Deduction of CPP, LTD and STD Permitted from IRB

September 06, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Cousins and TD General

Decision Date: July 10, 2017
Heard Before: Adjudicator Kimberley Parish


Jim Cousins was injured in a car accident on October 29, 2013 and sought accident benefits from TD payable under the Schedule however, when the parties were unable to resolve their disputes through mediation Mr. Cousins applied for arbitration at the FSCO.

The issues in this Hearing are:

  1. Is the calculation of the Income Replacement Benefit (“IRB”) payable to Mr. Cousins based upon the deduction of gross or net amounts of Short-Term Disability (“STD”), Long-Term Disability (“LTD”), and Canada Pension Plan (“CPP”) disability benefits?


  1. TD General can deduct the gross amounts of STD benefits, LTD benefits and CPP disability benefits from the IRB payable to Mr. Cousins.

Following the car accident, Mr. Cousins returned to work until October 28, 2014. Mr. Cousins has not worked since, and is claiming IRBs from TD General. Mr. Cousins was approved for STD benefits from October 29, 2014 to February 25, 2015, funded by his employer. The amounts received were taxable. LTD benefits have since been paid from Manulife to Mr. Cousins from February 26, 2015 to present. The amount of LTD benefits which Mr. Cousins is entitled to is based upon 75% of his pre-accident income, including cost of living adjustments after 12 months of payments, calculated every January 1. Mr. Cousins was approved for CPP disability benefits on April 23, 2016, retroactive to February 1, 2015. Mr. Cousins currently receives monthly payments from Manulife less any CPP disability benefits received. Any CPP disability benefits received are taxable.

TD General takes the position that Mr. Cousins is entitled to receive IRBs, but the quantum of the IRBs is $0.00 after credit for the collateral benefits has been applied. Mr. Cousins has not received any IRBs from TD General to date. Prior to the Hearing, it was agreed by the parties that if it was determined that TD General can deduct the gross amount of the STD, LTD, and CPP disability benefits from the IRB payable, then TD General owes no past or ongoing IRBs to Mr. Cousins.

The parties also agreed that if the Arbitrator determined TD General can deduct the net amount of the STD, LTD, and CPP disability benefits payable from the IRB, then TD General shall pay IRB arrears to Mr. Cousins in the amount of $25,000.00, inclusive of interest to May 31, 2017. The parties agreed the weekly amount of IRBs payable from June 1, 2017 to December 1, 2017 would be $154.12. It was further agreed by the parties that this weekly amount would continue to be paid to Mr. Cousins until issuance of a proper termination or recalculation notice from TD General, or a request for recalculation from Mr. Cousins.

Lastly, the parties agreed that if the Arbitrator determined TD General can deduct the net amount of collateral benefits payable from the IRB payable, then both parties will have the right as of January 1, 2018 to assess and calculate the weekly amount of ongoing IRBs payable based on the indexing of collateral benefits, review of tax credits, and amount of income taxes paid. At that time, TD General would have the right to recalculate the quantum or terminate entitlement thereafter by issuing a proper termination or recalculation notice. Mr. Cousins would retain the right to request the recalculation of the IRB entitlement/quantum and dispute any issues which may arise.

Mr. Cousins asserts TD General is only entitled to deduct the net amount of the STD, LTD, and CPP disability benefits payable from the IRB, and as a result, there is an unpaid IRB amount owing to Mr. Cousins. Mr. C submits that the Schedule is remedial and constitutes protection for consumers under consumer protection law. There are rules in place to prevent double-recovery, and the rules provide an understanding with respect to the priority of payers. It is Mr. C’s position that what is central to this dispute stems from s. 4(1)(a) of the Schedule, which states:

the amount of any gross weekly payment for loss of income that is received by  or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan, other than…

Mr. C further submitted that the words “received by are intended to mean it is the net amount of collateral benefits payable that are to be deducted from the IRB amount payable to Mr. Cousins. This is because Mr. Cousins does not receive any amounts which have been allocated to taxes. It is the parsing off of taxes which significantly impacts Mr. Cousins, and the collateral benefits deduction is aimed to prevent double-recovery. An accounting report from Collins Barrow notes that they deducted the amounts of Mr. Cousins’ STD and LTD benefits, net of applicable income taxes. It is noted within this report: “This approach as to the term “received” is consistent with the decision of Stinson J in Anand v. Belanger”  Anand v. Belanger concluded that ‘received by’ does not mean gross receipts. Mr. C therefore submits that the net (after-tax) amounts should be deducted from the IRB payment.

Mr. C referred to TD General’s Factum stating that Mr. Cousins is receiving more than $900.00 per week in combined LTD and CPP disability benefits, which is more than double the IRB entitlement limit for Mr. Cousins. A further report by Collins Barrow, dated July 29, 2016, notes that Mr. Cousins should be entitled to past and future IRBs in the amount of $146,174.00. Mr. C submitted that Mr. Cousins has not received that amount as an IRB payment from TD General, as it has been “carved off” as an amount paid to Revenue Canada.

Lastly, Mr. C submits that the problem with TD General’s argument that it can deduct the gross amounts of STD, LTD, and CPP disability benefits from the IRB payable to Mr. Cousins, is that an inequality exists between recipients who receive taxable benefits and recipients who receive non-taxable benefits.

An individual who has a taxable benefit incurs a shortfall as the credit goes to the insurance company. The words “received by” should be interpreted as the amount which is received in the claimant’s pocket. The result of Mr. Cousins receiving a taxable benefit equates to a shortage in the IRB amount of $154.00 per week. For recipients of non-taxable benefits, the calculation works and double recovery is prevented. The use of the word “gross” within the Schedule creates inconsistency when calculating an IRB, as the calculation is affected by the taxability of the collateral benefits. In this case, the contradiction between the wording “gross amounts” and “received by” has created an unavoidable contradiction which has worked against Mr. Cousins and resulted in a loss in the IRB amount payable.

TD General asserts it can deduct the gross amount of the STD, LTD, and CPP disability benefits from the IRB payable to Mr. Cousins. Therefore, the quantum of the IRBs is $0.00 after credit for the collateral benefits has been applied. TD stated that the proper calculation of an IRB as it relates to this accident comes from within the Schedule. They argue the wording “received by” in the Anand case that the Applicant relies upon submitting that by doing this, Mr. Cousins is trying to import a definition which is from a different regime and context. Anand was a tort case and the Schedule is contractual. The legislators of the Schedule intended to make the wording different.

TD noted a distinctive change in the wording from the Old SABS to the wording in the Schedule. Within Old SABS there was a formula provided for calculation of net weekly income -  deductions and tax credits were listed. These could then be applied to the calculation of after-tax amounts received. The current Schedule contains no sections corresponding to those of the Old SABS. It is TD’s position that the deliberate removal of these two sections from the current Schedule means it was the intent of its drafters that the gross income and gross collateral benefits be considered when deducting these benefits from the IRB. There is no mechanism within the Schedule to identify which tax credits are applicable, and there are no guidelines to calculate after-tax collateral benefit amounts.

TD asserts that the wording “gross weekly payment for loss of income” is clearly stated within the Schedule, and it was clear that the legislation did not intend there to be an after-tax calculation.

TD relies on a previous FSCO decision which allowed the deduction of a lump sum amount for past LTD benefits received from past IRB amounts it owed. It was further noted by the Arbitrator in that case that the purpose of s. 7(1) of the Old SABS was to prevent an insured person from being able to benefit from double-recovery.


TD also cited several other cases supporting their own.

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

TD General lastly submits that entitlement to accident benefits is based on elements of statutory and contractual entitlement. If it had been the legislative intent that Insurers were to only deduct net collateral benefits received, then the “net” language would have been maintained in the transition from the Old SABS to the Schedule. The change in language was a purposeful decision by the legislators. TD General asserted that to interpret “gross weekly payment” as “net weekly payment” would involve interpreting the plain and unambiguous language of a statute directly opposite to its ordinary grammatical meaning, and to interpret statutes in that way would pose a risk of ignoring legislative intent while enabling courts and tribunals to second-guess and overrule it.[14]

Based on the evidence and the law the Arbitrator concluded that TD General can deduct the gross amount of the STD, LTD, and CPP disability benefits from the IRB payable.


Posted under Accident Benefit News, Automobile Accident Benefits, Disability Insurance, Income Replacement Benefits, Personal Injury

View All Posts

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.

Practice Areas

  1. Car accidents
  2. Motorcycle accidents
  3. Automobile accident benefits
  4. Catastrophic injury
  5. Brain or Head injury
  6. Paraplegia and Quadriplegia
  7. Spinal cord injury
  8. Drunk driving accidents
  9. Concussion syndrome
  10. Post Traumatic Stress Disorder
  11. Slip and Fall Accidents
  12. Birth Trauma Injury
  1. Wrongful death
  2. Bicycle accidents
  3. Disability insurance claims
  4. Slip and fall injury
  5. Fractures or broken bone injury
  6. Pedestrian accidents
  7. Chronic pain
  8. Truck accidents
  9. Amputation and disfigurement
  10. Fibromyalgia
  11. Nursing Home Fatality Claims

Personal Injury Blog

Jul 27, 2021
IU School of Medicine researchers discover new potential for functional recovery after spinal cord injury
Jul 20, 2021
All Running Limitation Periods are Extended 183 Days Due to COVID-19 but That Doesn't Help This Claimant - McAuley v. Canada Post Corporation, 2021 ONSC 4528
Jul 20, 2021
New and Significant Departure from Previous Upper Limits for Such Damages – Moore v. 7595611 Canada Corp., 2021 ONCA 459
Jul 20, 2021
Brain Injury Can Change Everything – Including Your Marriage
Jul 15, 2021
Motorcycle Deaths At Concerning Levels Again This Year
Jul 13, 2021
New Treatment Protocols May Be Useful for Mild TBI Victims with Chronic Symptoms

More Personal Injury Articles » 
Review our services

Connect with us

Facebook Twitter Linkedin Youtube