Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – January 2022
12. Other Leadership Campaign Expenses
This chapter discusses leadership campaign expenses other than leadership contest, personal, travel and living, and litigation expenses. It provides examples of typical expenses in this category. It covers the following topics:
- What are "other" leadership campaign expenses?
- Who can incur and pay "other" leadership campaign expenses?
- Typical "other" expenses (contest fees, compensation paid to the contestant, fundraising expenses, unused inventory, loan interest outside the contest period, auditorís fees, preparing reports and replacing damaged property)
What are "other" leadership campaign expenses?
Some leadership campaign expenses, which are reasonably incurred as an incidence of the contest, do not fit into any specific expense category. They are called "other" leadership campaign expenses.
Property or services used before or after the leadership contest
Expenses for property or services used before or after the leadership contest are leadership campaign expenses if they were incurred as an incidence of the contest. Some expenses are not part of the campaign at all. The table below can help a campaign decide how to categorize an expense.
|Property or services used before the contest starts||Property or services used after contest day|
|The campaign should ask:
If the contestant had not planned to participate in a future contest, would the expense still have been incurred?
If yes, there is no leadership campaign expense to report.
If no, then there is a leadership campaign expense to report. If the expense is not a:
|The campaign should ask:
Did the expense reasonably serve some purpose related to the contest?
If no, there is no leadership campaign expense to report.
If yes, then there is a leadership campaign expense to report. If the expense is not a:
Note: The contest start date and end date (contest day) are indicated in the leadership contest report provided by the registered party.
- The campaign rents an office on March 1, two weeks before the contest period starts. Contest day is September 30. The rental agreement is for seven months and the rent is $300 a month. The leadership contest expense to be recorded is the rent for the six months of April to September, plus the rent for 17 days in March: ($300 x 6) + (17 / 31 x $300) = $1,964.52. The remaining amount, $135.48, is recorded as an other leadership campaign expense.
- After contest day, the contestant invites volunteers to a thank-you party. Although the event is outside the leadership contest period, the expense is incurred as an incidence of the leadership contest. Accordingly, the expense has to be reported as an other leadership campaign expense.
Who can incur and pay "other" leadership campaign expenses?
The financial agent, the leadership contestant or an authorized leadership campaign agent can incur other leadership campaign expenses.
Only the financial agent or an authorized leadership campaign agent is allowed to pay other leadership campaign expenses, other than petty expenses paid from the petty cash with the financial agent's written authorization.
Typical "other" expenses
Leadership contest fees
Leadership contestants might be required to pay a contest entry fee to the registered party. This fee is an other leadership campaign expense.
Note: When a refundable compliance deposit is required, it is recorded as a transfer to the registered party rather than as an expense. If the deposit is refunded to the contestant, it is recorded as other cash inflow rather than as a transfer back to the contestant.
Compensation paid to the contestant
Reasonable compensation may be paid to the leadership contestant from the campaign bank account. It is an other leadership campaign expense.
It is advisable to include a written contract or other documentation with the contestant's return about any compensation paid. In the absence of evidence, the payment of salaries may be considered an inappropriate use of campaign funds that would need to be returned.
Some fundraising expenses are other leadership campaign expenses rather than leadership contest expenses, even if the fundraising takes place during the contest period. See Fundraising expenses in Chapter 6, Fundraising, for more information.
Note: Expenses associated with the production and distribution of advertising and promotional materials related to a fundraising activity are leadership contest expenses to the extent that the advertising and promotional materials are used during the contest period.
The campaign holds a ticketed fundraising dinner during the contest period. The expenses incurred for the venue rental, food, drinks and entertainment are other leadership campaign expenses. The expenses incurred to promote the event are leadership contest expenses.
Interest on loans before and after the contest period
Interest accrued on loans before and after the contest period is an other leadership campaign expense.
After the contest, the leadership contestant's campaign may have promotional items that were never used during the contest period and remain in inventory.
The expense for these unused items is not a leadership contest expense but an other leadership campaign expense. This is the case except for unused signs promoting the contestant, which are always treated as leadership contest expenses.
Unused inventory should be sold at commercial value. The funds are then transferred to the registered party or a registered association of the party.
During the contest period, 45,000 flyers are distributed and 5,000 remain in the campaign office unused. The purchase price of the 5,000 flyers is reported as an other leadership campaign expense.
A leadership contestantís campaign that needs to file an auditorís report will receive a subsidy for audit fees. Elections Canada pays the subsidy directly to the auditor once it has:
- received the Leadership Contestant's Campaign Return, auditor's report and a copy of the auditor's invoice
- reviewed the contestant's return
How the subsidy is calculated
The auditor's subsidy is calculated as follows:
- the amount indicated on the auditor's invoice to a maximum of $2,253* or 3% of the contestant's leadership contest expensesówhichever is less
- a minimum of $375.50*
*These amounts have been adjusted for inflation from the base amounts of $1,500 and $250. They are in effect for contests with a contest day between April 1, 2021, and March 31, 2022.
Note: If the auditor's subsidy is less than the total fee charged by the auditor, the difference is an other leadership campaign expense, and the contestantís campaign is responsible for paying the remaining amount.
The financial agent submits the auditor's invoice for $500 with the Leadership Contestant's Campaign Return and other required documents. The total amount of the contestant's leadership contest expenses is $10,200. The auditor is entitled to receive 3% of that amount as a subsidy payment. However, 3% of $10,200 ($306) is less than the minimum amount payable. Accordingly, Elections Canada will authorize payment of the minimum amount of $375.50.
The financial agent pays the remaining $124.50 to the auditor from campaign funds and reports the amount as an other leadership campaign expense.
Preparation of reports
Expenses associated with fulfilling the various reporting obligations set out in the Canada Elections Act are other leadership campaign expenses.
The expense for a courier service used one month after contest day to send the contestant's return has to be reported as an other leadership campaign expense.
Replacement or repair of damaged property
A leadership contestantís campaign might incur unanticipated expenses during a contest period because of property damage, whether to a campaign vehicle or office equipment. The expenses to repair property, or to obtain an equivalent replacement for the property or for the service it provided, are other leadership campaign expenses rather than leadership contest expenses. This is because the repair or replacement is not being used to promote the contestant beyond the original expense.
If the replacement has upgraded features that are used to further promote the contestant and has a higher commercial value than the original property, then the difference needs to be reported as a leadership contest expense.
The contestant's campaign buys tablets for use during the contest period at a cost of $150 each. One tablet breaks when it falls off a desk and can no longer be used. The campaign purchases an exact replacement at a cost of $175. The original expense of $150 is a leadership contest expense. The second expense of $175 is an other leadership campaign expense.