The Electoral System of Canada
How is money regulated throughout federal elections?
The Canada Elections Act provides a framework designed to make the financing of the political system transparent and fairer. This includes requirements respecting contributions to and spending by various entities involved in the federal electoral system.
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 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.
Legislation passed in 2014 introduced a new set of rules on political financing. The legislation increased contribution limits and set matching limits on testamentary dispositions. It raised by 5 percent the spending limits for parties and candidates. In the case of an election period longer than the statutory minimum of 36 days, the legislation provided for proportionate increases in spending limits for registered parties, candidates and third parties. The legislation modified and standardized rules for loans to registered parties, registered associations, candidates, and nomination and leadership contestants.
Transparency measures and limits are also imposed on election advertising by third parties – persons or groups other than candidates, registered parties or electoral district associations of a registered party.
Major changes to the political financing regime that came into effect in 2004 and 2007 set limits on political contributions. These were revised upward in 2014 and will increase annually by $25 after 2015.
Limits on Contributions, Loans and Loan Guarantees, 2015*
To see current limits, click here.
|Political Entities||Citizens and Permanent Residents Only|
|Political parties||A maximum of $1,500 per calendar year to each of the registered political parties|
|Electoral district associations||A maximum of $1,500 per calendar year, in the aggregate, to the registered electoral district associations, nomination contestants and candidates of each of the registered political parties|
|Independent candidates||A maximum of $1,500 per election to each independent candidate|
|Leadership contestants||A maximum of $1,500 per calendar year, in the aggregate, to all of the contestants in a leadership contest|
* Amounts increase yearly by $25, as of January 1, 2016.
A cap of $5,000 is placed on the amount that candidates may contribute to their own campaigns. For leadership contestants, the cap is $25,000. Nomination contestants can contribute an amount that does not exceed $1,000 in total out of their own funds to their own campaign in addition to the permitted contribution limit.
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 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.
|$0.01 to $400||75 percent|
|$400.01 to $750||$300 plus 50 percent of the amount by which the contribution exceeds $400|
|$750.01 and over||The lesser of:
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. 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, and on the length of the election period. (For a party, the electoral districts are those in which the party has endorsed confirmed candidates.)
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 if the boundaries of the electoral district have not changed since then. In any other case, a nomination contestant can spend the amount that the Chief Electoral Officer determines.
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.
Electoral district associations cannot incur election advertising expenses during an election.
Each electoral participant or political entity must submit financial reports to the Chief Electoral Officer. The reports must include the name and address of anyone contributing more than $200. All financial reports are published at www.elections.ca.
|Registered political party||Statement of assets and liabilities||Six months after registration||Mandatory|
|Quarterly return||30 days after the end of the quarter||Mandatory (if received 2% of votes cast nationally or 5% of votes cast in all electoral districts where it endorsed candidates in the last general election)|
|Financial transactions return||June 30 each year||Mandatory|
|General election expenses return||Eight months after the election||Mandatory|
|Registered electoral district association||Statement of assets and liabilities||Six months after registration||Mandatory|
|Financial transactions return||May 31 each year||Mandatory; include auditor's report if contributions or expenses equalled $5,000 or more in the year|
|Candidate||Electoral campaign return||Four months after election day||Mandatory|
|Nomination contestant||Nomination campaign return||Four months after selection date (or election day in certain circumstances)||Only when $1,000 or more received in contributions or incurred in nomination campaign expenses; include auditor's report if contributions or nomination contest expenses equalled $10,000 or more for the contest|
|Leadership contestant||Report on contributions||On registration||Mandatory|
|Two interim reports on contributions||Three weeks before and two days before end of contest||Mandatory if $10,000 or more received in contributions or incurred in leadership campaign expenses|
|Leadership campaign return||Six months after end of contest||Mandatory; include auditor's report if $5,000 or more received in contributions or incurred in leadership campaign expenses|
|Third party||Election advertising report||Four months after election day||Only if $500 or more incurred in election advertising expenses; include auditor's report if $5,000 or more incurred in advertising expenses|
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 electoral district. This reimbursement is publicly funded. Once a candidate has complied with the requirements for filing his or her electoral campaign return, and has returned all unused 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 the greater of:
- The amount of the expenses incurred for the audit, up to a maximum of the lesser of 3 percent of the candidate's election expenses and $1,500; and
The subsidy is paid directly to a candidate's auditor.
Reimbursements 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.
Audit Subsidy for Registered Electoral District Associations
Registered electoral district associations that incur expenses or accept contributions of $5,000 or more must submit a report prepared by an auditor. They 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.
Foreign third parties are not permitted to incur election advertising expenses totalling $500 or more. A foreign third party is an individual who is not a Canadian citizen, a permanent resident, or resident in Canada; a corporation that does not carry on business in Canada; or a group for which the person responsible is not a Canadian citizen, a permanent resident, or resident in Canada.
“Election advertising” means the transmission to the public by any means during an election period of 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 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 transmitted by a third party 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 in election advertising expenses must include an auditor's report with their report. Among other information, the report 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 issue of the writs and ending on election day.