The T4 slip and T5007 slip, Statement of Benefits

In the year that the workers' compensation claim is reimbursed to you, the employee should also receive a T5007 slip from the workers' compensation board (WCB). Generally, tax is not paid on the workers' compensation benefits, however the employee has to report the amount shown on the T5007 slip as income on their income tax and benefit return for that year and claim the corresponding deduction.

For the employee to also deduct all or part of the reimbursed worker's compensation as "other employment expenses" on their income tax and benefit return, you have to fill out a T4 slip for the year in which you receive the reimbursement. Enter the amount of the reimbursed workers' compensation in the "Other information" area, under code 77. Code 77 should only be used in situations where:

• you previously paid the employee the workers' compensation amount and reported it as an employment income on the employee's T4 slip
• you have now been reimbursed by the WCB for the worker's compensation amount you paid to the employee 

This will allow the employee to deduct this amount against the previously paid salary. If the award is used only to offset loans and advances, do not report this amount on the employee's T4 slip.