ICBC Tort Claims and Net Wage Loss
If you have been injured in a BC motor vehicle accident and suffered a wage loss you may have had ICBC tell you that they can only pay you your ‘net wage loss’ in your tort claim.
I have often often seen ICBC calculate a person’s gross wage loss and deduct 25% to account for income taxes prior to paying the past wage loss. Is this proper? The answer is sometimes. It depends on the amnount of your past wage loss award.
Great reasons for judgement were released today by Madam Justice Boyd of the BC Supreme Court. In this case the court awarded $8,750.36 for past wage loss. ICBC then tried to deduct income taxes on this amount prior to paying it. Madame Justice Boyd summarized the applicable law very well and concluded that the leading BC Supreme Court dealing with this issue(Hudniuk v. Warkentin) applies, and using its principles
‘the Plaintiff’s net income loss should be calculated by deducting the necessary income tax from the agreed gross income loss of $8,750.36. Further, as Hudniuk requires, for the purposes of tax calculations, this formula assumes that this amount is the only income earned by the Plaintiff in 2008. Since the first day of trial was May 12, 2008, the tax rates in effect of the previous calendar year, as or December 31, 2007, are applicable‘
The court then noted that at the time personal income under $9,027 was exempt from taxation meaning the Plaintiff was entitled to the whole amount of past wage loss.
So, according to this judgement, if the past income loss you are entitled to in a BC ICBC tort claim is less than the personal income amount that is exempt from taxation you are entitled to the whole of your past wage loss.
I have heard through the grape-vine that the BC Court of Appeal will soon further clarify this area of the law, but until that time today’s case sets a great precedent for Plaintiff’s with less than $9,000 in past wage loss.