INJURY LEAVE PAY
In Canada, employees who are unable to work due to a work-related injury may receive injury leave pay to support them during their recovery. The tax treatment of such payments depends on the source of the payment and the specific circumstances of the leave.
Tax Treatment of Injury Leave Pay
- Employer-Paid Benefits: Regular salary or wages paid by an employer during an injury leave period are considered taxable income. These payments are subject to payroll deductions, including income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.
- Workers' Compensation Benefits: Payments from a workers' compensation board or similar authority due to a work-related injury are generally non-taxable. Employees are not required to include these amounts in their taxable income.
Employer Responsibilities
- Payroll Deductions: For taxable injury leave pay, employers must withhold and remit the appropriate deductions for income tax, CPP, and EI.
- Record Keeping: Employers should maintain detailed records of payments made to employees during injury leave, including benefits provided and deductions applied.
Employee Considerations
- Taxable Income Reporting: Employer-paid injury leave pay is included in taxable income and will appear on the employee’s T4 slip.
- Non-Taxable Benefits: While workers' compensation benefits are non-taxable, employees may need to report these amounts for information purposes on their tax returns.
Additional Resources
Note: This content is for informational purposes only and should not be considered as legal or financial advice. For specific guidance, consult the CRA or a professional tax advisor.
