Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Are payments under the Ontario Workplace Safety and Insurance Act (formerly Workers' Compensation Act) considered to be a pension for purposes of the Act?
Position: No.
Reasons:
Even though payments under the WSIA may, in some cases, be characterized as paragraph 56(1)(a) (pension) and 56(1)(v) (worker's compensation) amounts, the amounts would be considered a worker's compensation and not a pension because 56(1)(v) is more specific.
xxxxxxxxxx 991667
M. P. Sarazin
Attention: XXXXXXXXXX
October 4, 1999
Dear Sirs:
Re: Ontario Workplace Safety and Insurance Board Awards
This is in reply to your letters dated June 14, 1999 and August 30, 1999, wherein you asked whether NEL (non-economic loss benefit) and FEL (future economic loss benefit) awards provided under the Ontario Workplace Safety and Insurance Act (~WSIA") would be considered pensions for purposes of the Income Tax Act (the "Act")
When an employee suffers a permanent impairment due to a work-related injury or disease, the WSIA provides the injured employee with certain benefits. Based on the information you provided with your letters, the NEL award is an insurance benefit to recognize that, beyond any wage loss, the employee may have also suffered a physical, functional or psychological loss due to his or her permanent impairment and the FEL award applies in respect of the employee's future loss of earnings as a result of a workplace injury.
The WSIA is the reformed workers' compensation legislation and it replaced the Workers' Compensation Act (Ontario) effective January 1, 1998. Benefits provided under the WSIA relate to a work-related injury or illness suffered by an employee. Each claim is considered and treated separately and benefits are based on each individual situation.
Under paragraph 56(1)(v) of the Act, compensation received in any year under an employees' or workers' compensation law of Canada or a province in respect of an injury, a disability or death is included in the recipient's income for that year. Consequently, any amounts received under the WSIA will be included in the recipient's income under paragraph 56(1)(v). This provision would also apply to benefits received under the WSIA to provide retirement income benefits to injured workers when they reach age 65.
We recognize that certain benefits provided under the WSIA may also be considered payments that qualify as a pension benefit under paragraph 56(1)(a) of the Act. However, since the provisions of paragraph 56(1)(v) of the Act are more specific than the provisions of paragraph 56(1)(a) of the Act, any payments under the WSIA will be considered worker's compensation payments and not pension income payments for purposes of the Act.
We trust our comments will be of assistance to you.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Branch
Policy and Legislation Branch
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