Political Financing Handbook for Candidates and Official Agents (EC 20155) – October 2017
8. Election Expenses
This chapter explains what election expenses are, describes how limits are calculated and applied, and gives examples of typical election expenses. It covers the following topics:
- What are election expenses?
- Limits on election expenses
- Election advertising (traditional and over the Internet)
- Voter contact calling services and other outreach
- Expenses related to the campaign office and workers
- Use of existing resources, including websites and parliamentary resources
What are election expenses?
An election expense is:
- any cost incurred or non-monetary contribution received by a candidate to the extent that the property or service that the cost was incurred for, or that was received as a non-monetary contribution, is used to directly promote or oppose a candidate during an election period
- any non-monetary transfer received from a registered party or a registered association of the registered party to the extent that the property or services are used to directly promote or oppose a candidate during an election period
This generally means that any expense reasonably incurred for property or service used during the election period by a candidate's campaign is an election expense. Only some fundraising expenses are exceptions to that rule.
For details about fundraising expenses, see Chapter 6, Fundraising.
The concept of “directly promoting or opposing a candidate” is not limited to election advertising only. It is to be understood broadly and includes expenses for running a campaign, such as office rental, telecommunication services, etc.
The election period starts on the day the election is called and ends on election day when the polls close.
Limits on election expenses
The Canada Elections Act imposes a limit on election expenses to facilitate a level playing field among candidates.
The limit applies to each candidate's election expenses in the electoral district where they are seeking election. The limit applies to the total of all election expenses, whether paid, unpaid, or accepted as non-monetary contributions or transfers.
The candidate, the official agent and any other person authorized in writing by the official agent to incur expenses all have to respect the election expenses limit. They cannot enter into contracts or incur election expenses that exceed the limit.
It is highly advisable to agree on an expense approval process; this will help ensure that the candidate, the official agent and any other authorized person are informed and co-operate when incurring expenses. An expense approval process and a campaign budget created at the beginning of the campaign help manage campaign finances effectively.
How are the limits calculated?
The limit amount varies from one electoral district to another. Elections Canada calculates the limit for each electoral district as follows:
- Expenses limits are based on the number of names appearing on the preliminary lists of electors or on the revised lists of electors for the electoral district, whichever is greater.
- The Canada Elections Act provides for an adjustment for candidates running in electoral districts where there are fewer electors than the national average. In these districts the limit is increased.
- The Canada Elections Act also provides for an adjustment for geographically large electoral districts. If the number of electors per square kilometre of the electoral district is less than 10, the candidate's expenses limit is increased.
- The limit is then adjusted by the inflation adjustment factor in effect on the day the election is called.
Notification of election expenses limits
Shortly after an election is called, Elections Canada notifies each returning officer of the preliminary election expenses limit. The returning officer advises each campaign of the preliminary limit.
Approximately one week before election day, Elections Canada notifies the candidates directly of their final election expenses limit. The final election expenses limit may be higher but not lower than the preliminary limit.
Limit increases for longer election period
If an election period is longer than 37 days, the election expenses limit increases as follows:
- the initial limit is divided by 37
- the result is then multiplied by the number of days by which the longer election period exceeds 37 days
The candidate's election expenses limit for a 37-day election period has been calculated by Elections Canada and it is $96,756. When the election is called, the election period turns out to be 48 days. The limit is then recalculated as follows: 96,756 / 37 X (48 – 37) = 28,765.3. Therefore the candidate's new increased election expenses limit is: $96,756 + $28,765.30 = $125,521.30.
Note: During an election, expenses limits are published on the Elections Canada website.
Typical election expenses
The following are examples of typical election expenses.
Election advertising is the transmission to the public of an advertising message promoting or opposing the election of a candidate during the election period. Election advertising has to be authorized by the official agent. This authorization has to be mentioned in or on the message—for example, "Authorized by the official agent of John Smith."
Expenses incurred for advertising conducted during the election period, including the cost of production and distribution, are to be reported as election expenses.
Traditional election advertising
Advertisements distributed through traditional means such as signs, billboards, flyers, pamphlets, radio, television, newspapers or magazines during an election period are election advertising and have to be authorized by the official agent. This authorization has to be in or on the message.
Some advertising material, such as signs, can often be used for more than one election. For details, see the Use of existing resources section below.
- In anticipation of an upcoming election, the official agent purchases flyers before the election is called and distributes them during the election period to promote the candidate. The commercial value of the flyers—including their design, printing and distribution—is an election expense. The flyers are election advertising and have to include an authorization statement from the official agent.
- The official agent purchases an advertisement that is broadcast during the election period on the local radio station, promoting the candidate. The expenses for the advertisement—including its design, recording and transmission—are election expenses of the candidate. The advertisement is election advertising and has to include an authorization statement from the official agent.
Election advertising on the Internet
Election messages communicated over the Internet are election advertising only if:
- they meet the general criteria for election advertising (see Election advertising above), and
- they have, or would normally have, a placement cost
Any other messages communicated over the Internet are not election advertising.
The official agent has to authorize any election advertising, and this authorization must be mentioned in or on the advertisement. Where the authorization statement cannot be included on the advertising message because of its size, this is acceptable if the statement is made immediately apparent to the viewer by following the link in the advertising message.
For greater certainty, the following are not election advertising:
- messages sent or posted for free on social media platforms such as Twitter and Facebook
- messages sent by email or through other messaging services (including texts sent through a cellular or mobile network)
- content posted on the candidate's website (the ongoing costs of creating and maintaining a website are not placement costs)
However, any associated costs are election expenses.
If online content such as a video, website or Facebook page stays online during the election period, it has to be reported as an election expense. Alternatively, the campaign may remove all online content before the election period.
Note: The official agent has to report as election expenses all the expenses related to the design, development and distribution of online communications used during an election period, regardless of whether or not they are election advertising.
- The candidate's campaign hires a media firm to place banners on websites and social media platforms during the election period, directing users to a video posted on YouTube. Because the banners have a placement cost and promote the candidate, they are election advertising and have to be authorized by the official agent. Because there is no placement cost to post the video, it is not election advertising, but all expenses related to designing and developing the video are election expenses.
- A group page has been created for the candidate on a free social networking site. Volunteers manage the page and post articles related to the candidate's campaign. This is not election advertising. As long as the volunteers are helping outside their regular working hours and are not self-employed in the business of managing social media, the volunteer labour is not an expense.
- The official agent hires a media firm to post content on the candidate's website, promoting the campaign. The content is not election advertising, but all expenses related to designing, developing and posting the content are election expenses.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2015-04, Election Advertising on the Internet, on the Elections Canada website.
Voter contact calling services
Voter contact calling services are services involving the making of calls during an election period for any purpose related to an election, including:
- promoting or opposing a candidate or any position on an issue with which a candidate is associated
- encouraging electors to vote or to refrain from voting
- providing information about the election, including information about voting hours and the location of polling stations
- gathering information about how electors voted in past elections, or will vote in the election, or their view on a candidate or on any issue with which a candidate is associated
- raising funds for a candidate
Expenses incurred for voter calls conducted during the election period, including the cost of production and distribution, are election expenses.
Note: The candidate's campaign must register with the Canadian Radio-television and Telecommunications Commission (CRTC) if it uses a calling service provider or automatic dialing-announcing device to make voter calls. Refer to the CRTC's Voter Contact Registry web page for details.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2015-11, Application of Election Advertising Rules to Telephone Calls, on the Elections Canada website.
Expenses related to surveys or research conducted during the election period are election expenses. Expenses related to surveys or research conducted outside the election period are not election expenses, even if the results of the survey are used during the election.
After the election was called, the official agent engaged Election Polling Inc. for $1,538.42 to conduct a survey. Once the survey was completed, the official agent issued a cheque from the campaign bank account to pay Election Polling Inc., recorded the amount as an election expense and kept the invoice to submit it later with the candidate's return.
If the candidate's campaign purchases an asset and uses it during the election period, the election expense is the lower of the commercial value of renting a similar asset for the same period or the purchase price.
For low-value items such as office supplies, the full purchase price (the commercial value) must be recorded.
Assets might be received during the campaign in the form of a contribution from an individual or a transfer from the registered party or the registered association. In that case, the commercial value of the asset is a non-monetary contribution or transfer. The election expense amount is the lower of the commercial value of renting a similar asset for the same period or the purchase price. The remaining amount, if any, is an other electoral campaign expense.
Note: Amortization may not be used as a method of calculating the commercial value of the use of the asset.
Note: Capital assets purchased during the campaign must be disposed of at the end of the campaign. They can be sold at fair market value, or else transferred to the party or to the registered association in the candidate's electoral district.
- The candidate's campaign rents two computers from a local office supplier for $500 on the day the election is called. The rental agreement is for two months (61 days), and the election period is 37 days. The cost of renting the computers during the election period is an election expense, and it is calculated as follows: $500 / 61 x 37 = $303.30. The remaining amount, $196.70, is recorded as an other electoral campaign expense.
- On the day the election is called, the official agent pays $100 at a garage sale for the purchase of a printer for the campaign. The commercial value of renting a similar printer during the election period would have been $150. The official agent records $100 as an election expense since the purchase price, $100, is lower than the rental rate.
Rental of a campaign office
The campaign may rent an office for the candidate's campaign. The portion of the rent incurred before and after the election period is an other electoral campaign expense. Only the portion of the rent used during the election period is an election expense.
The campaign rents an office on March 1, a month before the election is called. The rental agreement is for three months and the rent is $300 a month. The election period is 37 days.
The election expense to be recorded is the rent for the month of April, plus the rent for 7 days in May: $300 + (7 / 31 x $300) = $367.74. The remaining amount, $532.26, has to be recorded under other electoral campaign expenses.
Installation costs and other office expenses
Installation cost incurred for items used during the election period is an election expense even if the installation takes place before the election is called, as long as the item itself is an election expense. Installation costs cannot be pro-rated.
Other office expenses include the cost of buying office supplies, such as paper or toner cartridges, or supplying refreshments during meetings. As long as these supplies are used during the election period, the cost of buying them is an election expense.
The full installation cost of any equipment (telephones, computers, fax machines, etc.) is an election expense and cannot be pro-rated between pre- and post-election periods regardless of when the installation takes place.
The cost of telephone usage, however, will have to be reported as an other electoral campaign expense for the time before and after the election period, while the portion of usage during the election period is an election expense.
Compensation paid to the official agent or other campaign workers
The campaign may choose to pay compensation to the official agent or other campaign workers. In that case, the compensation related to work performed during the election period is an election expense, while the compensation related to work performed after the election period is an other electoral campaign expense.
Note that work performed prior to the election period may also be an election expense if the output of that work is used during the election period. For example, if signs are installed by campaign workers prior to the election being called, any compensation paid would be an election expense.
It is advisable to include a written contract or other documentation with the candidate's return about any compensation paid because, in the absence of evidence, the payment of salaries may be considered an inappropriate use of campaign funds that would need to be returned.
Note: Any amount paid for the compensation of candidate's representatives at the polls or at the office of the returning officer when electors receive special ballots is to be reported as a personal expense of the candidate.
- The candidate decides to pay a salary of $800 to her official agent for work during the election period. This amount has to be recorded as an election expense.
- The candidate decides to pay $50 compensation to each of her six representatives at the polls on election day. The total amount paid, $300, has to be recorded as the candidate's personal expense.
Expenses of volunteers
Expenses of volunteers (for example, the costs of refreshments, lodging or transportation) are election expenses if the items were used during the election period. Unpaid campaign workers are generally providing volunteer labour.
If a volunteer pays for an expense incurred as an incidence of the election, the amount is a non-monetary contribution and an expense. However, if the amount is $200 or less and the individual is not in the business of providing the service, the non-monetary contribution is deemed to be nil and no expense has to be reported.
- Late one night during the election period, volunteers help in the campaign office to prepare hundreds of flyers for mailing. The official agent orders pizza and pays $83.50 to the pizza delivery person. The amount of $83.50 is an election expense.
- A volunteer is driving around in her own car to deliver flyers during the election period. She pays $30 to fill up her car. If the amount is not reimbursed by the campaign, the volunteer made a non-monetary contribution. However, because the amount is $200 or less, the non-monetary contribution is nil and consequently the expense is deemed to be nil.
Holiday greeting cards and receptions
Candidates might choose to distribute greeting cards during a holiday season. If the greeting cards are distributed during the election period, they are election advertising and have to be reported as election expenses. If these expenses are not paid by the campaign, then they could be either non-monetary contributions if paid by an individual, or non-monetary transfers if paid by the registered party or a registered association.
If the greeting cards are in transit on the day the election is called and the candidate does not have the ability to stop their delivery, they will not be considered an election expense even though the actual delivery will take place during the election period. However, any greeting cards distributed in the 36 days preceding a fixed date election will be considered an election expense.
Holiday season receptions held during the election period are election expenses. If these expenses are not paid by the campaign, then they could be either non-monetary contributions if paid by an individual, or non-monetary transfers if paid by the registered party or a registered association.
Use of existing resources
Candidates' campaigns commonly make use of existing resources such as websites, signs and office staff. These resources often come from a registered association, and sometimes from a member of Parliament's office. Their use during the election period is an election expense.
If a member of Parliament uses parliamentary resources during their election campaign, and these resources are not paid by the campaign, their use is a non-monetary contribution from the member and is subject to the contribution limit.
Note: The use of parliamentary resources is governed by other rules as well, including the Members By-law of the House of Commons.
For a detailed discussion of a related topic, please refer to Elections Canada's interpretation note 2014-02, The Use of Member of Parliament Resources Outside of an Election Period, on the Elections Canada website.
For details on shared transactions, such as subletting the registered association's office space, see Chapter 11, Working with Other Entities.
Candidates may have websites that are designed and maintained using parliamentary, registered association or other resources. If such a website stays online during the election period, its commercial value—including design, maintenance and hosting—is an election expense of the candidate.
Elections Canada will accept the current commercial value of an equivalent website as the commercial value of a pre-existing website.
If a campaign uses signs in a second or subsequent election, the amount of the election expense to be recorded is the current commercial value of equivalent signs.
Reused signs also have to be recorded as a non-monetary transfer or contribution received from the entity or individual that had possession of the signs. Generally this is the registered association or the candidate. Keep in mind that contribution and transfer rules apply to these transactions.
The commercial value, including design, production and installation, of any pre-existing billboards that remain in place during the election period are election expenses. Billboards include the sign and the supporting structure. Elections Canada will accept the commercial value of an equivalent sign that would be temporarily installed just for the election period.
Similarly, with respect to the supporting structure, Elections Canada will accept the commercial value of an equivalent structure that would typically be used for an election period rather than the commercial value of a structure designed to be more permanent in nature. Note that the commercial value of the structure is the lower of its purchase price or rental cost.
Staff of a member of Parliament
If employees on the staff of a member of Parliament engage in political activities to support a candidate during the election period, the salaries of these persons are election expenses of the candidate and, if not paid by the campaign, are nonmonetary contributions from the member.
However, if the employees work on the candidate's campaign outside their normal business hours or are on leave, their involvement is volunteer labour and is therefore neither an election expense nor a non-monetary contribution.
Householders issued by members of Parliament
A member of Parliament who is running as a candidate in an election might issue a householder during the election period. This is an election expense and, if not paid by the campaign, a non-monetary contribution from the member.
If a householder is in transit on the day the election is called and the candidate does not have the ability to stop the delivery, it will not be considered an election expense even though the actual delivery will take place during the election period. However, any householder distributed in the 36 days preceding a fixed date election will be considered an election expense.