Advances or loans not repaid

Normally, the advance or loan is offset or repaid when the claim is paid by the workers' compensation board. However, if the workers' compensation board denies an award, and the advance or loan is not repaid in the year the claim is settled, we consider the employee to have received a benefit from employment in the year that the award is refused. The amount of the loan or advance has to be reported on a T4 slip with CPP contributions, EI premiums, and income tax withheld.

If the claim is denied and you use the employee's sick leave credits to repay the loan, this amount has to be reported on a T4 slip with CPP contributions, EI premiums, and income tax withheld.

If income tax deductions cause undue hardship to the employee, he or she can contact any tax services office to ask for a letter of authority. This will allow you to deduct less tax.