This issue was recently considered by Arbitrator Sone in
Surani and Perth (FSCO A12-001274 & FSCO A12-001275,
February 23, 2016).
In this case, the issue was whether Mr. and Ms. Surani’s
post-accident business income could be considered “earned
income” for the purposes of paragraph 7(3)(b) of the
Statutory Accident Benefits Schedule, and therefore
deductible from any income replacement benefit paid by the
Section 7(3)(b) of the Schedule provides that:
(3) The insurer may deduct from
the amount of an income replacement benefit payable to an insured
(b) 70 per cent of any income
from self-employment earned by the insured person after the
accident and during the period in which he or she is eligible to
receive an income replacement benefit.
In this case, prior to the accident, both Mr. and Ms. Surani
worked full-time in their own pharmacy businesses and were
After the accident, they did not work as pharmacists, but were
involved in varying degrees in managing their businesses. The
Applicants both received post-accident income from their
The issue at the Hearing was whether or not the post-accident
income from the businesses could be characterized as “earned
income” such that the Insurer would be able to deduct 70% of
it from their IRBs.
Whether to characterize Mr. and Ms. Surani’s post-accident
income as “earned income” (as opposed to other types of
income such as passive income from investing, i.e., through
ownership of the business) turned on their individual level of
involvement in the businesses.
With respect to Mr. Surani, Arbitrator Sone found that he had
hired and replaced employees to carry on the Pharmacy businesses,
and continued to make all financial decisions for both
businesses. He also made the decision to hire a third
pharmacist and five more technicians; which Arbitrator Sone found
“led to a nearly doubling in sales revenue”.
As a result, Arbitrator Sone determined that Mr. Surani was
“actively engaged” in his business post-accident and
therefore the business income from the Pharmacy was considered
“earned income” from self-employment for the purposes
of paragraph 7(3)(b) of the Schedule. As a result, Perth
was entitled to deduct 70% of that income from his IRBs.
With respect to Ms. Surani, Arbitrator Sone accepted the
evidence that after the accident, she was available as a
trouble-shooter, mainly answering telephone calls, but was unable
to fully return to work. Although Ms. Surani did receive
income from dividends and other sources, Arbitrator Sone found
that, unlike her husband, the trivial, minor tasks that she
performed were insufficient for her to be considered to be
“actively engaged” in the business.
Accordingly, Ms. Surani’s post-accident business income
was not considered to be “earned income” from
self-employment for the purposes of paragraph 7(3)(b) of the
Schedule and as such, 70% of it was not
deductible from her IRB.
This case highlights the importance of carefully reviewing the
specific facts surrounding an Applicant’s participation in a
If an Applicant is in receipt of income replacement benefits and
also self-employed, the Insurer must consider whether or not it can
be said that the Applicant is actually “earning” any
An Applicant who only receives a “return on
investment” without more active participation in the
business, will not be subject to the 70% deduction set out in the
Schedule concerning post-accident income. An
Applicant must be “actively” participating in the
operation of the business in order for this section to be engaged
and allow the Insurer to deduct post-accident income for the
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