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Loss of Income

Example

  • Claimant: Jack - Male, aged 38.

  • Background: Jack resides in Ontario and always worked in an office. He became disabled due to his HCV infection on January 1, 2000. Below is how his LOI calculation would be done:
   

ANSWER

Step 1
Determine Jack's date of disability. January 1, 2000
(see table below)
Step 2

Select Jack's three consecutive highest income years.

NOTE! Consider every year predating your date of disability.

1987, 1988, 1989
(see table below)
Step 3

Calculate pre-claim gross income, which is the average Earned Income earned during the 3 years chosen above.

NOTE! Even though Jack earned an average of $40,333 in the years 1997, 1998 and 1999, he selected the three consecutive years 1987, 1988 and 1989 (average income $31,167) because the average income for those three years, when multiplied by the Pension Index ratio for 1988 was greater.

$ 31,167.00

  The average is multiplied by the Pension Index ratio of 1988 (the middle year).

$43,495.00 after indexation

(see table below)

Step 4
Calculate your post-claim gross income for every year postdating Jack's date of disability. Since Jack became disabled in the year 2000, he may submit a claim for the post-claim years 2000, 2001 and 2002. Post-claim years = 2000, 2001 & 2002
Step 5

Jack completed Form GEN 10.

He also submitted all necessary financial/income tax documentation confirming his pre-claim income and post-claim income.

GEN 10, T1 Income Tax returns & Notices of Assessment
Step 6
The Administrator completes loss of income calculation in order to determine the amount payable = Jack's annual loss of net income for the years 2000, 2001 and 2002 respectively. See below

Pre-claim Gross Income Calculation

Year

Status

Employment
Income

Average pre-claim gross income

Pension Index

Average pre-claim gross income in 2001 dollars

A

B

(A/B) X 112.9

1985

employed
17,000
xx,xxx

1986
employed
22,000
23,000
74.5
34,855

1987

employed &
HCV Infected

30,000

27,833

77.6

40,494

1988

employed

31,500

31,167

80.9

43,495

1989

employed

32,000

32,167

84.2

43,131

1990

employed

33,000

33,500

88.3

42,833

1991

employed

35,500

34,833

92.5

42,515

1992

employed

36,000

36,000

97.9

41,516

1993

employed

36,500

35,833

99.7

40,577

1994

employed

35,000

35,833

101.5

39,858

1995

employed

36,000

36,333

102.0

40,216

1996

employed

38,000

37,667

103.9

40,930

1997

employed

39,000

39,000

105.5

41,736

1998

employed

40,000

40,333

107.4

42,398

1999

employed

42,000

N/A

108.4

N/A

2000

date of disability

15,000

Not Applicable

110.1

Not Applicable

2001

disabled

12,000

Not Applicable

112.9

Not Applicable

2002

disabled

3,000

Not Applicable

116.3

Not Applicable

 

Loss of Income Calculation (top)

 
Post-Claim Years
 
2000
2001
2002
Pre-claim Income Calculation   

Average base year income before indexation adjustment

$31,167
$31,167
$31,167

Average base year income adjusted for indexation

$44,805

Gross income limit, adjusted for indexation

$321,864

Pre-claim gross income

$42,416
$43,495
$44,805

Minus: Ordinary deductions (income tax, CPP, EI)

($11,355)

Pre-claim net income

$33,450
       
Post-claim Income Calculation   
Actual employment or self-employment
15,000
12,000
3,000
Other disability benefits
2,000
2,000
2,000
Total Employment and Disability Income
5,000
Minus: Ordinary deductions (income tax, CPP, EI)
(66)
Post-claim net income
4,934
       
Calculation of Amounts Payable
Loss of income for compensation purposes @ 100% (subtract Post-claim Net Income from Pre-claim Net Income)
28,516
Amount payable to Jack

$16,619

$20,168

$28,516

 

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