Unreported income usually results from a failure to file tax returns or declare income to the Canada Revenue Agency. Breaking down disability benefits into three types can help to illustrate where unreported income can become a problem:

  • For individual disability policies for employees, there is usually a prescribed monthly benefit;
  • Group policies for employees are often passed on insurable earnings as reported or paid by an employer; and
  • For self-employed individuals, disability policies are usually based on the earnings they established when purchasing the policy, and many policies can increase as income grows.

In cases where there is a prescribed monthly benefit, or an employer’s records should show your income, there is less concern around unreported income. However, unreported income can become an area of contention for self-employed individuals, especially when their past income is hugely different from their current income.

However, unreported income can still be scrutinized for employees.

When is Unreported Income Scrutinized?

Unreported income can become increasingly scrutinized in many situations, including:

  • When dealing with partial or residual benefits;
  • For self-employed individuals who have incorporated; and
  • Being in an industry in decline.

What are Partial or Residual Disability Benefits?

Residual disability benefits deal with paying a specific percentage of your insured earnings. These benefits are payable when a disability lasts up to or over the assessment period and prevents a person from being fully employed. These benefits are reduced if the person’s current income exceeds their pre-disability income.

Partial disability provides coverage for people who qualify for disability but can work in a reduced capacity. They are generally based on a percentage of lost income.

So, for partial and residual disability benefits, it is important to establish both your pre-disability and current incomes. In this situation, if either of your incomes had unreported amounts, you may find yourself needing to provide evidence to support the amounts you are claiming.


For self-employed individuals who have incorporated, their earnings may come under scrutiny if an insurance provider believes that they may have split their income to maximize their residual or partial benefits under their policy.

Industry in Decline

There can also be a good deal of scrutiny if you are self-employed in an industry that is currently in decline. In these cases, insurance providers may jump at the chance to say that your earnings would also be low, even if your own earnings were not actually declining alongside your industry.

How to Provide Evidence of Unreported Income

In general, the facts of your situation will ultimately decide whether your unreported income is considered. Factors that may be considered include:

  • The nature of your unreported work;
  • Your credibility; and
  • Evidence you can provide of your income.

There are many types of evidence you can provide for your unreported income. Ultimately, which forms of evidence are available to you will depend on the nature of your unreported work.

Some examples of evidence include:

  • Deposits made to your bank account;
  • Online transactions if you are an online seller;
  • Pay stubs;
  • Statistical evidence of average earnings; and
  • Having others in the same business testify for you.

How Can NOVA Injury Help?

At NOVA Injury Law we will act on your behalf to advocate for you in your disability claim.

The whole idea behind a disability claim is to ensure you are provided compensation for your disability – and this is a wide-ranging task with unique facts in each case. To learn more about NOVA Injury Law’s approach to protecting disability claims, contact us now to book your free Case Review. During the free Case Review process, we will give you our honest opinion about your case, how much your disability claim might be worth, and what you should consider as your next steps.

If you are in need of legal advice or representation for your disability claim in Halifax, Nova Scotia, or anywhere in Atlantic Canada, our long-term disability lawyers are here to help. Contact us today and tell us more about your claim – we are here to help!