Calculating a dependent contractor’s average earnings

The representative of Mr. A, a dependent contractor, called the Commission with concerns about the calculation of the contractor’s average earnings. A new WSIB policy sets out guidelines for determining average earnings in exceptional cases, including dependent contractors. Under this policy, decision-makers use the contractor’s net business income and then add items listed in the policy, including expenses arising out of the individual’s use of their home or personal vehicle for business purposes.

In Mr. A’s case, the case manager added an amount for depreciation and business use of home expenses, as outlined in Mr. A’s tax return, but did not add any amount for use of his personal vehicle or cell phone. The representative wrote to the manager to find out why these amounts were not added. The case manager said the amounts were not allowable based on the WSIB policy. Since these items are listed in the policy, the representative was confused.

The Commission spoke with the manager who agreed that the policy listed these add-backs. She reviewed the claim with a payment specialist who said that expenses for a vehicle or cell phone bought solely for business purposes are not added back. However, if they are personal items used for business purposes they can be considered for add-backs. This information is determined by reviewing business
expense forms filed with Revenue Canada.

The manager called the representative who agreed to file the additional Revenue Canada forms so that the case manager could reconsider the decision. After reviewing the forms, the case manager revised the contractor’s average earnings to include the business use of his personal vehicle. The cell phone expense was not added back as it was reported to Revenue Canada as a 100-per-cent business expense.