Piercing the Corporate Veil

In the recent Licence Appeal Tribunal decision, Guan Mei Huang and The Dominion of Canada General Insurance Company (File Number: 19-006264/AABS), the Adjudicator found that a self-employed restaurateur, was entitled to IRBs of $0 because she did not provide the required financial information to calculate her IRB quantum as ordered by the Tribunal.

This decision states the following in regards to the relevant sections of the Statutory Accident Benefits Schedule:

“Section 4(3) of the Schedule states that when considering a self-employed person’s income or loss from self-employment at the time of the accident, the amount would be 1/52 of the amount of the person’s income or loss from the business for the last, completed tax year in accordance with Part I of the Income Tax Act, RSC 1985, c 1 (5thSupp) (the ‘Income Tax Act’).”

“Section 7(3)(b) of the Schedule states than an insurer may deduct from the amount of IRB payable to an insured person and 70% of any income from self-employment earned by the insured person after the accident and during the period in which he/she/they is eligible to receive an IRB.”

The Applicant argues that she is an employee of the restaurant and her accountant based the calculation of her pre-accident income on her 2018 personal tax return and her pre/post-accident paystubs.

The Respondent’s accountant requested that the Applicant provide documentation supporting 2500520 Ontario Inc.’s income earned prior to and subsequent to the accident (i.e. T2 Corporate Income Tax Returns, Goods and Services Tax / Harmonized Sales Tax Returns, etc.) as she owned the corporation.

The Respondent references prior decisions, A.P. v. Economical Mutual Insurance Company, 2019 CanLII 101433 (ON LAT) and Surani v. Perth Insurance Company, 2018 ONSC 7254, to support that the above is not the correct way  to calculate a self-employed person’s income for the purposes of calculating an IRB quantum.

The Adjudicator states that, “I do not agree with the applicant’s position, that the documents she provided to the respondent were sufficient to calculate the quantum of IRB she is entitled to.  Instead, I also more persuaded by the respondent’s arguments related to the applicant’s IRB quantum and that the applicant needed to provide the financial documents, as ordered by the Tribunal to ensure that the respondent had a complete financial “snapshot” of her self-employment.”

In addition, the Adjudicator states that, “This Tribunal decision (A.P. v. Economical) found that relying on an IRB report that examined the applicant’s personal income tax returns and payroll summaries as an employed person, similar to the facts before me, was not sufficient to calculate the applicant’s IRB quantum as a self-employed person.  The adjudicator in this matter found that further information, such as the applicant’s corporate income tax returns, the business’ monthly revenue, and labour costs were needed to calculate the applicant’s IRB quantum, as also seen in Surani v. Perth.”

The Adjudicator concludes that as the applicant has not provided the required financial information to calculate her IRB quantum, she is not entitled to such, nor is interest payable.

Read the decision in full detail here:
Guan Mei Huang and The Dominion of Canada General Insurance Company (File Number: 19-006264/AABS)