Summary: Include the income when it is earned, not when it is received. For real estate agents, this is most often considered to be the date that all conditions are met on the sale, as opposed to the closing date. So relying on a tax return may lead to errors in the calculation of income replacement benefits.
Background: In real estate sales, an agent performs many tasks in order to sell a property. Most of the work is performed prior to the sale, although the agent receives no compensation related to this work until the sale closes. Many offers are conditional on some future event, such as the purchaser being able to obtain financing or a home inspection. Once the purchaser waives the conditions of sale, the offer becomes “firm” and the payment of the commission becomes reasonably certain. Continue reading
When it comes to calculating income, it is not always as straightforward as how much salary an employee earns on their paycheque. Sometimes income also comes in the form of goods and/or services.
But what are you to do if an insured tells you they were provided with an apartment rent-free in exchange for working as a handyman in a building?
How do we translate those goods and services into income when determining Income Replacement Benefits (IRB)?
The most important thing to remember is that goods and services earned through Continue reading
Summary: Allocate it to the date or period in which it was earned, not when it was received.
It has been our experience that these sources of income are often a source of error in the gross income calculation for income replacement benefits…both in the pre and post-accident periods.
How do I allocate this income?
Employees can receive bonuses (and commissions) in addition to their regular wages, and most often they are received after the period in which they were earned. In general, this income should be included in the calculation of gross income as discussed in section 4 of the SABS. However, which period to include the income in usually requires some consideration. Continue reading
Thanks to my dad who inspired me to ensure not all accounting reports read this way.
Unlike in the attached cartoon, one of our key goals at ADS Forensics is to provide clear, concise yet credible reports for our clients.
We are always happy to provide a sample at your request.
For information on ways to dissect a tort report, including unclear schedules and analysis, download our article, “Analyzing Weaknesses in Income Loss Reports“.