Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – August 2024

3. Contributions

This chapter defines what is and is not a contribution, explains the rules for administering contributions and provides practical examples. It covers the following topics:

• What is a contribution, and what is commercial value?
• Who can contribute to whom and how much?
• Are volunteer labour, sponsorship or advertising contributions?
• What are the rules for contribution receipts, anonymous contributions and ineligible contributions?
• What are directed contributions, and how are they reported?

What is a contribution?

A contribution is donated money (monetary contribution) or donated property or services (non monetary contribution).

Monetary contribution	Non-monetary contribution
A monetary contribution is an amount of money provided that is not repayable. Monetary contributions include cash, cheques or money orders, credit card or debit card payments, and online payments (other than contributions of cryptocurrency).	The amount of a non-monetary contribution is the commercial value of a service (other than volunteer labour) or of property, or the use of property or money, to the extent that it is provided without charge or at less than commercial value. This includes contributions of cryptocurrency and forgone interest on loans.

Note: Leadership contestants can receive contributions in two ways: directly to the leadership campaign or as "directed contributions" through the party. See the Directed contributions section below for more information

What is commercial value?

Non-monetary contributions are recorded at commercial value. Commercial value, in relation to property or a service, is the lowest amount charged at the time that it was provided for the same kind and quantity of property or service, or for the same use of property or money, by:

• the person who provided the property or service (if the person who provided it is in that business), or
• another person who provides that property or service on a commercial basis in the area (if the person who provided the property or service is not in that business)

Note: If the commercial value of a non-monetary contribution is $200 or less, and it is from an individual not in that business, the contribution amount is deemed to be nil. While individuals can make multiple non-monetary contributions over time that are deemed to be nil, they cannot attempt to circumvent the contribution rules using this provision.

Who can contribute?

Only individuals who are Canadian citizens or permanent residents of Canada can make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.

Contributions can be accepted from minors, but political entities should consider whether the person is contributing willingly and using their own property or money.

Note: Corporations, trade unions, associations and groups cannot make contributions. It is prohibited for a person or entity to circumvent, or attempt to circumvent, the eligibility rules or contribution limits.

Limits on contributions, loans and loan guarantees to a leadership contestant

This table displays the limits for leadership contestants. The limits for all entities are available in Chapter 1, Reference Tables and Timelines.

Limits on contributions, loans and loan guarantees to a leadership contestant

Political entity	2024 annual limit
In total to all leadership contestants in a particular contest	$1,725*

Volunteer labour is not a contribution

What is volunteer labour?

Volunteer labour is any service provided free of charge by a person outside of their working hours, excluding a service provided by a self-employed person who normally charges for that service.

Volunteer labour is not a contribution.

Who is eligible to volunteer?

Any person can volunteer for a political entity, even if they are not a Canadian citizen or permanent resident.

But a self-employed person cannot volunteer a service they would normally charge for. That is a non-monetary contribution and not volunteer labour. The person would have to be an eligible contributor under the contribution rules and stay within their contribution limit.

People who work on-call or variable hours can volunteer for a political entity, as long as they are not self-employed in the field and their employer has not instructed them to work for the political entity while receiving standby pay or other compensation.

Volunteer labour cannot be provided by corporations, trade unions, associations or groups, though individual employees or members can independently choose to volunteer.

Note: To know whether a person is an employee or self-employed, ask if they receive a salary or wages, payroll deductions and a T4 slip from their employer or corporation at tax time. If they do, the person is an employee for the purpose of the Canada Elections Act and can volunteer in the same capacity as their line of business, outside their working hours.

Paying volunteers for part of their work

Volunteers can be paid for part of their work, but the paid work is not volunteer labour. An agreement must be in place before the work is performed. It can specify incentive- or performance-based terms of remuneration rather than a fixed rate.

Once an agreement is in place, the campaign is liable for the related expenses.

For work performed during the contest period, compensation is almost always a leadership contest expense. Before the contest period, it is occasionally a leadership contest expense. It is never a leadership contest expense after the contest period. Please see Campaign workers and related expenses in Chapter 9, Leadership Contest Expenses, for details on timing of work and expense reporting.

If the campaign gives monetary compensation (other than nominal gifts) to volunteers without a prior agreement being in place, it will be considered an inappropriate use of campaign funds that would need to be returned.

Leadership contestants cannot pledge to pay their volunteers or pay an honorarium on condition that the campaign has sufficient funds after the contest. This would constitute a gift rather than compensation and be subject to the $200 nominal gifts threshold (see the next section).

An invoice is required for payments of $50 and over, setting out the nature of the expense. Because compensation expenses can vary widely, it is advisable to also have a written agreement or other documentation about a volunteer’s compensation to support all amounts being reported. Failure to adequately support the expenses may result in follow-up enquiries by Elections Canada auditors. In the absence of evidence, the payments may be considered an inappropriate use of campaign funds that would need to be returned.

Note: If the campaign pays its workers, it may have to issue T4 or T4A slips to them for income tax purposes. See the Canada Revenue Agency website for more information.

Nominal gifts and thank-you parties

The leadership contestant's campaign can give each volunteer nominal gifts up to a total value of $200 and throw a thank-you party without this being considered compensation. The nominal gifts can be monetary, such as an honorarium, or non-monetary. The associated costs are other leadership campaign expenses.

If the campaign gives gifts to volunteers above the nominal gift threshold, it will be considered an inappropriate use of campaign funds that would need to be returned.

Keep in mind that capital assets valued over $200 that the campaign no longer needs cannot be given as gifts. They must be sold as part of the surplus disposal.

Sponsorship or advertising at a political event is a contribution

A transaction involving the receipt of money by a political entity in exchange for advertising or promotional opportunities directed at members or supporters of the political entity is not recognized as a commercial transaction. Any money received as part of such an arrangement is to be treated as a contribution that is subject to the contribution limit and eligibility rules.

Accepting and recording contributions made directly to the campaign

Only the financial agent and authorized leadership campaign agents can accept contributions made directly to the leadership contestant's campaign.

The tables below summarize some important points about accepting and recording contributions received in different scenarios.

Where a home address is required below, please note the following:

• A mailing address can be accepted if it is the address that the contributor regularly uses to receive mail for their household (for example, a general delivery address in a rural area).
• An address that is both the contributor's home and business address is valid as a home address.
• The campaign does not have to validate each address, but it should specifically request a home address from contributors. This will limit the issues that may need to be resolved when Elections Canada audits contributions.

Contribution range	What to keep in mind
$20 or less	It can be accepted as an anonymous contribution.
Over $20 and up to $200	The contributor's full first and last names must be recorded. Initials cannot be accepted. A contribution receipt must be issued.
Over $200	The contributor's full first and last names must be recorded. Initials cannot be accepted. The contributor's home address must be recorded. A business address cannot be accepted in its place. A contribution receipt must be issued.

Contribution method	What to keep in mind
By e-transfer	If only the contributor's name is available in the bank record, contact the individual for other required information.
Online payment service	An online processing fee might apply. The full contribution amount has to be recorded as a contribution, and the processing fee has to be recorded as an other leadership campaign expense. For example, if the campaign receives a $500 contribution through an online payment service and the net deposit to the campaign bank account is $490, the financial agent has to record and issue a receipt for a contribution of $500 and record an other leadership campaign expense of $10.
Untraceable instrument	We recommend that campaigns only accept contributions made by way of a traceable instrument. A campaign may wish to reject contributions made by money order, bank draft or prepaid credit card, unless it is confident of the contributor's identity and that the contributor has used their own funds.

Contribution source	What to keep in mind
Joint bank account (cheque)	It is generally reported under the name of the individual who signed the cheque. If the cheque is accompanied by written instructions signed by both account holders indicating how the contribution is to be allocated to the contributors, the contributions are to be reported in accordance with that agreement.
Joint bank account (credit card)	Where a contribution is made by credit card, and the credit card balance will be paid from a joint bank account, the contribution is generally reported under the name of the cardholder. A contribution can be made on the same credit card by a person who shares the joint bank account but is not the named cardholder. However, the campaign should get certification that the contributor is using their own funds (for example, by adding a checkbox with this certification to its online contribution system).
Partnership	The partnership has to provide the following information in writing: name and home address of each contributor the voluntary nature of each contribution who it is intended for the amount of each contribution The instructions must be signed and dated by each contributor. Each contributing partner should reduce their next draw of income from the partnership by the amount of their contribution.
Unincorporated sole proprietor	It must be recorded in the individual's name (not the business name), using the contributor's home address when an address is required.

Accepting contributions of cryptocurrency

A contribution of cryptocurrency is non-monetary.

The contribution amount is the commercial value of the cryptocurrency at the time that it was received. There are two ways to determine the commercial value:

• If the transfer passed through a payment processor (such as BitPay) that provided an exchange rate, use that rate.
• If the transfer did not go through a payment processor or no exchange rate was provided, use a reasonable rate on a major exchange platform (such as Coinbase) at the time closest to when the transfer was sent. The valuation must be readily ascertainable and verifiable.

Political entities should set up a two-step process to identify contributors of over $20 and record transaction information from the blockchain so that contributions can be audited.

A transaction in cryptocurrency will almost always involve a processing fee. The full amount sent by the individual is a contribution to the political entity, and the processing fee is an expense.

For contributions up to $200, if the contributor is not in the business of selling cryptocurrencies, the contribution amount is deemed nil. But the contributor must still be eligible under the contribution rules. Over $20, the campaign must keep a record of the contributor's name.

In all instances, campaigns should be mindful of the rules in the Canada Elections Act against circumventing contribution rules and watch for unusual amounts or patterns in contributions that they receive.

Issuing receipts for contributions made directly to the campaign

A receipt has to be issued for each monetary contribution over $20 or non-monetary contribution over $20 that is not deemed nil.

Contribution made directly to the contestant's campaign	Monetary contribution directed through the registered party
Only the financial agent or authorized leadership campaign agents can issue the receipt. The contribution is not eligible for a tax receipt.	Only the registered party can issue the receipt. The contribution is eligible for a tax receipt. See the Directed contributions section below for more information.

We recommend that the financial agent use Elections Canada's Electronic Financial Return (EFR) software to issue receipts. EFR is free and can be accessed from the Political Entities Service Centre.

Determining the date a contribution is made

As most contribution limits apply per calendar year, the date a contribution is made is important. It is also important for reporting purposes because this same date will be used as the "date received" in the contestant's return.

The date a contribution is made is generally the date the contribution is in the hands of the financial agent or another authorized agent. There are exceptions for contributions made by regular mail, by post-dated cheque and electronically.

How contribution is made	Date contribution is made
In person	The date the contribution is in the hands of the financial agent, an authorized leadership campaign agent or, if it is a directed contribution, an authorized party agent.
By regular mail	The date of the postmark on the envelope. If the postmark is not legible, the contribution is made on the date the agent receives the mail. The campaign or party should keep the stamped envelope as part of its records.
Post-dated cheque by any means	The date on the cheque.
Electronically (e-transfer, credit card, PayPal, etc.)	The date the contributor initiates the transaction. If the transaction is post-dated, the contribution is made on the date specified by the contributor.

Recording anonymous contributions

If anonymous contributions of $20 or less are collected during an event related to the campaign, the financial agent or an authorized leadership campaign agent has to record:

• a description of the function at which the contributions were collected
• the date of the function
• the approximate number of people at the function
• the total amount of anonymous contributions accepted

Anonymous contributions of $20 or less may also be received outside the context of a particular function. In that case, the financial agent or a leadership campaign agent has to keep track of the total amount collected plus the number of contributors.

Remitting anonymous contributions that cannot be accepted

If the financial agent or an authorized leadership campaign agent receives a contribution that is:

• over $20 and the name of the contributor is not known, or
• over $200 and the name and address of the contributor are not known

the financial agent has to send the ineligible amount (that is, the amount over $20 or $200) without delay to Elections Canada.

Contributions can be remitted to Elections Canada by cheque payable to the Receiver General for Canada (by mail to 30 Victoria Street, Gatineau, Quebec, K1A 0M6) or by bank transfer. To send a bank transfer, contact Elections Canada's Political Entities Support Network for account information and instructions.

Ineligible contributions

The financial agent and the leadership campaign agents are responsible for ensuring that contributions are in accordance with the rules set out in the Canada Elections Act.

The following contributions are ineligible:

• cash contributions over $20
• contributions from corporations, trade unions, associations and groups
• contributions that exceed the limit
• indirect contributions (no individual can make a contribution that comes from the money, property or services of another person or entity)
• contributions from a person who is not a Canadian citizen or a permanent resident
• contributions an individual makes as part of an agreement to sell goods or services, directly or indirectly, to a registered party or a candidate (for example, a leadership contestant cannot accept a contribution that was a condition for a candidate to buy signs from a local dealer for an election)

Returning ineligible or non-compliant contributions

The financial agent or authorized leadership campaign agents must not accept a contribution that exceeds the limit and should not accept any other type of ineligible contribution.

The financial agent has to return or remit a contribution (or the excess amount of an over-the-limit contribution) within 30 days of becoming aware that:

• it is ineligible, or
• it was received as part of a regulated fundraising event for which the publication or reporting requirements were not complied with

An ineligible or non-compliant contribution must be returned to the contributor or remitted to Elections Canada, based on whether or not it was used. If the contribution is unused, it is returned to the contributor. If it was used or is impossible to return, it is remitted to Elections Canada.

A monetary contribution is considered used if the campaign's bank account balance fell below the ineligible amount at any time after the contribution was deposited into the bank account.

Contributions can be remitted to Elections Canada by cheque payable to the Receiver General for Canada (by mail to 30 Victoria Street, Gatineau, Quebec, K1A 0M6) or by bank transfer. To send a bank transfer, contact Elections Canada's Political Entities Support Network for account information and instructions.

Flowchart 1 explains how to administer ineligible or non-compliant contributions in different scenarios.

Flowchart 1: Returning ineligible or non-compliant contributions

Text Description "Flowchart 1: Returning ineligible or non-compliant contributions"

*A monetary contribution was used if the campaign bank account balance fell below the ineligible or non-compliant amount at any time after the contribution was deposited into the bank account.

**For example, the contributor's address is known and there are no obstacles to prevent the return.

Directed contributions

What is a directed contribution?

A directed contribution is a contribution made to a registered party that the contributor requests, in writing, to have transferred to a particular leadership contestant. It may be one part of a larger contribution—for example, if the contributor decides to send $2,000, with $1,000 for the party and $1,000 directed to a contestant.

The contestant has to register with Elections Canada before the party can transfer a directed contribution to them.

Unlike contributions made from a contributor to a leadership contestant, directed contributions through a registered party are eligible for a tax receipt. The party issues the receipt.

The full amount of a directed contribution is deemed to be a contribution to the contestant's campaign, even if the party retains part or all of the directed amount. The Canada Elections Act does not restrict the portion of the directed contribution that may be retained by the party.

Note: The directed contribution is subject to the limit on contributions made to leadership contestants, not the limit on contributions made to the party.

Recording directed contributions

The registered party must provide each leadership contestant's campaign with a Statement of Directed Contributions Received and Transferred to a Leadership Contestant when it transfers contributions to the campaign. This form includes:

• the name and address of each contributor
• the amount and date of the contribution
• the amount of the directed contribution
• the amount that the party has transferred
• the date of the transfer

The statement sent to the campaign includes only those directed contributions that were transferred, in whole or in part, to the contestant.

When it comes to reporting directed contributions in financial returns:

• the party must report all directed contributions in its financial returns, whether or not it transferred an amount to the contestant
• leadership campaigns report only the directed contributions out of which an amount was transferred to them—campaigns do not report contributions that the party fully withheld, even though those contributions count toward the limit on contributions made to contestants

Registered party's retention of a directed contribution

Parties will often retain all or part of a directed contribution in two situations:

• the party charges a processing fee for directed contributions
• the party withholds part or all of the contribution to cover a contestant's contest fee or other administrative expenses

In rarer situations, parties may choose to retain directed contributions without using them to cover an expense.

Note: The Canada Elections Act does not restrict the portion of the directed contribution that may be retained by the party.

The financial agent or an authorized leadership campaign agent must authorize the campaign's expenses that are being paid using withheld contributions. This can be done in advance through an agreement with the party (for example, the campaign can be informed that, by registering for the contest, it agrees to incur a contest fee and processing fees).

When the party withholds an amount to cover a fee or other expense, the party must provide the leadership campaign with an invoice or other document evidencing the expense. There is no expense if the directed contribution was withheld without property or services being provided in return.

As mentioned above, the campaign does not report a contribution that is fully withheld. It reports an expense in any case where property or a service was provided. The expenses are recorded as having been paid through withheld contributions.

There may be differences in reporting when tickets for a fundraising event are sold through the registered party. For more information, see the section Ticketed fundraising events > Managing contributions received through ticket sales in Chapter 7, Fundraising.

Note: Expenses paid through withheld contributions count toward the $10,000 threshold for filing interim returns and an auditor's report.

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