{"id":3014,"date":"2018-12-18T09:00:50","date_gmt":"2018-12-18T14:00:50","guid":{"rendered":"http:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/?p=3014"},"modified":"2020-06-15T12:31:18","modified_gmt":"2020-06-15T16:31:18","slug":"self-employment-income-deducted-post-accident-yes-or-no","status":"publish","type":"post","link":"https:\/\/stage.tbkdev.com\/dev\/davismartindale.com\/src\/self-employment-income-deducted-post-accident-yes-or-no\/","title":{"rendered":"Self-Employment Income Deducted Post-Accident \u2013 Yes or No?"},"content":{"rendered":"

[vc_row][vc_column][basic_container container_size=”container container-narrow” bg_overlay=”overlay-light”][vc_column_text]In the recent Divisional Court decision released on December 7, 2018, Surani and Perth (File No.: 541\/17),<\/em> an application for judicial review was dismissed.\u00a0 The application was regarding an order of the Director\u2019s Delegate dated August 18, 2017 that determined Ms. Surani\u2019s post-accident business income from her pharmacy should be deducted from her IRBs in accordance with Section 7(3)(b) of the SABS.\u00a0 Specifically, Arbitrator Swinton concluded that the Director\u2019s Delegate\u2019s interpretation of the SABS was reasonable and that the insurer is entitled to deduct the business income earned by Ms. Surani\u2019s pharmacy from her IRBs payable.<\/p>\n

Arbitration & Appeal<\/h5>\n

Ms. Surani (the \u201cApplicant\u201d) owns and operates her own Pharmacy business.\u00a0 After the accident, she did not work as a Pharmacist, however she was involved in varying degrees in managing her business.\u00a0 Additional labour was hired subsequent to the accident to replace her Pharmacist duties.<\/p>\n

The Applicant\u2019s position was that she had not \u201cearned\u201d income as defined by the SABS.\u00a0 An accounting expert report prepared on behalf of the Applicant took the approach that as Ms. Surani had not returned to work, she had not \u201cearned\u201d any post-accident income.\u00a0 They relied on the Black\u2019s Law Dictionary<\/em> definition of earned income which states, \u201cMoney derived from one\u2019s own labor or active participation; earnings from services\u201d.<\/p>\n

An accounting expert report prepared on behalf of the insurer took the approach that Section 7 of the SABS allows business losses after an accident to be added to an IRB, while business profits after an accident are to be deducted. The business income \u201cearned\u201d by the Pharmacy was the post-accident income earned by the Applicant.\u00a0 This approach maintains consistency and the treatment of passive and active income pre-accident and post-accident.<\/p>\n

Arbitrator Stone relied on the definition of \u201cearned income\u201d from the Income Tax Act<\/em> (Canada).\u00a0 Section 146(1)(a) of the ITA \u201cincludes the taxpayer\u2019s income from a business carried on by the taxpayer actively engaged in the business<\/u><\/em>\u201d.\u00a0 Arbitrator Stone concluded that the Applicant\u2019s tasks were insufficient for her to be considered actively engaged in the business, therefore her post-accident income should not be deducted.<\/p>\n

The Insurer appealed this decision with the position that \u201cearned Income<\/em>\u201d in Section 146 of the ITA is not relevant to the SABS.\u00a0 The definition of \u201cearned income\u201d is not found in Section 7(3)(b) of the SABS and a self-employed person\u2019s income is the profit from the business, both before and after the accident.<\/p>\n

In the appeal, Arbitrator Evans found that the legislation of the SABS could not have intended that an insured person could continue to profit from a business, yet not have those profits deducted from their IRBs post-accident.\u00a0 The Applicant\u2019s Pharmacy continued to earn income due to the replacement worker and as a result, it does not make sense that the income earned can only be deducted if the Applicant herself actively participates in the company.<\/p>\n

Arbitrator Evans concluded that the insurer is entitled to deduct business income earned by Ms. Surani\u2019s Pharmacy from her IRBs payable.\u00a0 The Applicant disagreed with the appeal decision and sought a judicial review, which as indicated above was dismissed.<\/p>\n

Read the decision in full detail here:<\/h4>\n

Surani v. Perth Insurance Company, 2018 ONSC 7254 (CanLII)<\/em><\/a>[\/vc_column_text][\/basic_container][\/vc_column][\/vc_row][vc_row][vc_column][basic_container]

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A growing trend has emerged recently as it relates to individuals making a claim for income replacement benefits (\u201cIRBs\u201d). \u00a0More frequently than ever, insured\u2019s seem ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\tRead More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\t\t\t\t\t\t\r\n\t\t\t\t

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For self-employed individuals seeking to claim an income replacement benefit (\u201cIRB\u201d), the calculation of their pre-accident gross weekly income is not always straightforward.\u00a0 Two recent ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\tRead More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\t\t\t\t\t\t\r\n\t\t\t\t

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In the LAT decision released on January 13, 2020, T.A.K. v Aviva General Insurance Company (18-008232\/AABS), the Adjudicator provides interpretation for the Section 8(1) adjustment ...<\/p>\n\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\tRead More<\/span>\r\n\t\t\t\t\t\t\t<\/a>\r\n\t\t\r\n\t\t\t\t\t

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Prior to the accident, both parties agreed the Applicant was employed earning $19,847.96 during [...]","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-3014","post","type-post","status-publish","format-standard","hentry","category-insurance-claim-and-litigation-updates"],"acf":[],"yoast_head":"\nSelf-Employment Income Deducted Post-Accident \u2013 Yes or No? - Davis Martindale<\/title>\n<meta name=\"description\" content=\"Summary: decision was upheld that the Applicant\u2019s post-accident business income to be deducted from IRB because it was income earned from self-employment.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Self-Employment Income Deducted Post-Accident \u2013 Yes or No? 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