As of January 1, 1996, social security benefits paid by the United States government to residents of Canada ceased to be taxable in Canada. Instead, the benefits are subject to tax in the United States. This is presumably the change to which this question refers.
The rate at which the United States taxes a particular benefit depends on several factors. The most important of these is the citizenship of the recipient. The U.S. taxes its citizens on their worldwide income. If a resident of Canada is a U.S. citizen, any U.S. social security benefits will be taxed at the same rate as they would be taxed domestically. That rate will vary according to the recipient's income and personal circumstances. Social security benefits paid to non-U.S. citizens who are U.S. resident aliens ("green card holders") are taxed in the same manner.
A resident of Canada who is neither a U.S. citizen nor a U.S. resident alien but who nonetheless receives U.S. social security benefits pays the standard 30 per cent U.S. withholding tax on 85 per cent of the amount of the benefits, the equivalent of a 25.5 per cent tax on the whole benefit (.3 x .85 = .225).
These variations among the tax rates paid by Canadians receiving U.S. benefits make it impossible for the Government of Canada to estimate with any accuracy the total amount of tax the United States will collect on this income.
Question No. 46-