Workers Compensation (WCB) Payments and Income Tax 2013

The following information is general in nature only. The Union Hall does not provide income tax advice. See a tax accountant or call the Canada Revenue Agency (CRA) for information about your individual tax situation. Having said that, the Hall can provide the following assistance:

Canada Post is considered a self insured employer. What this means is that Canada Post pays your wages for a work-related injury and recovers the amount from WCB once your claim is awarded.

WCB wage loss benefits are usually not taxable income. However, your claim for wage loss benefits does not become successful until you have won your award. This can take a considerable amount of time, especially since it would appear to be Canada Post’s policy to appeal most initial WCB awards. And, in fact, the time frame between when you became injured and when you win your award can sometimes span two or three years.

Until you have won your award you will continue to receive a T-4 from Canada Post stating all your wages from your work on the floor with no corresponding deduction for the WCB portion. You must claim this income on your tax form and pay any corresponding income tax that is a result of this income.

Once you have won your award you will receive a tax information slip called a T-5007 from WCB. This slip will include the amount of lost wages due to an injury. For some members, this can be two or more year’s wages.

When you receive your T-5007 form WCB, check your T-4 from Canada Post. It should reflect the same amount in Box 77 of your T-4 slip. If it does not, wait for an amended T-4 from Canada Post before you do your income taxes.

Most information slips must be mailed out by the last day of February of the following tax year. Therefore, if you won your WCB award in 2012, you should receive your T-5007 and amended T-4 by the middle of March 2013. Year 2012 income taxes are due April 30, 2013.

Finally, for some members this tax treatment for a WCB claim can result in having a larger deduction for the amount of the WCB claim than there is income to deduct it from. If this happens, members should know that this may result in a non-capital loss. A non-capital loss can be carried back 3 years and forward for 20 years against the income of these years. This results in an income tax reduction from past or future tax returns. Contact a tax preparer or CRA for assistance with this if you don’t understand non-capital losses and how to apply them.

In conclusion, the most important items for a member who has had a work-related injury resulting in a WCB claim are the following:

1. you have won your final award through WCB;
2. you are in receipt of a T-5007 from WCB;
3. you have received an amended T-4 from Canada Post with an amount in Box 77.

If you would like to see Revenue Canada’s information on Worker’s Compensation Payments, you may access this at www.cra-arc.gc.ca. In the search box insert “Line 144”.

In Solidarity,

Andy Henderson
Secretary-Treasurer