Advances or loans

An employer may continue to pay an injured employee while the employee is off work. If there is wording in the employee’s collective agreement that link the payments to a workers’ compensation board decision, then the employer can treat them as an advance or loan. For example, an agreement may say an employee shall be granted injury-on-duty leave with pay for the time approved by the provincial workers’ compensation board.

Advances or loans made to an employee that are equivalent to an anticipated workers' compensation award will not be treated as employment income. As a result, you do not have to deduct CPP contributions, EI premiums, or income tax on this amount. It is not reported on a T4 slip at year-end and code 77 does not apply.

Note

We do not consider any interest that accumulates on advances or loans while waiting for a claim decision to be a taxable benefit.

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