POLICY NUMBER: 3. 1. 2R

Effective Date: November 6, 1997
Date Issued: December 15, 1997
Date Approved by Board of Directors: November 6, 1997
Topic: Calculation of Net Earnings
Section: Short-Term and Long-Term Benefits
Subsection: Earnings Profiles

Policy Statement

1. Net average earnings will be calculated by deducting the following from the worker's gross earnings (as calculated in accordance with Policy 3.1.1R2):

1. the probable income tax payable by the worker;

2. the probable Canada Pension Plan (CPP) premiums or Quebec Pension Plan (QPP) premiums payable by the worker; and

3. the probable Employment Insurance (EI) premiums payable by the worker.

Any changes in income tax rates or rates of CPP/QPP or EI premiums which come into effect during a given calender year will be taken into account by the Board effective January 1 of the following calender year for the purpose of calculating net average earnings.

2. The probable income tax payable by the worker is calculated by using the worker's Personal Tax Credits Return (TD 1 code). The TD 1 code that will be used will be the one provided by the employer.

3. When such information cannot be obtained for whatever reason, the Board will use the TD 1 code for a worker with no dependants (Code 1).

4. If the Board believes that the code supplied by the employer is not accurate, the Board may assign a different code to the worker.

5. If the worker wishes to change the TD 1 code, the worker must provide appropriate documentation from Revenue Canada that supports the request.

6. If a decrease in the net value of the worker's earnings results from changing the TD1 code, it will generally not result in an overpayment. If the change in the TD1 code results in an increase, the effective date of the increase will be the day benefits commenced or the day the circumstances changed, whichever is later.

Application

This Policy applies to all decisions made on or after November 7, 1997. It replaces Policy 3.1.2 issued on December 1, 1995 and effective February 1, 1996.

References

Workers' Compensation Act (Chapter 10, Acts of 1994 - 95), Section 39(1) and 39(3).