Anyone who thinks taxation is overly complicated and onerous in this country needs to spend a day or two in the shoes of a student. That’s because our tax system has absolutely nothing on our student aid assessment system.

Student aid in Canada is distributed based on something called “assessed need”, which is defined as “assessed costs” minus “assessed resources” (not real costs or real resources, because those are subjective). Essentially, government has to ask students about their resources and then make a call about how much they can spare for education. To the extent government thinks you can spare enough, it won’t give you aid. Thus, the formula for various resource tests acts as a kind of tax rate.

The Canada Student Loans Program recognizes five different types of income and five different types of assets, and – here’s the fun part – uses different tax thresholds and rates for each one. Here are the key ones:

(1) Parental Income. The threshold depends on family size, but for a family of four in Ontario, the threshold is about $50,000. For the first $3,000 in post-tax income, the tax rate is 33%, after that, it’s 50%

(2) Spousal Income. Again, it varies a bit by province, but in practice, 80% of all spousal income over about $1,500/month is considered a resource.

(3) Scholarship income. The first three thousand is exempt; after that, the tax rate is 100%.

(4) Student Summer Income. The threshold varies depending on whether you live with your parents in the summer; if you do, your threshold is about $1,000 per month, if not it’s about $200. Above that, the tax rate is 100%.

(5) In-school income. The first $50/week is yours. After that, the tax rate is 100%.

(Look at the pattern of 100% tax rates on student income over the thresholds: CSLP seems at least as concerned with ensuring students don’t get too comfortable as it does with ensuring that students have a basic income floor).

On top of that, there are various asset tests: on income from RESPs, on any RRSPs held (you keep everything up to $2,000 per year of age over 18 – after that the tax is 100%), on any liquid savings in your name (100% on that), on the value of any vehicle owned, and, in one province at least, on the value of houses as well.

There are many words that come to mind when you lay the program out like this. “Unnecessarily complicated” is one. “Ludicrous” is probably another, though reasonable people can disagree about which bits are the least reasonable. (my money’s on the spousal rate, which I’ll address tomorrow).

As a country, we can do better than this. This week, we’ll show you how.