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Political Financing Handbook for Candidates and Official Agents (EC 20155) – April 2015

This document is Elections Canada's archived guideline OGI 2014-03 and is no longer in effect.

The version replacing this document is available in the Registry.

Chapter 2 – Campaign Inflows

This chapter covers the following topics:

Introduction

Before the campaign begins to receive inflows, the official agent and the candidate should understand the types of inflows that can be received. This chapter defines the rules and procedures for receiving campaign inflows.

The Canada Elections Act imposes limits on individual contributions, loans and loan guarantees. The contribution limits apply to: total contributions, the unpaid balance of loans made during the year and the amount of any loan guarantees made during the year that an individual is still liable for. The sum of these three amounts cannot at any time exceed the contribution limit.

This chapter explains the rules and procedures for accepting and administering contributions, loans, transfers, and other monetary inflows that the campaign may receive.

Note: The following table displays the limits for all political entities.

Individual Contribution, Loan and Loan Guarantee Limits
Political entity 2015 annual limit Limit per election called between Jan 1, 2015, and Dec 31, 2015
To each registered party $1,500* n/a
In total to all the registered associations, nomination contestants and candidates of each registered party $1,500* n/a
In total to all leadership contestants in a particular contest $1,500* n/a
To each independent candidate n/a $1,500*

The contribution limits apply to: total contributions, the unpaid balance of loans made during the contribution period and the amount of any loan guarantees made during the contribution period that an individual is still liable for.

The sum of these three amounts cannot at any time exceed the contribution limit.

* The limits will increase by $25 on January 1st in each subsequent year.

There are some exceptions to the limits on contributions:

Examples
  1. Max decides to contribute $1,500 to the registered party he supports. In addition, he makes a $500 contribution to the party's registered association in his riding; and when a federal election is called in the same year, he makes a $1,000 contribution to the candidate representing the party in his riding. With that, Max reaches the annual limit for contributions to the registered party as well as the annual limit for contributions to any combination of candidates, registered associations and nomination contestants of the registered party.
  2. Clara made a $1,500 contribution in her riding to the registered association of the party she supports. Later that year an election is called and Clara makes a $1,500 contribution to the candidate representing the party in her riding. The official agent of the candidate, however, is aware of the contribution made to the association and returns the cheque to Clara, because with the earlier contribution she has reached her annual limit.

Note: It is important that financial agents of electoral district associations and nomination contestants, and official agents of candidates communicate about contributions, loans and loan guarantees, because the yearly contribution limit applies to the total amount of these.

  1. Peter gave a $1,500 loan to a candidate in his riding during the election period. The full amount is still outstanding on December 31st; consequently Peter could not have made another contribution that year to the registered association. The sum of contributions, loans and loan guarantees cannot at any time exceed the contribution limit.

Note: These examples use the limits in effect for 2015.

2.1   Contributions

This section provides details and practical examples about contributions: Who can contribute what and how much? Is volunteer labour a contribution? What are the rules about anonymous contributions, ticketed fundraising events, auctions and draws?

In addition, this section provides basic information about how to administer contributions.

Definitions

What is a contribution?

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

Note: An employer can give an employee a paid leave of absence during an election period to allow him or her to be a nomination contestant or a candidate. The paid leave is not considered a contribution.

Who can contribute?

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

Note: The term 'individual' used in this section refers to a Canadian citizen or permanent resident.

Any money that is used for the campaign out of the candidate’s own funds is a contribution. If the candidate obtains a loan from a financial institution for the purpose of making a contribution to his or her own campaign, the loan must be guaranteed by the personal property of the candidate.

Note: Corporations, trade unions, associations and groups cannot make contributions.

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 contributions made using online payment services.

Non-monetary contribution

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 forgone interest on loans.

What is commercial value?

Non-monetary contributions are recorded at commercial value. The commercial value 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:

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.

Examples
  1. An individual who is not in the business of renting office supplies lends a photocopier to the campaign office for the duration of the campaign. The official agent has to determine the commercial value of this non-monetary contribution by checking with local suppliers to see how much they would charge for renting similar equipment for the same period. If that amount is greater than $200, a non-monetary contribution must be reported.
  2. A self-employed individual in the business of providing information technology services offers to set up the computers in the campaign office and does not charge for the service. This is a non-monetary contribution from that person. The commercial value is equal to the lowest amount charged by that individual for the same kind of service.
Volunteer labour

Volunteer labour is any service provided free of charge by a person outside of their working hours. Volunteer labour is not a contribution.

Note: A service provided by a self-employed person who normally charges a fee for that service is a non-monetary contribution and is not volunteer labour. The person providing the service has to be eligible under the contribution rules.

Examples
  1. A person who is employed at an accounting firm offers to work in the evenings in the campaign office to answer the phone and help with other office duties. This is volunteer labour and therefore it is not a contribution.
  2. A self-employed graphic designer offers to design a pamphlet for the candidate free of charge. Because the person is self-employed and normally charges for that service, the pamphlet design is not volunteer labour. The commercial value of the service has to be recorded as a non-monetary contribution. In this case, the commercial value is the lowest amount the graphic designer normally charges for that service.

2.2   Loans

Loans are used as a source of financing.

Both the candidate and the official agent have to manage campaign finances properly and ensure that all loans are repaid.

This section discusses how loans are received, reported and repaid.

Getting a loan

A candidate's campaign may receive loans from either a financial institution or an individual who is a Canadian citizen or permanent resident. Candidates may also receive loans from their registered party or a registered association of their registered party. A written loan agreement must accompany all loans.

Loans from financial institutions

There is no limit to the amount a campaign can borrow from a financial institution. Note however that if the financial institution requires a loan guarantee, only the registered party, a registered association of the party, or individuals who are Canadian citizens or permanent residents can guarantee the loan. The amount an individual guarantees is subject to the individual's contribution limit.

Example

The campaign is planning to borrow $15,000 and the bank requires a guarantor for the loan. Because individual guarantees are subject to the contribution limit, the campaign needs at least
10 individuals to guarantee the requested amount. Each guarantor is limited to guaranteeing $1,500 of the total loan amount. Alternatively the candidate's registered party or a registered association of the same party may guarantee the whole amount.

Loans from the registered party or the registered association

There is no limit to the amount a campaign can borrow from the registered party or from a registered association of the party. The registered party or a registered association of the party can also guarantee loans obtained from financial institutions. There is no limit to the amount the registered party or a registered association of the party can guarantee.

Loans from individuals

If an individual obtains a personal loan from a financial institution and lends those funds to a campaign, the lender is the individual and not the financial institution. The loan amount would be subject to the individual's contribution limit.

An individual can lend money to a campaign as long as the total of the individual's contributions, the unpaid balance of the loan and the amount of any outstanding loan guarantees does not at any time exceed the contribution limit in the calendar year that the loan was made.

Example

Paul made a $500 contribution to Christine's campaign. In addition, he takes out a $1,000 personal loan from his bank and lends it to the campaign. With that, Paul has reached the annual limit for contributions to any combination of candidates, registered associations and nomination contestants of the registered party.

Note: This example uses the limits in effect for 2015.

Loan interest

The official agent must report the interest rate of each loan in the loans section of the Candidate's Electoral Campaign Return.

Interest incurred on loans is an electoral campaign expense, whether it is paid or accrued.

If the interest rate on a loan from an individual is lower than the market interest rate, the official agent will need to record the forgone interest as a non-monetary contribution from the individual.

Note: If the loan is from an individual who is not in the business of lending money and the forgone interest on the loan is $200 or less, the non-monetary contribution is deemed to be nil.

Demand loan

A demand loan is a loan with no specific payment deadline. It is due whenever the lender demands to be repaid. To report a demand loan, a loan agreement has to be submitted with the candidate's return. It is recommended that the agreement include a maximum term for the repayment.

Note: If the demand loan is from an individual, it is subject to the contribution limit.

Overdraft and line of credit

If overdraft protection or a line of credit is used, it has to be recorded as a loan at the maximum amount used. Note however that if the financial institution requires a guarantee, only the registered party, a registered association of the party, or individuals who are Canadian citizens or permanent residents can guarantee the overdraft or line of credit. The amount an individual guarantees is subject to the individual's contribution limit.

The official agent has to include the following information when reporting an overdraft or a line of credit:

Example

The campaign bank account has overdraft protection of $1,000. The account goes into overdraft by $200 and the official agent pays back $100 within the same day. Later on that day, the official agent withdraws another $400 from the same account, bringing the highest amount overdrawn during the campaign to $500.

The overdraft amount to be reported is $500. The official agent has to report this amount in the Details of operating loans section of the candidate's return.

2.3   Administering contributions and loans

Contribution rules

Contributor identification

Depending on the amount and type of the contribution, the contributor's personal information has to be recorded as follows:

Note: In order to issue a tax receipt, the official agent has to record the address as well.

Note: When recording a contributor's personal information, the full first and last name (initials are not acceptable) and the home address have to be recorded.

Ineligible contributions

The official agent is responsible for ensuring that contributions are in accordance with the rules set out in the Canada Elections Act. The following contributions are ineligible:

Returning ineligible contributions

The official agent must not knowingly accept an ineligible contribution.

If the campaign receives an ineligible contribution, the official agent has to return the unused contribution to the contributor within 30 days of becoming aware that it is ineligible. If that is not possible, the official agent has to send a cheque for the amount of the ineligible contribution to Elections Canada, payable to the Receiver General for Canada. In the case of an ineligible non-monetary contribution that has been used, the official agent has to send an amount equal to the commercial value of the property or service to Elections Canada, payable to the Receiver General for Canada.

Examples
  1. The official agent receives a cheque for $600 from a contributor. When he enters the contribution in the books, he notices that the same person has already contributed $1,000 to the candidate's campaign. Within 30 days, assuming the money has not been spent, the official agent has to issue a cheque for the excess amount, $100, and send it to the contributor.

Note: This example uses the contribution limit in effect for 2015.

  1. An individual makes a non-monetary contribution to the campaign by offering the use of an office space. The official agent later realizes that the commercial value of renting the same office is higher than the contribution limit. The office has been used during the campaign, so he sends a cheque for the amount in excess of the contribution limit to Elections Canada payable to the Receiver General for Canada.
  2. The official agent receives a notice from Elections Canada a couple of months after election day, stating that a person who made contributions to both the registered association and the candidate exceeded the annual limit with the contribution to the candidate. Since the date of the ineligible contribution, the campaign bank account balance had fallen below the ineligible amount and the funds were therefore used. The amount of the ineligible contribution must be sent to Elections Canada within 30 days of the official agent becoming aware of the contravention. To obtain funds, the official agent could organize a fundraising event, request a transfer from the registered association or the party, or request that the registered association or the party repay the contribution on the candidate's behalf. Once the money is available, the official agent has to send a cheque for the excess amount to Elections Canada, payable to the Receiver General for Canada.
Anonymous contributions

If the official agent receives a contribution that is:

then the official agent has to send a cheque for the amount without delay to Elections Canada, payable to the Receiver General for Canada.

Ticketed fundraising

If a fundraising activity is held for the primary purpose of soliciting monetary contributions through the sale of tickets, the amount of a ticket purchaser's monetary contribution is the difference between the price of the ticket and the fair market value of the benefit that the ticket entitles the purchaser to receive. The benefit received includes the fair market value of using a rented venue, the cost of dinner and entertainment, etc.

Note: The fair market value of the production and distribution of materials promoting the event is not included in the benefit received because persons who attend the event would not benefit from such activities. Instead, if the event was during the election period, these would be considered election expenses.

Example

A ticketed fundraiser was expected to attract 50 attendees. On the assumption that this number would attend, the following expenses were incurred in an open and competitive market:

  • room rental – $500
  • meal – $2,500
  • decoration – $300
  • entertainment – $500
  • server staff and gratuities – $200
  • mail-out promoting the event – $500
  • total – $4,500

The fair market value of the benefit for each ticket purchaser is $80, calculated by dividing $4,000 by 50 (the $500 expense related to the mail-out is excluded, because it is not part of the benefit received by the attendee). The fair market value remains the same regardless of the number of individuals who actually attend the event.

Forty tickets were sold at $200 each for the event. The amount of each monetary contribution is therefore $120, calculated by subtracting $80 (the fair market value) from the ticket price ($200).

Note: The contribution rules apply to contributions made through ticketed fundraising.

Auctions and draws

Note: Please check the provincial or territorial regulations before organizing draws or other lotteries. In jurisdictions where draws are permitted, a license from the province or territory may be required.

Below is a list of important reminders about auctions and draws:

Example

Diane donated a painting to an auction organized during a candidate's campaign. A local art dealer appraised the painting at $450. During the auction, John made the winning bid and paid $600 for the painting. Let's see what the contributions are:

  1. Diane made a $450 non-monetary contribution to the campaign by donating the painting.
  2. John made a monetary contribution. The amount is the paid price minus the commercial value of the painting: $600 – $450 = $150.

Note: In addition, the official agent has to record $450 (the painting's commercial value) as an electoral campaign expense, in Part 3a, column 9 of the candidate's return, under Amounts not included in election expenses.

Sponsorship or advertising

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.

Administering contributions

Accepting contributions

Only the official agent can accept contributions to the candidate's campaign.

Recording anonymous contributions

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

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

Example

Campaign volunteers organize a wine and cheese event one evening in the campaign office, and invite local residents. Approximately 40 people show up. During the evening, the campaign manager passes a basket around to collect cash contributions from the attendees. She informs the guests about the contribution rules: a maximum of $20 can be accepted from any one individual as an anonymous cash contribution. At the end of the evening there is $326 in the basket.

After the event the official agent has to record the following: the date and a description of the event, the approximate number of people who attended (40), and the amount collected in anonymous contributions ($326). The official agent has to deposit the amount into the campaign bank account.

Issuing contribution receipts

Only the candidate's official agent can provide official receipts for contributions, including receipts issued for income tax purposes.

Receipts have to be issued for each contribution over $20.

Official agents can issue tax receipts only for monetary contributions received within a specified period. The period starts from the day on which the candidate's nomination has been confirmed by the returning officer. It ends on the day that is one month after election day.

For tax receipting purposes, the date of the contribution is the date the official agent has control over the funds.

Tax receipts have to be issued on prescribed forms. The paper forms are available from Elections Canada. It is important to keep in mind that the official agent has to return all paper tax forms (copies of used pages, plus unused and cancelled receipts) to Elections Canada no later than one month after election day; otherwise the nomination deposit will be forfeited.

Alternatively, the official agent may use Elections Canada's Electronic Financial Return (EFR) software to issue all receipts, including tax receipts. One of the advantages of using the EFR software is that it makes the use of paper tax forms unnecessary and there is no risk of forfeiting the nomination deposit for not returning the tax receipts to Elections Canada on time. Please refer to the EFR User Guide for more information. The EFR User Guide can be found under the Help menu within the EFR software application. EFR is free and downloadable from the Elections Canada website.

Example

Clara contributed $300 to Peter, who announced that he would be running as a candidate in the next election. Once Peter's nomination was confirmed, Clara made another contribution of $500. Clara will receive a tax receipt for $500, although the total amount she contributed was $800. She must receive an official receipt (not valid for tax purposes) for the other $300.

What to keep in mind when administering contributions

As a best practice, it is recommended to only accept contributions made by way of a traceable instrument – such as a cheque or money order – that links the contributor to the contribution. Here are some important points to keep in mind when recording contributions or issuing receipts:

Administering loans

The official agent has to include the following information when reporting a loan:

Repaying a loan

Loan repayments may be made any time up to 36 months after election day. Authorization is not required from Elections Canada or a judge before making these payments.

If a loan is paid in full after the candidate's return is filed, but before 36 months after election day, the campaign must file an updated return within 30 days of the final payment. The updated return must also indicate the source of funds used to pay the loan.

Loan repayments made more than 36 months after election day require authorization from Elections Canada or a judge. The request to pay should be accompanied by evidence in the form of a campaign bank account statement, showing that the campaign has sufficient funds to make the requested payment. The authorization to pay a loan may be subject to additional terms and conditions considered appropriate by Elections Canada.

2.4 Transfers received

Definition

A transfer is a provision of funds, property or services between specified political entities of the same political affiliation. A transfer is not considered to be a contribution, and contribution rules therefore do not apply.

Transfers are permitted only between related political entities (registered party, electoral district association, candidate and leadership or nomination contestant) of the same political affiliation.

However, not all types of entities are authorized to provide all types of transfers. For a quick reference guide to eligible and ineligible transfers, see the Transferstypes and rules table in the Tables and Reminders section.

Transfer types

A monetary transfer is a transfer of funds. A non-monetary transfer is a transfer of property or services.

Transfers to the candidate

The following transfers may be accepted by the candidate's campaign:

Note: Transfers may not be accepted from provincial parties or provincial electoral district associations. Transfers from a registered provincial division of a federal registered party are considered transfers from the registered party.

Transfers before an election

The registered party, registered association or nomination contestant may transfer funds, property or services to the candidate before the election is called provided the following conditions are met:

Transfers after an election

No registered party, registered association or nomination contestant may transfer funds to a candidate after election day, except to pay claims or loans related to the candidate's electoral campaign.

Therefore, it is important to verify whether a transfer is needed before accepting it.

Transfers of expenses are prohibited

It is important to differentiate between the candidate's electoral campaign expenses and the expenses of the candidate's registered party. The Canada Elections Act specifies separate expenses limits for the registered party and each of its candidates. The Act prohibits the transfer of expenses without accompanying property or services. Each entity has to report the expenses it incurred for property and services it used during the electoral campaign.

Administering incoming transfers

The official agent has to include the following information when reporting a transfer in the Candidate's Electoral Campaign Return:

Non-monetary transfers from the registered party or the registered association have to be reported even if the commercial value of the property or service received is less than $200.

Example

The registered party provides a web page on its site for each candidate. Each candidate’s official agent has to report a non-monetary transfer and an expense equal to the commercial value of creating that page.

Independent candidates

An independent candidate may not receive any transfers. Any property, services or funds received by an independent candidate, including his or her own funds, are governed by the rules for contributions and loans.

2.5   Other cash inflows

All monies flowing through the campaign bank account have to be reported. In addition to contributions, loans and transfers (described in the previous sections), a campaign may receive the following cash inflows: the non-contribution portion of fundraising revenue, bank interest, refunds from suppliers, the returned portion of any cash advances, the proceeds from the sale of assets, and all other sources of cash inflows.

Inflow type Description Example
Non-contribution portion of fundraising revenue The inflows recorded for fundraising activities are:
  • the contribution portion (see section 2.1, Contributions), recorded as a contribution
  • the difference between the selling price and the contribution, recorded as other inflow
John Smith holds a ticketed fundraiser in support of his campaign. The ticket price for the fundraiser is $200, and the fair market value of the benefits received is $75. The contribution made by each individual ticket purchaser is $125.

The amount to be recorded as other inflow is the fair market value of the benefits received – that is, $75.
Bank interest earned Interest earned on the campaign bank account must be recorded as other inflow, along with the date received. At the end of the month, the bank deposits $1.50 of interest into the campaign bank account. The official agent has to record this amount as other inflow.
Refunds from suppliers If a refund is received from suppliers, the official agent has to record the refunded amount as other inflow.

The refunded amount may also need to be offset from the original election expense or candidate's personal expense, and classified as an amount not included in election expenses since it is not an expense subject to the election expenses limit.
The official agent purchases 20 reams of paper for use in the campaign office, at a total cost of $60. Near the end of the campaign, the official agent returns 5 unused reams of paper and receives a $15 refund from the supplier. The official agent has to record this amount as other inflow.

The $15 is also offset from the original expense in the expenses section and classified as an amount not included in election expenses.
Returned cash advances If the campaign advanced funds for petty cash, travel or other expenses, the unused returned portions have to be recorded as other inflow. The official agent gives $200 to an authorized person for travel expenses. At the end of the campaign, there is $50 left over and the official agent deposits this amount into the campaign bank account. The official agent records the $50 as other inflow.
Sale of assets If the campaign sells any of its assets, the amount received has to be recorded as other inflow.

The sale proceeds do not reduce the commercial value of the asset, which is reported at the lower of the purchase price or the cost to rent a similar asset.
At the beginning of the campaign, the official agent purchases two brand new computers, at a cost of $2,000. After election day, the official agent sells the two computers for the amount of $1,500. This amount is recorded as other inflow.
Initial reimbursement of paid election expenses and candidate's personal expenses If applicable, the initial reimbursement of paid election expenses and candidate's personal expenses received from Elections Canada should be recorded as other inflow. The candidate received more than 10% of the valid votes cast. Later, the campaign receives the first installment of the reimbursement, which is 15% of the election expenses limit. The official agent has to record the reimbursement as other inflow.

Administering other cash inflows

For the inflows described in the preceding table, the official agent has to record:

2.6   Gifts and other advantages

Once a person becomes a candidate, there are restrictions on the gifts and other advantages that he or she may accept.

A candidate may not accept any gift or other advantage that might be seen to have been given to influence him or her as a Member of Parliament. However, a candidate may accept a gift or other advantage given by a relative or as a normal expression of courtesy or protocol.

A normal expression of courtesy or protocol is an expected act of showing thanks or politeness, such as gift exchanges with foreign delegates or the celebration of events such as holidays and birthdays.

Definition

A gift or other advantage is money, property or services provided without charge or at less than commercial value.

This definition excludes monetary or non-monetary contributions or transfers, as defined in the Canada Elections Act and in the preceding chapters of this manual.

Reporting gifts or other advantages received

The Candidate's Statement of Gifts or Other Advantages Received discloses all gifts or other advantages received from any one entity that exceed a total of $500. The benefit to the candidate is the difference between:

Gifts or other advantages given by a relative or by non-discretionary testamentary disposition are excluded from this statement.

A relative is a person related to the candidate by marriage, common-law partnership, birth, adoption or affinity.

A common-law partnership is the relationship between two persons who are cohabiting in a conjugal relationship that has lasted for at least one year.

An affinity is a relationship other than by blood, especially a relationship by marriage or adoption.

Reporting period

The candidate is responsible for filing the Candidate's Statement of Gifts or Other Advantages Received. This document is confidential, except when required for enforcement purposes. It must be sent directly to Elections Canada within four months after election day.

The candidate is required to report gifts received between:

Administering gifts and other advantages

The following information needs to be recorded for gifts or advantages received: