US Social Security payments

US social security benefits received by residents of Canada are only subject to tax in Canada. The United States will not tax these benefits pursuant to the Canada-US Treaty.

Generally, Canadian residents receiving US social security benefits are required to include 85% of those benefits
in computing their Canadian income. However, the inclusion rate is 50% for Canadian residents (and their spouses or common-law partners eligible to receive survivor benefits) who have been in receipt of benefits since before January 1, 1996.

The full amount of benefits received is included in net income for purposes of assessing various clawbacks and other net income-based calculations: the OAS clawback (see topic 72) and the age credit (see topic 79). The non- taxable amount (15% or 50%) is claimed as a deduction from net income in calculating taxable income.

Tax tip: Make sure you consider applying for US social security if you have ever worked in the US in the past. You could be surprised at your benefit entitlement!