Political Financing Handbook for Electoral District Associations and Financial Agents (EC 20089) – August 2021
6. Registered Association's Expenses
This chapter takes a broad look at a registered association's expenses and how they are administered. It covers the following topics:
- Who can incur and pay the registered association's expenses?
- How do expenses relate to non-monetary contributions and transfers?
- Providing property or services to another entity
- What invoices have to be kept?
- Repaying and reporting unpaid claims
- Auditor's fee
Note: The financial agent is responsible for recording expenses and keeping receipts and invoices, as required by the Canada Elections Act.
Who can incur expenses?
Only the financial agent and authorized electoral district agents can incur registered association expenses.
An expense is incurred when the association becomes legally obligated to pay. The timing will vary based on how the property or service is procured. For example:
- Where a written contract is executed, such as an office lease or a loan agreement, the expense is incurred when the contract is signed.
- Where there is no written contract, the expense is incurred when a verbal agreement is reached. Generally, this is when property or services are ordered or, for retail purchases, at the point of sale.
For a non-monetary contribution of property or services, the expense is incurred when the association accepts the contribution.
There is no limit to the amount of expenses a registered association may incur for property or services it uses, but the expenses must be reported in the association's annual financial return.
The financial agent distributes flyers outside of an election period to promote an information session held at the registered association's office. Expenses incurred for the flyers, including the cost of production and distribution, are reported as expenses of the registered association.
Who can pay expenses?
Only the financial agent and authorized electoral district agents can pay registered association expenses.
There is one exception to this rule. Expenses from the petty cash can be paid by a person authorized in writing by the financial agent. The financial agent must set the maximum amount that may be paid from the petty cash.
Non-monetary contributions and transfers are also expenses or assets
The registered association incurs an expense or acquires an asset when it accepts a non-monetary contribution or a non-monetary transfer.
Keep in mind that if a service is provided free of charge by an eligible volunteer, there is no contribution and no expense. See Volunteer labour is not a contribution in Chapter 2, Contributions, for details.
|Received from an individual at no charge||The full commercial value is a non-monetary contribution.*|
|Purchased from an individual for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary contribution.*|
|Received from an affiliated political entity at no charge||The full commercial value is a non-monetary transfer.**|
|Purchased from an affiliated political entity for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary transfer.**|
The full commercial value of the property or service is an expense or an asset.
*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 is deemed to be nil and no expense has to be reported.
**All non-monetary transfers provided by the registered party, a candidate or another registered association must be reported, regardless of commercial value.
Property or services provided to another political entity
The registered association may incur expenses for property or services that are then provided to the registered party, another registered association, a candidate, a nomination contestant or a leadership contestant. The property or services can be sent as non-monetary transfers or can be sold to the other political entity. Non-monetary transfers must be offered equally to all contestants.
If the property or service is being sold to the other political entity, a copy of the original supplier invoice as well as the invoice from the association must be sent to that other entity. The documentation should confirm the amount reported in the financial returns.
See Chapter 4, Transfers, for more information on rules and restrictions.
- The registered association purchases signs from Signs Inc. for $1,500 and resells them to the candidate's campaign for $1,500. The association has to send the candidate a copy of the original invoice from Signs Inc. for $1,500 as well as an invoice from the association for $1,500.
- The registered association creates a web page on its site for each nomination contestant. The commercial value of creating the web pages is $150 per contestant. Each nomination contestant has to report a non-monetary transfer and an expense of $150.
Staff of a parliamentarian
If employees on the staff of a parliamentarian engage in political activities to support the association during the year, the salaries of these persons are registered association expenses and, if not paid by the association, are non-monetary contributions from the parliamentarian. During an election period, some of these expenses may be election expenses of the candidate or party. See Chapter 8, Working with Other Entities During the Election Period.
However, if the employees work for the association outside their normal business hours or are on unpaid leave (or paid, if the leave was earned under regular terms of employment that do not specify leave for the purpose of helping a political entity), their involvement is volunteer labour and is therefore neither an expense nor a non-monetary contribution.
If an expense of $50 or more was incurred by the registered association, either the financial agent or the authorized electoral district agent who incurred the expense must keep a copy of the supplier invoice setting out the nature of the expense. Once it is paid, the agent must also keep the proof of payment.
If an expense of less than $50 was incurred by the registered association, either the financial agent or the authorized electoral district agent who incurred the expense must keep a record of the nature of the expense. Once it is paid, the agent must also keep the proof of payment.
For payments made from the petty cash, the person who is authorized to pay petty expenses has to provide the financial agent with the documents mentioned above within three months after the date the petty expense was incurred.
Repaying and reporting unpaid claims
All invoices for claims have to be submitted to the financial agent or authorized electoral district agents. Claims have to be paid within 36 months after payment is due.
The registered association's annual financial return must include the following schedules related to unpaid claims:
- statement of unpaid claims (claims past due as of December 31 or claims with no due date)
- previously reported claims that have been paid in full since the last fiscal period
- statement of claims that remain unpaid 18 or 36 months after their due date
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-09, Unpaid Claims and Reporting Requirements, on the Elections Canada website.
A registered association that needs to file an auditorís report with their annual financial return will receive a subsidy for audit fees. Elections Canada pays the subsidy directly to the auditor once it receives the return, the auditorís report and a copy of the auditor's invoice.
The auditor's subsidy for the fiscal year that ends on December 31, 2021, is a maximum of $2,253. (This is the base amount of $1,500 multiplied by the inflation adjustment factor in effect at the end of the fiscal period.)
If the auditor's fee exceeds the maximum allowable subsidy, the registered association is responsible for the difference.
See Chapter 9, Reporting, for the conditions under which an audit is required.