What’s in this article?
Note: This article examines how workers’ compensation, social assistance, and senior supplement payments are dealt with on federal tax returns. This article does not reference or apply to returns filed with Revenu Québec.
Workers Compensation Benefit refers to benefits paid with respect to injury, disability, or death of a worker, under the law of Canada, a province, or a territory. These benefits are non-taxable. They have to be included in your net income on your tax return, but they are deducted before your taxable income is determined.
Canada Revenue Agency (CRA) says…
Workers' compensation benefits are compensation paid in respect of an injury, disability, or death to a worker, under the law of Canada or a province or territory. These amounts are shown on a T5007: Statement of Benefits slip and include:
- benefits that are a wage-loss replacement for time lost from employment due to a compensable injury or condition;
- a wage-loss replacement income paid to an injured worker who suffered a partial, total, temporary, or permanent disability as a result of a work-related accident;
- compensation for future loss of earnings made to an injured worker who suffers from an injury resulting in permanent impairment or temporary disability;
- survivor benefits that are periodic payments to a dependent spouse or common-law partner, dependent children, or orphans; and
- wage-loss replacement income periodically paid to a surviving spouse or common-law partner to replace the income that a worker who died in a work-related accident or as a result of an industrial accident would have earned.
Social Assistance Payments - These payments are made to you or a third party based on means, needs, or income testing and include payments for food, clothing, and shelter.
Canada Revenue Agency (CRA) says…
These payments are shown on a T5007 slip and are usually made to:
- impaired individuals in nursing homes or similar accommodations; and
- elderly individuals (generally 65 years of age or older) whether or not they live in nursing home or similar accommodations.
These amounts are not taxable, but you must include them in your net income to ensure any benefits that you may be entitled to are calculated properly. These benefits include the OAS Supplement, the goods and services tax/harmonized sales tax credit, the Canada Child Tax Benefit, as well as certain provincial or territorial tax credits and certain non-refundable tax credits.
If you lived with your spouse or common-law partner when the payments were received, the one who has the higher net income has to report all of the payments, no matter whose name is on the slip. If the net income is the same for both of you, the person named on the T5007 slip has to report it.
Note: You do not have to include certain social assistance payments you or your spouse or common law partner received for being a foster parent or for caring for a disabled adult who lived with you. However, if the payments are for caring for your spouse or common-law partner or an individual related to either of you, whoever has the higher net income will have to include those payments.
Senior Supplement or the Guaranteed Income Supplement is a monthly non-taxable benefit that is added onto the Old Age Security (OAS) for seniors who have a low income and are living in Canada. The amount you receive depends on your marital status and previous year’s income. Click this link for more information on the current benefit rates.
Workers’ Compensation Benefit – You may qualify if you were injured at your place of employment and suffered a partial, total, temporary, or permanent disability as a result of the work-related injury. If you are a surviving family member (spouse, common-law partner, or a dependant child) of a worker who died in a work-related accident, you may qualify for the workers’ compensation benefit amount.
Social Assistance Payments – You may qualify if you are in financial need, are impaired and live in a nursing home or similar accommodation, or are an elderly individual (65 years of age or older).
Seniors Supplement – You may qualify for the Guaranteed Income supplement if all of the following conditions are met:
- you are a legal resident of Canada
- you are receiving the Old Age Security
- Your annual income (or in the case of a couple, your combined income) is lower than the maximum annual income.
Your eligibility for this benefit is reviewed each year based on your income tax return.
Follow these steps in H&R Block’s tax software if you are filing your 2015 taxes:
1. Click the PREPARE tab.
2. Click the YOUR YEAR IN REVIEW icon.
3. Select the checkbox 'I received benefits from the government.'
4. Click the EMPLOYMENT icon. You will find yourself here:
5. Under the GOVERNMENT BENEFITS RECEIVED section, select the checkbox for Workers' compensation, social assistance, or senior supplements (T5007).
6. Scroll to the bottom of the page and click Continue.
When you arrive at the page for Workers' compensation, social assistance, or senior supplements (T5007), enter your information into the tax software.
- Guaranteed Income Supplement (Service Canada website)
- Line 144 – Workers' compensation benefits (CRA website)
- Line 145 – Social assistance payments (CRA website)