Calculating Income Replacement Benefits (IRBs) for self-employed individuals under Ontario’s Statutory Accident Benefits Schedule (SABS) can be deceptively complex. One of the most contested issues? Whether IRBs should be based on the claimant’s last completed taxation year or on the 52 weeks immediately prior to the accident.
Recent decisions from Ontario’s Licence Appeal Tribunal (LAT), including Zhu v. Allstate (2023), K.D v. Aviva (2020), and Eid v. Allstate (2022) have helped clarify the issue — and solidify a strict interpretation.
Here’s what lawyers and law clerks need to know when advocating for self-employed clients.
The SABS Framework: What the Regulation Says
Under section 4(3) of the current SABS (O. Reg. 34/10), a self-employed person’s pre-accident income must be based on the income or loss from their business for the last completed taxation year.
Still, many forms (including the OCF-1 application) and industry practices historically allowed claimants to elect the higher of the two periods. For self-employed clients whose income is seasonal or trending upward, the difference can be significant — which is why this has become a frequent point of contention.
Case Law: LAT Decisions Confirm Strict Interpretation
Recent LAT decisions have clarified that for self-employed claimants, the last completed taxation year is binding — unless the claimant meets special employment criteria.
Zhu v. Allstate (2023)
In Zhu v. Allstate, the applicant argued that s. 4(2) of the Schedule allowed her to choose whether her IRB should be calculated using income from the last 52 weeks or the last fiscal year, relying on the wording of “may” in s. 4(2)3 and the options provided on the OCF-2 form. She submitted that, given the Schedule’s consumer-protection purpose and her inability to work for most of 2021 due to the pandemic, a strict interpretation would lead to an unfair result.
The adjudicator rejected this interpretation. He found that s. 4(2) only applies where the claimant was employed or recently employed under s. 5(1)1(i) or (ii), which was not the case here. The applicant was solely self-employed prior to the accident, as reflected in her tax returns, and had no employment income. The adjudicator also found no basis to conclude that the OCF-2 form overrides the calculation method set out in the Schedule. Because the wording of ss. 4(2) and 4(3) is clear, a self-employed person must have their IRB calculated under s. 4(3), unless they were also employed before the accident. As the applicant’s last completed taxation year was 2021, her IRB must be based on that year’s income. The adjudicator therefore accepted KPMG’s calculation of $38 per week.
Unless your client was also employed (or meets the 26-of-52-week test), there’s no room to elect the higher period.
Eid v. Allstate (2022)
In Eid v. Allstate, the applicant argued that the word “may” in the Income Replacement Benefit (IRB) provisions should allow self-employed claimants to choose how their income is calculated, especially where pregnancy or family-related leave lowers income. The Tribunal rejected this, finding the permissive language applies only to s. 4(2), which is available only to self-employed people who were also employed or recently employed before the accident. Because the applicant was solely self-employed and had been on maternity leave, s. 4(2) did not apply.
The Tribunal held that s. 4(3) governed, requiring income to be based strictly on the last completed tax year. It acknowledged that this rule had a discriminatory effect on the applicant due to pregnancy, a protected ground, but ultimately concluded that it lacked the authority to provide the remedy she sought.
Regardless of the claimant’s personal circumstances, if they are only self-employed on DOL, the IRB has to be calculated based on last taxation year.
KD v. Aviva (2020)
The Tribunal found that the applicant was solely self-employed at the time of the accident and therefore fell under s. 4(3) of the Schedule. This required his IRB to be based on his last completed taxation year-2016. Because his 2016 return reported no self-employment income, his IRB base was zero, and he was not entitled to IRBs.
The applicant’s accountants wrongly used the 52-week method, but the Tribunal held that s. 4(2) only applies where a self-employed person also has employment income, which he did not. The Tribunal further clarified that the OCF-2 form does not give claimants a choice; the Schedule governs the calculation. Claims of unfairness were rejected, as the legislation was clear and there was no evidence he started self-employment after 2016.
Why This Matters: The 52-Week Trap
For self-employed individuals with fluctuating or growing income, using the last tax year can paint an outdated or unfair picture. For example:
- A landscaper injured in spring 2025 may have seen their best months in late 2024 to early 2025 — but still be stuck using a slow year from 2024.
- A consultant who launched mid-2025 might have no completed tax year at all, potentially leaving them with a zero IRB calculation.
Unless the claimant also qualifies under s. 4(2)3 (i.e. recently or concurrently employed), LAT will not allow a switch to the 52-week method, even if it’s clearly more representative.
Best Practices for Lawyers and Clerks
To build a defensible and well-supported IRB claim for a self-employed client:
1. Start with the Tax Year
- Assume section 4(3) controls unless your client was also employed at DOL or for 26 out of the 52 weeks before the accident.
- Request the last completed T1 General + Statement of Business Activities.
2. Document the 52 Weeks if they were also employed
- Forensic accountants and insurers may review the most recent 12 months if they were employed at DOL or employed for at least 26 weeks out of 52 weeks prior to DOL.
- Track monthly income details, paystubs, ROEs or other documents reflecting 52 weeks income.
Final Thoughts
In the current legal climate, IRBs for self-employed claimants are locked to the last taxation year — even when that number is unrepresentative or outdated. While insurers may informally consider a 52-week analysis, recent LAT rulings make it clear that only verified, reported income will prevail.
If you’re unsure whether your client’s income period election is defensible, it may be time to consult with a forensic accountant and build a case that aligns with both SABS and the latest LAT jurisprudence.
For case-specific advice or help preparing a self-employed IRB calculation, contact Great Oak VFA — we’ll help you structure it right, from intake to mediation.