The Electoral System of Canada
How is money regulated throughout federal elections?
The Canada Elections Act provides a comprehensive framework designed to make the financing of the political system open, fair and accessible. The rules and requirements for contributions and election spending are clearly defined.
Disclosure requirements have existed for candidates since the beginning of the 20th century, but the current regime was essentially laid out with the introduction of political party registration in 1970 and the Election Expenses Act in 1974. The latter introduced limits on election expenses for both candidates and political parties, and the first forms of public funding through partial reimbursement of expenses and tax credits for contributions. It was not until 2004 that regulation was extended to electoral district associations, and that nomination and leadership contestants became obliged to register and disclose their financial transactions.
Limits on contributions were introduced in 2004. Further restrictions were imposed as of January 1, 2007, and corporations and trade unions are no longer allowed to make political contributions.
Transparency measures and limits have been imposed also on election advertising by third parties – persons or groups who are not candidates, registered parties or electoral district associations. The principles of transparency and fairness thus apply to all participants in the electoral process.
Major changes to the political financing regime that came into effect in 2004 and 2007 set limits to political contributions (adjusted annually for inflation). The most important are:
- a citizen or permanent resident of Canada can give up to $1,100 in total each year to a particular registered political party, up to $1,100 each year to the registered electoral district associations, nomination contestants and candidates of a particular registered party, up to $1,100 in total each year to the leadership contestants of a registered party and up to $1,100 for a particular election to a candidate in the election who is not endorsed by a registered party
- corporations and trade unions may not make any contributions to political entities
|Political entities||Citizens and permanent residents only|
|Political parties||A maximum of $1,100 per calendar year to each of the registered political parties|
|Electoral district associations||An aggregated maximum of $1,100 per year to the registered electoral district associations, nomination candidates and candidates of each of the registered political parties|
|Independent candidates||A maximum of $1,100 per election to each independant candidate|
|Leadership contestants||An aggregated maximum of $1,100 to all of the contestants in a leadership contest|
* Adjusted annually for inflation. The numbers cited here are those that apply on January 1, 2007.
Tax credits for political contributions
Although contributions may be in the form of money, goods or services, only a contribution of money to a registered political party, a provincial division of a registered party, a registered electoral district association or a candidate qualifies for an income tax credit under the Income Tax Act. Given the current contribution limit of $1,100, the maximum tax credit is $591.67. As contribution limits increase with inflation, the maximum credit allowed under the Income Tax Act will be $650.
|$0.01 to $400.00||75 percent|
|$400.01 to $750.00||$300 plus 50 percent for contributions over $400|
|$750.01 to $1,275.00||$475 plus 33⅓ percent for contributions over $750|
|$1,275.01 and over||A maximum of $650|
Expenses limits at the 39th general election
During the 39th general election, the election expenses limits for political parties ranged from $68,155 for those that endorsed only one candidate to $18,278,279 for each of those that endorsed candidates in all 308 ridings – namely, the Conservative Party of Canada, the Green Party of Canada, the Liberal Party of Canada and the New Democratic Party.
The final limits for candidates varied from $62,210 in the electoral district of Malpeque, Prince Edward Island, to $106,290 in Peace River, Alberta.
The Canada Elections Act defines an election expense as any cost incurred, or non-monetary contribution received, by a registered party or a candidate, which is used to directly promote or oppose a registered party, its leader or a candidate during an election period. Such expenses are subject to limits for candidates, registered political parties and third parties. The limits for candidates and political parties are calculated according to a formula based on the number of names on the preliminary or revised lists of electors for each electoral district (for a party, the electoral districts are those in which the party has endorsed confirmed candidates). Candidates' campaign expenses include election expenses, which are capped, and personal expenses, which are not capped. Electoral district associations cannot spend on election advertising during an election.
Expenses limits are also calculated for nomination campaigns. The Canada Elections Act defines a nomination campaign expense as an expense reasonably incurred by or on behalf of a nomination contestant during a nomination contest as an incidence of the contest. For a nomination campaign, a nomination contestant can spend 20 percent of the amount allowed for a candidate's election expenses in the same riding during the last general election.
Each electoral participant or political entity must submit financial reports to the Chief Electoral Officer:
- registered political parties: an audited statement of assets and liabilities within six months of registration, an audited annual fiscal return, quarterly reports for parties receiving allowances and an audited report on election expenses within six months after election day
- registered electoral district associations: a statement of assets and liabilities within six months of registration; and an annual fiscal return (with an auditor's report if the association received contributions or incurred expenses of $5,000 or more in the fiscal period)
- candidates: an audited report on the candidate's campaign expenses, contributions, loans and transfers within four months after election day
- nomination contestants: a financial return within four months after the nomination date if the contestant received contributions or incurred expenses of $1,000 or more (with an auditor's report if the contestant received contributions or incurred expenses of $10,000 or more)
- leadership contestants: a report on contributions received before the application for registration as a contestant, which must be provided on registration; an interim report on contributions from the first day of the leadership contest to the fourth week before the selection date and weekly reports for the next three weeks; and a final report on all contributions and expenses (with an auditor's report if the leadership candidate received contributions or incurred campaign expenses of $5,000 or more) six months after the end of the contest
- third parties: a report on election advertising expenses (with an auditor's report if the third party incurred advertising expenses of $5,000 or more) within four months after election day
The names and addresses of those whose contributions exceeded $200 must also be reported to the Chief Electoral Officer. All financial reports are published at www.elections.ca.
|Political parties||Opening balance sheet||Six months after registration||Mandatory|
|Quarterly return||30 days after the end of the quarter||Mandatory (if eligible for quarterly allowances)|
|Financial transactions return||June 30 each year||Mandatory|
|General election expenses return||Six months after the election||Mandatory|
|Electoral district associations||Opening balance sheet||Six months after registration||Mandatory|
|Financial transactions return||Annually||Mandatory|
|Candidates||Electoral campaign return||Four months after the election||Mandatory|
|Nomination contestants||Nomination campaign return||Four months after nomination date||Only when $1,000 or more received in contributions or spent on nomination|
|Leadership contestants||Registration report||On registration||Mandatory|
|Weekly leadership campaign return||Last four weeks of the campaign period||Mandatory|
|Leadership campaign return||Six months after the end of the contest||Mandatory|
Reimbursements for candidates
A candidate who is elected or receives at least 10 percent of the valid votes cast in his or her electoral district, submits the proper reports by the statutory deadline and has an unqualified auditor's report is entitled to a reimbursement of 60 percent of election and personal expenses paid, to a maximum of 60 percent of the election expenses limit established for the riding. This reimbursement is publicly funded. Once a candidate has filed the necessary reports by the statutory deadline and has accounted for all income tax receipts, the nomination deposit of $1,000 is also returned.
All candidates receive an audit subsidy paid directly to the auditor, equal to 3 percent of election expenses incurred from a minimum of $250 to a maximum of $1,500.
Reimbursements and allowances for political parties
Registered parties become eligible for a reimbursement of 50 percent of their expenses for general elections if they receive at least 2 percent of the valid votes nationally or 5 percent of the valid votes in electoral districts where they endorsed candidates.
Registered parties also become entitled to receive publicly funded quarterly allowances once they have filed the proper reports and obtain the minimum threshold of valid votes described above. The quarterly allowance is equivalent to $0.4375 per valid vote obtained by the party in the most recent general election, and is adjusted annually for inflation.
Audit subsidy for registered electoral district associations
Registered electoral district associations that incur expenses or accept contributions of $5,000 or more are eligible to receive an audit subsidy of up to $1,500 of the auditor's invoiced amount.
Regulation of third parties
The Canada Elections Act regulates third parties that engage in election advertising, defined as an advertising message that promotes or opposes a registered party or the election of a candidate, including one that takes a position on an issue with which a registered party or candidate is associated.
A third party may be a person or a group, defined as an unincorporated trade union, trade association or other group of persons acting together by mutual consent for a common purpose. Candidates, registered political parties and registered electoral district associations are not third parties.
Third parties that spend less than $500 on their election advertising are not required to register with the Chief Electoral Officer. Still, any election advertising must identify the sponsoring third party and state that it was authorized by the third party. A third party must register with the Chief Electoral Officer as soon as it spends $500 or more on election advertising.
For the 39th general election in 2006, 80 third parties registered. Each one could spend up to $172,050, as indexed, on election advertising nationwide. Of this, a third party could not spend more than $3,441, as indexed, in a single electoral district.
A registered third party must report its election advertising expenses no later than four months after election day. Third parties that spent $5,000 or more in election advertising must include an auditor's report on the return. Among other information, the return must include the name and address of any contributor who gave a total of more than $200 in the period starting six months before the election was called and ending on election day. Third parties cannot issue tax receipts for monetary contributions.
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