Present Application of Tax System Discriminates
Against Children of Middle Income Parents

Doaktown, Newbrunswick - Thursday, May 9, 2002 - by: Stanley Donovan




I wish to share with you, the general public, a flaw within the present tax system that discriminates against children of middle income parents.




On February 24, 1998 the Federal Minister of Finance, the Honourable Paul Martin, in his budget speech in Parliament said,
“Therefore this budget announces that for the first time ever, all students will be given tax relief on interest payments on their student loans. This will be provided through a tax credit, which can be carried forward for five years.”




I was most pleased when this was published in our local newspaper, The Daily Gleaner, and expressed this satisfaction with my friend, our Member of Parliament (MP), Charles Hubbard.



is a loan?

It was only a short time later that I read in the Income Tax and Benefit Guide that the definition of loan was,
“Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws for post-secondary education.”




Because my wife and I both worked, our combined gross incomes exceeded the limit, and thus disqualified our daughter from getting a Canada Student Loan (… we also had three other children going to university at the same time).



no loan

My daughter was forced to go to the bank for assistance. We were able to get a student loan from the Bank of Montreal, in which I co-signed. The criteria to obtain a student loan from the Bank of Montreal were just as rigorous as that of a “Canada Student Loan.”



tax credit

My daughter was refused the tax credit on the interest she paid on her student loan because the student loan was from the Bank of Montreal. She appealed, and was again refused.




I expressed my concerns to the Minister of Finance, the Honourable Paul Martin, and some of his comments were:
“For simplicity, the credit for payment of interest on student loans does not directly verify that the funds obtained through the loan have been spent on post-secondary education. However, the fact that government loan programs generally assess needs and means helps to ensure that the credit relates to bona fide education costs.”




I discussed the criteria for a Canada Student Loan with a representative from the province of New Brunswick who deals with Canada Student Loans. She said,
“We cannot control what the students do with their money.”




The Minister of Finance, the Honourable Paul Martin, goes on to say:
“That being said, it should be noted that the policy is under continual examination by the Department of Finance with a view to ensuring that the existing system of taxation is fair and effective. It is important for the government to receive comments from a broad range of Canadians in order to help us to identify issues of concern and focus our efforts toward solutions.”




My local MP, Charles Hubbard supports the change to include provable student loans and he said some support for change was expressed in caucus.




If you share my concerns, I ask that you write your local MP and also the Honourable Paul Martin at:

Minister of Finance
Ottawa, Canada
K1A 1H5


You can also leave a message on the Department of Finance web site.


Stanley Donovan