How is loss of earning capacity calculated in Canada?
Canadian courts treat earning capacity as a capital asset that has been impaired. The typical approach: determine the pre-injury earnings stream, subtract residual (post-injury) earning ability, multiply the annual differential over the remaining work life, discount to present value using the statutory real discount rate, then reduce for negative contingencies (unemployment, illness, early retirement).
What discount rate do Canadian courts use?
Several provinces mandate a discount rate. Ontario's Rule 53.09 sets 0.5% real for the first 15 years and 2.5% thereafter. British Columbia sets 1.5% for earnings and 2.0% for future care by regulation. The rate is a real (inflation-adjusted) rate, which is why future losses are not separately indexed for inflation.
What is the difference between lost income and lost earning capacity?
Lost income is actual wages missed (past, easily proven with pay stubs). Loss of earning capacity is prospective — it compensates the impairment of your ability to earn in the future, even if you currently earn the same amount, because the injury makes you less competitive, less able to advance, or more vulnerable to job loss.
Do I need an economist to prove loss of earning capacity?
For significant future-loss claims, yes. Courts typically require a vocational expert to assess residual capacity and an economist or actuary to calculate present value using the correct discount rate, work-life expectancy tables, and contingency factors. The defence will retain its own experts.