The article examines the implications of the changes to section 626.1 of the Insurance Act that were introduced in The Insurance Amendment Act, 2003. Dr. Bruce argues that these changes will: (i) require that income taxes be calculated for every year of both the with-accident and without-accident income streams in all personal injury cases; and (ii) raise the strong possibility that the courts will allow income tax “gross ups” on awards for loss of earnings. He also shows how the income tax gross up is calculated and estimates the overall impact of the revisions on personal injury awards; and he argues that those revisions will have no effect on the manner in which CPP premiums have been treated in Alberta.
The article is an addendum to Christopher Bruce’s The Impact of the “Net Income” Provisions of the Insurance Amendment Act, 2003. It shows how to download Tables on Diskette (TOD), a software program provided free of charge by the Canada Revenue Agency. It also discusses how law firms can use this calculator to determine income taxes in litigation purposes.
