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The purpose of this enactment is to reduce from 85% to 50% the inclusion rate on United States social security payments received by Canadian taxpayers.
The “inclusion rate” is the percentage of United States social security payments 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, thus resulting in an 85% inclusion rate.
This enactment provides for an additional 35% of United States social security payments to be excluded from taxable income. The enactment therefore increases the exemption to 50% and decreases the inclusion rate to 50%.
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