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Political Financing Handbook for Registered Parties and Chief Agents (EC 20231) – October 2017

9. Leadership and Nomination Contest Finances

This chapter explains the financial aspects of leadership and nomination contests from the registered party's perspective. It covers the following topics:

Leadership and nomination contest rules

Registered parties usually set their own rules, in addition to those in the Canada Elections Act, for holding leadership and nomination contests. They may provide other restrictions on political financing aspects of the contest, which they administer themselves (e.g. expenses limits for leadership contestants).

As long as these rules do not conflict with the requirements of the Canada Elections Act, this is not problematic.

Leadership and nomination contest fees

Leadership and nomination contestants might be required to pay a contest entry fee or other service fees to the registered party. These fees may be refunded to the contestant at the discretion of the party.

What is a directed contribution?

A directed contribution is a contribution made to a registered party, with a written request from the contributor that the amount, or part of it, be transferred to a particular leadership contestant.

Unlike contributions made directly from a contributor to a leadership contestant, directed contributions through a registered party are eligible for a tax receipt.

Parties often charge a processing fee for directed contributions. The Canada Elections Act does not restrict the portion of the directed contribution that may be retained by the party. Contribution processing fees charged to a leadership contestant are considered transfers from the leadership contestant to the party.

The full amount directed by the contributor to the leadership contestant is a contribution to the contestant's campaign. A tax receipt for the full amount is issued by the registered party.

Note: The directed contribution is subject to the limit on contributions made to leadership contestants, not the limit on contributions made to the party.

Example

Annie wishes to contribute to the leadership contestant she supports and also receive a tax receipt. She sends a cheque for $500 to the registered party, with written instructions requesting that the amount be forwarded to the leadership contestant as a directed contribution. The party normally charges a processing fee of $20 for directed contributions. The chief agent therefore transfers $480 to the leadership contestant, records a directed contribution of $500 to the leadership contestant, and records a transfer of $20 from the leadership contestant. The chief agent also issues a tax receipt to Annie for $500, the full amount of her contribution.

Statement of directed contributions

It is the responsibility of the registered party to provide each leadership contestant's campaign with a Statement of Directed Contributions Received and Transferred to a Leadership Contestant. This form includes the name and address of each contributor, the amount and date of the contribution, the amount of the directed contribution, the amount that the party has transferred and the date of the transfer.

The party and the leadership contestants must also report to Elections Canada any directed contributions received and the amounts transferred.

Contributions received during ticketed fundraising events

Because only directed contributions are eligible for tax receipts, it is common practice during leadership campaign fundraising events for individuals to remit contributions to the registered party, with written instructions requesting that the amount be forwarded to the leadership contestant as a directed contribution.

In the case of a ticketed fundraising event, the contribution amount is the ticket price less the fair market value of the benefit that the ticket entitles the bearer to receive. Since a party may only transfer directed contributions to leadership contestants (no other monetary amount may be transferred from the party to a leadership contestant), only the contribution portion of the ticket price may be sent to the party and directed for transfer to a leadership contestant.

There are different ways that a registered party and leadership contestant might choose to manage the situation when an individual purchases a ticket for a fundraiser:

Example

Tickets are sold at $100 each for a fundraising event organized by a leadership contestant's campaign during a leadership contest. The contribution portion of each ticket is $80, calculated by subtracting $20 (the fair market value of the benefit to be received during the event) from the ticket price ($100). Ticket purchasers are asked to issue two payments: one for $20, paid to the campaign; and the other for $80, paid to the registered party with written instructions requesting that the amount be forwarded to the leadership contestant as a directed contribution. The registered party issues tax receipts for the contribution amounts and transfers the funds as directed contributions to the leadership contestant.

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