How to Approach Inconsistent Reporting of CCA Before and After an Accident for IRBs

In the recent Licence Appeal Tribunal decision, Eid v Allstate Insurance Company of Canada (20-001143/AABS), the Adjudicator determined that the quantum of the Applicant’s income replacement benefits (“IRBs”) ought to be determined by excluding pre-accident and post-accident capital cost allowance (“CCA”).

In this claim, the self-employed Applicant was injured in an automobile accident on May 22, 2017 and did not report any of her eligible CCA expenses during 2016 (i.e. the last fiscal year before the accident) or 2017 (i.e. the year of the accident). However, the Applicant did report the maximum allowable CCA expenses during 2018 and 2019 (i.e. the years after the accident).

The Applicant reporting CCA in this manner increased her pre-accident income and decreased her post-accident income.  Accepting the Applicant’s inconsistent treatment of CCA before and after the accident would result in overstating her IRBs payable.

Therefore, a question arose regarding how to consider CCA expenses, when they have been reported inconsistently, for purposes of determining the Applicant’s IRBs.

Ultimately, the adjudicator determined that the treatment of CCA expenses before and after an accident needs to be consistent when quantifying IRBs (i.e. included both before and after an accident or excluded both before and after an accident).

Specifically, the Adjudicator concluded, “Therefore…I find that the quantum…is the amount that the respondent calculated based on the applicant’s 2016 income tax return without the deduction of the CCA from the IRB as set out on p. 10 of the Davis Martindale report dated August 22, 2022.  I find this report to be more persuasive because it [was] provided without the deduction of the CCA, which has been issue central to this dispute.”

The adjudicator also relied on Section 4(3) of the SABS and previous decisions to rule that the Applicant’s pre-accident income must be calculated using their business’ last completed fiscal year before the accident as opposed to the 52 weeks before the accident.

Read the decision in full detail here: Eid v Allstate Insurance Company of Canada (20-001143/AABS)