Amounts received as workers' compensation or as indemnities further to a traffic accident
Calculation of amounts paid and non-refundable tax credits
Income replacement indemnities and compensation for the loss of financial support paid by the Société d'assurance automobile du Québec (SAAQ) and the Commission de la santé et de la sécurité du travail (CSST) are calculated on the basis of a beneficiary's net income.
In calculating the amounts paid to a beneficiary, the SAAQ and the CSST take into account the beneficiary's non-refundable tax credits, such as the basic personal amount, the employment insurance premium, the Québec Pension Plan (QPP) contribution and the Québec parental insurance plan (QPIP) premium. The income tax on taxable income is also taken into account.
Tax adjustment for income replacement indemnities
If you received income replacement indemnities from the SAAQ or the CSST, you must report in your income tax return for the year concerned the amount shown in box M of the RL-5 slip (RL-5) you were issued. The amount represents the adjustment for income replacement indemnities that must be made in the calculation of your non-refundable tax credits, where the period covered by the indemnities received is included in the taxation year concerned.
The adjustment reduces the amount of your non-refundable tax credits by the amount already taken into account in the calculation of the indemnities paid to you by the SAAQ or the CSST. The purpose of the adjustment is to prevent the non-refundable tax credits of a beneficiary who receives indemnities from the SAAQ or the CSST from being taken into account twice.
Retroactive payments
If you received a retroactive payment for indemnities that were owing to you for previous years, Revenu Québec will make the adjustment in the income tax return for the year in which you received the retroactive payment.
The adjustment offsets the additional income tax you would have had to pay for in which the indemnities were owing to you, had you received the indemnities that year.
Repayment of indemnities or compensation
If, in a year, you were required to repay the SAAQ or the CSST an amount of income replacement indemnities or compensation for the loss of financial support that is higher than the amount you received in that year, you can deduct this amount in the calculation of your net income for that year.
If, in a year, the SAAQ or the CSST requests the repayment of an amount of income replacement indemnities or compensation for the loss of financial support for a previous year, Revenu Québec may grant a refundable tax credit in your income tax return for the year in which the repayment is requested. This may offset the additional income tax you had to pay for the year in which the indemnities or compensation were taxed.
For additional information about the calculation of the adjustment for income replacement indemnities, refer to Information bulletin 2004-9 of the Ministère des Finances du Québec.
Amounts paid by a public benefit plan outside Québec
Amounts granted by a public benefit plan outside Québec must be included in the calculation of your net income. The benefits may have been received under a law of Canada or a province other than Québec. This amount may be shown on a T5007 slip.
Where the benefits received are income replacement indemnities based on your net employment income (workers' compensation, or indemnities received further to a precautionary cessation of work, a traffic accident or because you were the victim of a crime, or compensation for the loss of financial support), you must complete work chart 358 to determine the adjustment to be made in the calculation of your non-refundable tax credits.
If the benefits were reduced because, for example, you were holding other employment, you must complete form TP-752.0.0.6-V.
On June 26, 2007, the Ministère des Finances amended, retroactively to the 2004 taxation year, the calculation of the tax adjustment for income replacement indemnities. To revise the calculation of the adjustment made in your 2004, 2005 and 2006 income tax returns, contact us.
