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The Electoral System of Canada

Note: This document was last updated in 2011. It remains online for reference and research purposes. A revised version will be posted later in 2015.

Political Financing

How is money regulated throughout federal elections?

The Canada Elections Act provides a comprehensive framework designed to make the financing of the political system transparent, 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 as well as the first forms of public funding through partial reimbursement of expenses and tax credits for contributions. As of January 1, 2004, the scope of the legislation was extended to electoral district associations, nomination contestants and leadership contestants.

Limits on contributions adopted in 2003 became effective in January 2004. Further restrictions were imposed as of January 1, 2007; consequently, corporations and trade unions are no longer allowed to make political contributions.

Transparency measures and limits have also been imposed on election advertising by third parties – persons or groups who are not candidates, registered parties or electoral district associations of a registered party. The principles of transparency and fairness thus apply to all participants in the electoral process.

Contribution Limits

Major changes to the political financing regime that came into effect in 2004 and 2007 set limits on political contributions (adjusted annually for inflation). The most important, indexed as of 2012, are as follows:

• A citizen or permanent resident of Canada can give up to $1,200 each year in total to each registered political party; up to $1,200 each year in total to the registered electoral district associations, nomination contestants and candidates of each registered party; up to $1,200 in total to the leadership contestants of a registered party in a particular contest; and up to $1,200 for a particular election to each candidate who is not endorsed by a registered party.
• Corporations and trade unions may not make contributions to political entities.

Tax Credits for Political Contributions

Although contributions can take 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. According to a Canada Revenue Agency interpretation, a monetary contribution to a candidate is eligible for a credit only if it is received between the date that the candidate's nomination is confirmed by the returning officer and 30 days after election day.

Expenses Limits

The Canada Elections Act defines an election expense as any cost incurred, or non-monetary contribution received, by a registered party or a candidate that 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 and registered political parties, and these limits 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.) 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 previous general election.

The Canada Elections Act does not set limits on the amount of leadership campaign expenses that each contestant may incur. A registered party may set its own limits by internal rules, but such limits are not enforceable through the Act.

Third parties are limited in the amount that they can spend on election advertising. The third party election advertising limit during the 2011 general election was $188,250 nationally, with a maximum of $3,765 per electoral district.

Reporting

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 return, quarterly reports for parties receiving allowances and an audited report on election expenses within six months of 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 electoral campaign return within four months of election day.
• Nomination contestants: A campaign return within four months of the selection date (or election day in some circumstances) 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 of contributions received prior to applying for registration as a contestant, provided on registration; four interim weekly reports on contributions and other sources of funds, the first of which covers the period from the first day of the contest through to the day that is four weeks before the end of the leadership contest and the subsequent three covering each of the next three weeks; and a final report on all contributions, other sources of funds and expenses (with an auditor's report if the contestant 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 within four months of election day (with an auditor's report if advertising expenses of $5,000 or more are incurred).

The names and addresses of those contributors whose contributions exceeded $200 must also be reported to the Chief Electoral Officer. All financial reports are published on the Elections Canada website at www.elections.ca.

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, complies with the financial reporting provisions and submits an auditor's report is entitled to a reimbursement of election and personal expenses paid, up to a maximum of 60 percent of the election expenses limit established for the riding. This reimbursement is publicly funded. Once a candidate has complied with the requirements for filing his or her electoral campaign return, and has accounted for all prenumbered income tax receipts optionally received at the beginning of the election period, the nomination deposit of $1,000 is also returned.

All candidates also receive an audit subsidy equal to three percent of election expenses (with a minimum of $250 and a maximum of $1,500). The subsidy is paid directly to a candidate's auditor.

Reimbursements and Allowances for Political Parties

Registered parties become eligible for a reimbursement of 50 percent of their paid election expenses for general elections if they file the proper financial reports and receive at least 2 percent of the valid votes cast nationally or 5 percent of the valid votes cast in electoral districts where they endorsed candidates.

Registered parties are also eligible to receive publicly funded quarterly allowances once they have filed the proper financial reports and obtained the minimum threshold of valid votes described above. The allowances are based on the number of valid votes each party received at the most recent general election. Legislative amendments passed in 2011 are phasing out the payments. The allowances began to be reduced on April 1, 2012, and will stop completely as of April 1, 2015.

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. A third party can be a person or a group, other than a candidate, registered political party or registered electoral district associations of a registered party. A "group" is defined as an unincorporated trade union, trade association or other group of persons acting together by mutual consent for a common purpose.

Election advertising is defined as an advertising message transmitted to the public by any means during an election period and 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 must register with the Chief Electoral Officer as soon as it spends $500 or more on election advertising. Even if it is not required to register, any election advertising must identify the third party and state that it has authorized the advertisement.

A registered third party must report its election advertising expenses within four months of election day. Third parties that incur $5,000 or more on election advertising must include an auditor's report on their return. Among other information, the return must include the name and address of any contributor who gave a total of more than $200 for election advertising in the period starting six months before the election was called and ending on election day.

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