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Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – February 2020

2. Contributions

This chapter defines what is and is not a contribution, explains the rules for administering contributions and provides practical examples. It covers the following topics:

  • What is a contribution?
  • What is commercial value?
  • Who can contribute to whom and how much?
  • Are volunteer labour, sponsorship or advertising contributions?
  • What are the rules for contribution receipts, anonymous contributions and ineligible contributions?

What is a contribution?

A contribution is donated money (monetary contribution) or donated property or services (non monetary contribution).

Monetary contribution Non-monetary contribution
A monetary contribution is an amount of money provided that is not repayable.

Monetary contributions include cash, cheques or money orders, credit card or debit card payments, and online payments (other than contributions of cryptocurrency).
The amount of a non-monetary contribution is the commercial value of a service (other than volunteer labour) or of property, or the use of property or money, to the extent that it is provided without charge or at less than commercial value. This includes contributions of cryptocurrency and forgone interest on loans.

What is commercial value?

Non-monetary contributions are recorded at commercial value. Commercial value, in relation to property or a service, is the lowest amount charged at the time that it was provided for the same kind and quantity of property or service, or for the same use of property or money, by:

  • the person who provided the property or service (if the person who provided it is in that business), or
  • another person who provides that property or service on a commercial basis in the area (if the person who provided the property or service is not in that business)

Note: 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 amount is deemed to be nil.

Examples
  1. David, who is not in the business of renting office supplies, lends chairs and tables to the leadership campaign. The financial agent has to determine the commercial value of this non-monetary contribution by checking with local suppliers to see how much they would charge for renting similar furniture for the same period. If that amount is greater than $200, a non-monetary contribution must be reported. If it is $200 or less, the contribution is deemed nil and does not have to be reported.
  2. Paula, a self-employed web designer, offers to design the leadership contestant's website and does not charge for the service. This is a non-monetary contribution from Paula. The commercial value is equal to the lowest amount she normally charges for the same kind of service of similar scope.

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 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

Roger supports Annie's bid to be a party leader. After Annie registers as a leadership contestant, Roger sends a cheque for $1,000 to the registered party with written instructions to forward the amount to Annie's leadership campaign.

Who can contribute?

Only individuals who are Canadian citizens or permanent residents of Canada can make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.

Contributions can be accepted from minors, but political entities should consider whether the person is contributing willingly and using their own property or money.

Note: Corporations, trade unions, associations and groups cannot make contributions. It is prohibited for a person or entity to circumvent, or attempt to circumvent, the eligibility rules or contribution limits.

Limits on contributions, loans and loan guarantees to a leadership contestant

This table displays the limits for leadership contestants. The limits for all entities are available in Chapter 1, Reference Tables and Timelines.

Limits on contributions, loans and loan guarantees to a leadership contestant
Political entity 2020 annual limit
In total to all leadership contestants in a particular contest $1,625*

Notes

  • The contribution limits apply to total contributions, the unpaid balance of loans made during the contribution period, and the amount of any loan guarantees made during the contribution period that an individual is still liable for.
  • The sum of these three amounts cannot at any time exceed the contribution limit.

There is an exception to the limits on contributions:

  • A leadership contestant is permitted to give a total of $25,000 in contributions, loans and loan guarantees to their campaign. A leadership contestant is also permitted to give an additional $1,625* in total per year in contributions, loans and loan guarantees to other leadership contestants.

*The limits will increase by $25 on January 1 in each subsequent year.

Examples
  1. Indra makes a $1,000 monetary contribution to a leadership contestant in March. The next month, she makes a non-monetary contribution with a commercial value of $625 to the same contestant. Indra has now reached the limit for contributions to all leadership contestants in that contest for the year.
  2. A leadership contest is called in February and Max immediately contributes $400 to a leadership contestant. In March, Max lends $1,225 to another contestant in the same contest. Max has now reached the limit and cannot make any further contribution, loan or loan guarantee to any of the leadership contestants in that contest during the year until loan repayments are made.

Note: These examples use the limits in effect for 2020.

Volunteer labour is not a contribution

What is volunteer labour?

Volunteer labour is any service provided free of charge by a person outside of their working hours, excluding a service provided by a self-employed person who normally charges for that service.

Volunteer labour is not a contribution.

Who is eligible to volunteer?

Any person can volunteer for a political entity, even if they are not a Canadian citizen or permanent resident.

But a self-employed person cannot volunteer a service they would normally charge for. That is a non-monetary contribution and not volunteer labour. The person would have to be an eligible contributor under the contribution rules and stay within their contribution limit.

People who work on-call or variable hours can volunteer for a political entity, as long as they are not self-employed in the field and their employer has not instructed them to work for the political entity while receiving standby pay or other compensation.

Volunteer labour cannot be provided by corporations, trade unions, associations or groups, though individual employees or members can independently choose to volunteer.

Note: To know whether a person is an employee or self-employed, ask if they receive a salary or wages, payroll deductions and a T4 slip from their employer or corporation at tax time. If they do, the person is an employee for the purpose of the Canada Elections Act and can volunteer in the same capacity as their line of business, outside their working hours.

Examples
  1. Nana, who is employed as a teacher, offers to work for the leadership contestant's campaign in the evenings, making phone calls to party members. This is volunteer labour and is therefore not a contribution.
  2. Alex, a self-employed graphic designer, offers to design a flyer for the leadership contestant free of charge. Because Alex is self-employed and normally charges for that service, the flyer design is not volunteer labour. The commercial value of the service has to be recorded as a non­monetary contribution. In this case, the commercial value is the lowest amount Alex normally charges for that service.
  3. Beatrice is employed by a corporation and is paid to be on standby every weekend. During these hours, while waiting to be called by her employer, she works on the leadership contestant's communications strategy for free. This is volunteer labour. However, if the corporation had instructed Beatrice to help the campaign while being paid, the services provided would be an ineligible contribution from the corporation.

Paying volunteers for part of their work

Volunteers can be paid for part of their work, but the paid work is not volunteer labour. An agreement must be in place before the work is performed. It can specify incentive- or performance-based terms of remuneration rather than a fixed rate.

Once an agreement is in place, the campaign is liable for the related expenses. The compensation is recorded as a leadership contest expense if the work was done or the output of the work was used during the contest period. If the output was not used during the contest period, the expense is an other leadership campaign expense.

If the campaign gives monetary compensation to volunteers without a prior agreement being in place, it may be considered an inappropriate use of campaign funds that would need to be returned.

Examples
  1. Sam works full-time as an administrative officer on the staff of a member of Parliament. When the member runs in a leadership contest, Sam takes a leave of absence (paid or unpaid) to volunteer for the campaign. The contestant offers Sam an honorarium for the hours he will work—a fixed amount of $1,000 for the contest period. The financial agent puts this agreement in writing at the start of the campaign, and the honorarium is a leadership contest expense that has to be reported.
  2. Suzanne is being paid to manage a leadership contestant's social media accounts during the contest period. Suzanne has signed an agreement that lists the tasks she will perform and her hourly wage. Often, when she has finished her paid work, Suzanne volunteers for the campaign. This is an acceptable combination of paid and volunteer work. The expenses incurred under the agreement are leadership contest expenses that have to be reported. The volunteer labour is not reported.

Nominal gifts and thank-you parties

The leadership contestant's campaign can give each volunteer nominal gifts (but not money) up to a total value of $200 and throw a thank-you party without this being considered compensation. The associated costs are other leadership campaign expenses.

If the campaign gives gifts to volunteers above the nominal gift threshold, it may be considered an inappropriate use of campaign funds that would need to be returned.

Example

After the contest, the campaign holds a pizza party for its volunteers. They are each given a $50 travel bag and a $100 gift card in appreciation of their hard work. The cost of the gifts and thank-you party is an other leadership campaign expense.

OGI reference

For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2019-01, Volunteer Labour, on the Elections Canada website.

Sponsorship or advertising at a political event is a contribution

A transaction involving the receipt of money by a political entity in exchange for advertising or promotional opportunities directed at members or supporters of the political entity is not recognized as a commercial transaction. Any money received as part of such an arrangement is to be treated as a contribution that is subject to the contribution limit and eligibility rules.

Example

The leadership contestant's campaign holds a golf tournament as a fundraiser. The campaign encourages individuals to sponsor a hole: for $200, they can have their names printed on a small sign attached to the flag pole. The full amount paid by each individual is a contribution to the leadership contestant. The campaign does not ask corporations or unions to sponsor a hole because only individuals can make contributions.

Accepting and recording contributions

Only the financial agent and authorized leadership campaign agents can accept contributions to the leadership contestant's campaign.

Contribution What to do
Anonymous contributions Anonymous contributions of $20 or less can be accepted.
Contributions over $20 and up to $200 The contributor's full first and last names have to be recorded (initials are not acceptable), and a contribution receipt must be issued.
Contributions over $200 The contributor's full first and last names (initials are not acceptable) and home address have to be recorded, and a contribution receipt must be issued.

Note: When total contributions from an individual are over $200, their name, partial address and contribution amounts disclosed in the financial return will be published on the Elections Canada website.

This table summarizes some important points about accepting contributions and issuing receipts.

Contribution received What to keep in mind
Cheque from a joint bank account
  • Generally reported under the name of the individual who signed the cheque.
  • If the cheque is accompanied by written instructions signed by both account holders indicating how the contribution is to be allocated to the contributors, the contributions are to be reported in accordance with that agreement.
Through an online payment service
  • An online processing fee might apply.
  • The full contribution amount has to be recorded as a contribution, and the processing fee has to be recorded as an expense. For example: If the campaign receives a $500 contribution through an online payment service and the net deposit to the campaign bank account is $490, the financial agent has to record and issue a receipt for a contribution of $500 and record an other leadership campaign expense of $10.
From a partnership
  • The partnership has to provide the following information in writing:
    • names and home addresses of each contributor
    • the voluntary nature of each contribution
    • who it is intended for
    • the amount of each contribution
  • The instructions must be signed and dated by each contributor.
  • Each contributing partner's next draw of income from the partnership should be reduced by the amount of that partner's contribution.
From an unincorporated sole proprietor
  • Must be recorded in the individual's name (not the business name), using the contributor's home address when an address is required.

Note: It is recommended that campaigns only accept contributions made by way of a traceable instrument.

Accepting contributions of cryptocurrency

A contribution of cryptocurrency is non-monetary.

The contribution amount is the commercial value of the cryptocurrency at the time that it was received. There are two ways to determine the commercial value:

  • If the transfer passed through a payment processor (such as BitPay) that provided an exchange rate, use that rate.
  • If the transfer did not go through a payment processor or no exchange rate was provided, use a reasonable rate on a major exchange platform (such as Coinbase) at the time closest to when the transfer was sent. The valuation must be readily ascertainable and verifiable.

Political entities should set up a two-step process to identify contributors of over $20 and record transaction information from the blockchain so that contributions can be audited.

A transaction in cryptocurrency will almost always involve a processing fee. The full amount sent by the individual is a contribution to the political entity, and the processing fee is an expense.

For contributions up to $200, if the contributor is not in the business of selling cryptocurrencies, the contribution amount is deemed nil. But the contributor must still be eligible under the contribution rules. Over $20, the campaign must keep a record of the contributor's name.

In all instances, campaigns should be mindful of the rules in the Canada Elections Act against circumventing contribution rules and watch for unusual amounts or patterns in contributions that they receive.

OGI reference

For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2019-12, Cryptocurrencies, on the Elections Canada website.

Issuing contribution receipts

A receipt has to be issued for each monetary contribution over $20 or non-monetary contribution over $20 that is not deemed nil.

Monetary contribution directed through the registered party Contribution made directly to the contestant's campaign
Only the registered party can issue the receipt.

The contribution is eligible for a tax receipt.
Only the financial agent or authorized leadership campaign agents can issue the receipt.

The contribution is not eligible for a tax receipt.

It is recommended for the financial agent to use Elections Canada's Electronic Financial Return (EFR) software to issue receipts. EFR is free and can be accessed from the Elections Canada website.

Example

Clara makes a $300 contribution directly to Marcel's leadership campaign when he announces his intention to run. After Marcel registers as a contestant, Clara contributes another $700 to his campaign by directing the contribution through the registered party. Clara has made a total of $1,000 in contributions to the leadership contestant. She receives a receipt for $300 from Marcel's campaign, which is not valid for tax purposes, and a receipt for $700 from the registered party, which is valid for tax purposes.

Recording 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 amounts transferred in their annual returns and leadership campaign returns.

Determining the date a contribution is made

As most contribution limits apply per calendar year, the date a contribution is made is important. It is also important for reporting purposes because this same date will be used as the "date received" in the contestant's return.

The date a contribution is made is generally the date the contribution is in the hands of the financial agent or another authorized agent. There are exceptions for contributions made by regular mail, by post-dated cheque and electronically.

How contribution is made Date contribution is made
In person The date the contribution is in the hands of the financial agent, an authorized leadership campaign agent or, if it is a directed contribution, an authorized party agent.
By regular mail The date of the postmark on the envelope. If the postmark is not legible, the contribution is made on the date the agent receives the mail. The campaign should keep the stamped envelope as part of its records.
Post-dated cheque by any means The date on the cheque.
Electronically (e-transfer, credit card, PayPal, etc.) The date the contributor initiates the transaction. If the transaction is post-dated, the contribution is made on the date specified by the contributor.
Examples
  1. On December 23, 2019, Lucy goes to a meet and greet for the leadership contestant and gives a cheque in the amount of $300, dated for the previous day. The financial agent deposits the cheque on January 10, 2020. The contribution is made on December 23, 2019. The financial agent issues a receipt for 2019, and the amount counts toward Lucy's 2019 contribution limit.
  2. Hassim makes an e-transfer to the leadership contestant's campaign on December 23, 2019, but the financial agent does not process the amount until January 10, 2020. The contribution is made on December 23, 2019. The financial agent issues a receipt for 2019, and the amount counts toward Hassim's 2019 contribution limit.
  3. The financial agent receives a cheque from Janelle in the mail on January 5, 2020. The cheque is dated December 28, 2019, and the postmark on the envelope is December 30, 2019. The contribution is made on December 30, 2019. The financial agent issues a receipt for 2019, and the amount counts toward Janelle's 2019 contribution limit.
  4. The financial agent receives a cheque from Andrew and deposits it in the campaign bank account. A few days later, when checking the account online, the financial agent notices that the bank has charged the account a fee because the cheque did not have sufficient funds. No contribution has been made and the bank charge is an other leadership campaign expense. If Andrew issues a new cheque later, the contribution is made on the date associated with the new contribution.

Recording anonymous contributions

If anonymous contributions of $20 or less are collected during an event related to the campaign, the financial agent or an authorized leadership campaign agent has to record:

  • a description of the function at which the contributions were collected
  • the date of the function
  • the approximate number of people at the function
  • the total amount of anonymous contributions accepted

Anonymous contributions of $20 or less may also be received outside the context of a particular function. In that case, the financial agent or a leadership campaign agent has to keep track of the total amount collected plus the number of contributors.

Example

Campaign volunteers organize a wine and cheese event one evening and invite local residents. Approximately 40 people show up. During the evening, one of the organizers passes a basket around to collect cash contributions from the attendees. She informs the guests about the contribution rules: a maximum of $20 can be accepted from any one individual as an anonymous cash contribution. At the end of the evening there is $326 in the basket.

The organizer remits the contributions to the financial agent after the event, along with the following details: a description and the date of the event, the approximate number of people who attended (40), and the amount collected in anonymous contributions ($326). The financial agent records the event details, deposits the amount into the campaign bank account and reports the contributions in the campaign return.

Remitting anonymous contributions that cannot be accepted

If the financial agent or an authorized leadership campaign agent receives a contribution that is:

  • over $20 and the name of the contributor is not known, or
  • over $200 and the name and address of the contributor are not known

the financial agent has to send a cheque for the ineligible amount (that is, the amount over $20 or $200) without delay to Elections Canada, payable to the Receiver General for Canada.

Ineligible contributions

The financial agent and the leadership campaign agents are responsible for ensuring that contributions are in accordance with the rules set out in the Canada Elections Act.

The following contributions are ineligible:

  • cash contributions over $20
  • contributions from corporations, trade unions, associations and groups
  • contributions that exceed the limit
  • indirect contributions (no individual can make a contribution that comes from the money, property or services of another person or entity)
  • contributions from a person who is not a Canadian citizen or a permanent resident
  • contributions an individual makes as part of an agreement to sell goods or services, directly or indirectly, to a registered party or a candidate (for example, a leadership contestant cannot agree to buy party signs for the next election from a local dealer in exchange for a contribution)

Returning ineligible or non-compliant contributions

The financial agent or authorized leadership campaign agents must not accept a contribution that exceeds the limit and should not accept any other type of ineligible contribution.

The financial agent has to return or remit a contribution within 30 days of becoming aware that:

  • it is ineligible, or
  • it was received as part of a regulated fundraising event for which the publication or reporting requirements were not complied with

An ineligible or non-compliant contribution must be returned to the contributor or remitted to Elections Canada, based on whether or not it was used.

A monetary contribution is considered used if the campaign's bank account balance fell below the ineligible amount at any time after the contribution was deposited into the bank account.

Flowchart 1 explains how to administer ineligible or non-compliant contributions in different scenarios.

Examples
  1. The financial agent deposits a cheque for $650 from a contributor. When he enters the contribution in the books, he notices that the same person has already contributed $1,000 in the form of a directed contribution. Within 30 days, assuming the money has not been spent, the financial agent has to issue a cheque for the excess amount, $25, and send it to the contributor. He records a returned contribution of $25.
  2. The financial agent receives a cheque for $2,000 from a contributor. As this is obviously an over-contribution, the financial agent cannot deposit the cheque. She sends it back to the contributor uncashed, and no reporting is required.
  3. An individual makes a non-monetary contribution to the campaign by offering the use of office equipment for a week. The financial agent later realizes that the commercial value of renting the same office equipment is $1,700, which is higher than the contribution limit. The equipment was used during the contest period, so he sends a cheque for the excess amount of $75 to Elections Canada, payable to the Receiver General for Canada. He records a contribution of $1,700, a returned contribution of $75 and a leadership contest expense of $1,700.
  4. The financial agent for Marta, a leadership contestant, receives a notice from Elections Canada a couple of months after the reporting deadline. It states that a person who contributed $900 to Marta and another contestant in the same contest exceeded the annual limit by $175 with the contribution to Marta. Since the deposit date of the contribution, the campaign's bank account balance had fallen below the ineligible amount of $175 and the funds were therefore used. The financial agent must remit $175 within 30 days of becoming aware of the contravention. To obtain funds, she could organize a fundraising event. Once the money is available, the financial agent sends a cheque for the excess amount to Elections Canada, payable to the Receiver General for Canada. She records a returned contribution of $175.

Note: These examples use the limits in effect for 2020.

Flowchart 1: Returning ineligible or non-compliant contributions

Flowchart 1: Returning ineligible or non-compliant contributions
Text Description "Flowchart 1: Returning ineligible or non-compliant contributions"

*A monetary contribution was used if the campaign bank account balance fell below the ineligible or non-compliant amount at any time after the contribution was deposited into the bank account.

**For example, the contributor's address is known and there are no obstacles to prevent the return.