The Appeal CommissionThe Workers Compensation Act of Manitoba

Applicable Legislation

The Appeal Commission and its panels are bound by The Workers Compensation Act (the “Act”), regulations and policies of the Board of Directors.

Under subsection 4(1) of the Act, where a worker suffers personal injury by accident arising out of and in the course of employment, compensation shall be paid to the worker by the WCB.

Section 45 of the Act deals with the calculation of average earnings. Subsection 45(1) of the Act provides:

Calculation of average earnings

45(1) The board shall calculate a worker’s average earnings before the accident on such income from employment and employment insurance benefits, and over such period of time, as the board considers fair and just, but the amount of average earnings shall not exceed the maximum annual earnings established under section 46.

The Worker’s Position

The worker's appeal was considered by way of file review. His position is best set out in his seven page typewritten submission to the Review Office. He states:

In 2009, I recovered invoice documentation which I found in a box at my now ex girlfriends cabin, which contained invoices I had billed out in the 2000 tax year as a subcontractor prior to my injury. I then had my representative [name] contact the Workman's Compensation Board to find out what I needed to do in regards to submitting this information to WCB and Revenue Canada about this undeclared income. My representative contacted and informed [WCB] of what we exactly had for paperwork. She directed [my representative] that I was to file what paperwork I had to Revenue Canada then forward my reassessment from Revenue Canada to the Worker's Compensation Board as they work off Revenue Canada's assessments. So that is exactly what was done, I sent in exactly what was found in the box. Now the Worker's Compensation Board decided to investigating all of the invoices, calling and meeting with the people I had done the work for, from my understanding all the people contacted confirmed I did the work for them except my parents who have passed away several years ago … Now the Workman's Compensation Board refuses to include that income when they are calculating my benefits. So now I have a tax bill of $51,621.03 and growing interest charges that I am responsible for and Worker's Compensation Board will not accept my tax assessment even though Revenue Canada did and I have to pay taxes on this income.

The written submission goes on to address the available evidence and concludes by asking that the worker's income for the 2000 tax year be accepted and that his average earnings be adjusted.

Analysis

The issue before the panel is whether or not the worker's average earnings should be adjusted based on the tax assessment for the year 2000. In order for the worker's appeal to succeed, the panel must find that the amended tax assessment for the year 2000 accurately reflects income from employment which was actually earned by the worker during that period. We are not able to make that finding.

After reviewing the evidence on file and considering the worker's written submission, the panel is not satisfied on a balance of probabilities that the approximately $58,000 reported by the worker to Canada Revenue Agency in an amended income tax return for the year 2000 was actually earned by him during that period of time. In coming to this conclusion, the panel relied on the following:

• The original Worker's Incident Report filed at the time of the accident in July 2000 only referenced permanent full time and sub-contractor work with the accident employer. The worker did not indicate that he had earnings from other sources.
• In October 2000, the worker had several conversations with WCB staff regarding his work as a subcontractor for the accident employer and calculation of his average earnings. The specific dates of the conversations were October 12, 19, 24, 30. There is no record of the worker making mention of his self-employed income as a renovator during any of these conversations.
• The worker did refer the WCB payment assessor to his professional accountant for any questions she may have concerning the income statements related to his subcontractor income. The professional accountant prepared and filed the worker's 1999 income tax return on October 6, 2000.
• On November 7, 2000, the WCB payment assessor calculated the worker's average earnings based on the 1999 income tax return and spoke with the worker that day to communicate the basis for her calculations. Total income of $27,443.10 was used, based on T4 income of $15,126.49, net business income of $11,212.22 and capital cost allowance of $1,104.39. This information was confirmed by a letter sent to the worker the same day.
• There is a further memo on file from the payment assessor dated November 7, 2000. It states: "Called Clmt to advise him of A/E rate. Clmt will gather his income statements for 2000 and submit them for review. Clmt would like to pick up his cheque."
• It is notable that at the time of the average earnings review in October and November, 2000, the worker had expressed frustration about the amount of his benefits, characterizing them as "peanuts". Given his dissatisfaction, one would have expected that he would have raised the fact that he was earning significant additional income as a renovator, particularly given that he had undertaken to gather and submit his income statements for 2000.
• The copies of the invoices show that payment had been made to the worker as recently as June 27, 2000 - only four months prior to these discussions between the worker and the WCB.
• $58,000 is an extremely large sum compared to the total income of $27,443 used by the WCB to calculate the worker's average earnings. It would have represented a significant proportion of the worker's take-home pay and the panel cannot understand why the worker would not have mentioned this income. The worker submits that he was not in a good state at the time due to his accident and relationship issues. While the panel acknowledges the stresses on the worker at the time, this does not provide a complete explanation as to why he made no mention of the self-employed income until the invoices were discovered in 2009. Even in the absence of the documents, the worker would have had knowledge of the work performed and income earned.
• The panel acknowledges the case manager's memo of September 20, 2010 summarizing how he reached his decision that the WCB not use the newly reported 2000 income to recalculate the worker's average earnings and we agree with the case manager's analysis.