Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – February 2020
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, auditor's fees and costs of reports)
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 campaign expense to report.
If no, and 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 campaign expense to report.
If yes, and 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. An expense is incurred when a purchaser enters into an agreement with a supplier, even if payment will happen later.
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.
The leadership contestant's auditor will receive a subsidy from Elections Canada, paid directly to the auditor. 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 contestant's campaign is responsible for paying the remaining amount.
Once Elections Canada receives the Leadership Contestant's Campaign Return, auditor's report and auditor's invoice, and once it has reviewed the contestant's return, it authorizes the auditor's subsidy payment.
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 $2,193* or 3% of the contestant's leadership contest expenses—whichever is less
- a minimum of $365.50*
*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, 2019, and March 31, 2020.
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 $365.50.
The financial agent pays the remaining $134.50 to the auditor from campaign funds and reports the amount as an other leadership campaign expense.
Note: The subsidy is provided only when an audit of the contestant's financial return is required by the Canada Elections Act. See Chapter 13, Reporting, for the conditions under which an audit is required.
Cost of preparing 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.