Tag Archives: gross employment income

How are loans considered in an Income Replacement Benefit (IRB) calculation?

Generally, loans received by an insured, regardless of the source, are not considered income for IRB purposes. But, as with most situations, and because this would be a really short topic otherwise, it’s not quite so cut and dry.

Traditionally, this issue is more prevalent after an accident than before, but the same principles apply. Whether it is a self-employed individual who cannot work post-accident and is taking loans from their business to survive, or an employee who is receiving loans from his employer, family, or friends, you need to understand whether the receipt of money is related to employment or self-employment activities.

Background:

Subsection 4(1) of the SABS defines gross employment income as “salary, wages and other remuneration from employment…”

Subsection 3(1) of the SABS defines self-employment as a “trade, occupation, profession or other type of business…” It would appear then that income from self-employment would be as a result of providing services as a business to customers in return for money or other payment type.

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The Role Employment Insurance Benefits Play in Calculating an IRB

Employment Insurance (EI) benefits are explicitly included as a component of gross employment income per the Statutory Accident Benefits Schedule (SABS). Subsection 4(1) defines Gross Employment Income as “salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada)…”

So, why the need for a blog post?

EI benefits can be more than just a component of an individual’s pre-accident income, they can also be the basis of their eligibility for an Income Replacement Benefit (IRB).

The Many Roles of EI Benefits

Eligibility is the first question that must be addressed when starting to calculate an IRB. EI benefits are important in determining an insured’s eligibility if they are unemployed at the time of the motor vehicle accident. If an insured is receiving EI benefits at the time of the accident, they qualify for an IRB, as per s. 5(1)1.ii of the SABS. Continue reading

Are Canada Pension Plan child benefits deductible from an IRB?

Summary: Unlike CPP disability benefits, CPP child benefits are not deductible as payments for loss of income from the IRB.

What is the CPP Child Benefit, and when is it paid?

Let’s first look at what a qualifying child is:

  • The natural child of the CPP contributor
  • A child “adopted legally” or “in fact” by the CPP contributor while under the age of 21
  • A child “legally” or “in fact” in the custody and control of the CPP contributor while under the age of 21

Further, the dependent child must be either:

  • under the age of 18, or,
  • if between the ages of 18 and 25, they must be a full time student.

In regard to the benefit itself, there are two different types available:

  • For a child who is in the care of an individual receiving the CPP disability benefit; and,
  • For a child who was in the care of an individual at the time of the individual’s death.

In both instances, the individual must have made enough contributions to CPP to qualify. To determine whether an insured might qualify for CPP disability benefits, see our blog on that very topic.

The CPP child benefit is paid monthly and fluctuates annually with the Consumer Price Index. The payment is received as a single lump sum amount, combined with the CPP disability benefit. It is for this reason, you must be able to assess if CPP child benefits are being received.

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Offsetting pre-accident employment income with self-employment losses

Summary

The Henderson-Briehl arbitration decision became the guide for calculating pre-accident income for an individual who had both employment income and self-employment losses under the Old SABS (O. Reg. 403/96). However, the New SABS (O. Reg. 34/10) appears to revert back to the methodology which was regularly used prior to that decision.  As such, from September 1, 2010, self-employment losses can offset employment income in calculating an insured’s pre-accident income.

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