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The purpose of this enactment is to reduce the inclusion rate on
United States social security payments received by Canadian taxpayers
from 85% to 50%.
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The ``inclusion rate'' is the percentage of United States social
security payments that is to be included as income by a Canadian
taxpayer. The Canada-United States Tax Convention Act, 1984
provides for 15% of such payments to be non-taxable in the hands of
Canadian residents, which would result in an 85% inclusion rate.
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This enactment provides that a further 35% of United States Social
Security payments are not included in taxable income. This 35% is in
addition to the 15% that is to be exempt from Canadian tax under the
Convention and the enactment therefore increases the exemption to
50% and decreases the inclusion rate to 50%.
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