receive – but starting in Dec 2017, this changed.  The CAF started putting Member’s posting allowance into their bank account, not their Personalized envelope. Then, in April 2018, changes to the Relocation Directive saw the elimination of almost all the incentives. (The one remaining incentive is the Real Estate Incentive)  Without the posting allowance and/or incentives, your Personalized envelope will only have the $650 Movement Grant in it.  Further complicating things, the Movement Grant is a non-taxable benefit, which means it cannot be used to pay taxable benefits.  Members are required to submit a claim for the $650 Movement Grant, and the funds will also be sent to their bank account. This means for almost every Member, the Personalized funding envelope is empty. It’s not that you no longer get the same amount of Personalized funding as you did previously, it’s just that it is put into your bank account instead of your BGRS Personalized funding envelope.  

TL/DNR Version:

Core

  • Expenses that have to be paid for virtually every relocation (civil or military)
  • Paid by the CAF
  • Unlimited fund

Custom

  • Can be:  “second” or “additional” to benefits covered under Core 

Example:

  • 2 PMVs – first is Core, second is Custom
  • Extended HHT – first 7 days are Core, the additional 4 days are Custom
  • Can be “remainder” type expenses 

Example:

  • Cleaning costs – $100 from Core, remainder Custom
  • Home Equity Assistance (see Article 8.2.13) – 80% of loss from Core, to a maximum of $30,000 – remainder Custom
  • Can be reimbursement for things when they don’t meet the requirements to be reimbursed from Core

Example:  

  • CMHC fees for Members who rented at origin 
  • Paid for out of your Custom funding – which is determined by your specific circumstances
  • Custom funds can run out and cannot be renewed
  • Custom funds are “use it or lose it” and cannot be cashed out 

Personalized

  • Only 2 sources of funding – $650 Movement Grant and Real Estate Incentive.
  • Members who don’t claim the Real Estate Incentive, must submit a claim for the $650 Movement Grant and the funds will be deposited into the bank account on file
  • Once the $650 is claimed, the Personalized funding envelope will be empty and no Personalized expenses will be reimbursed. 
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