Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – January 2022
This chapter explains the rules and procedures for accepting and sending transfers. It covers the following topics:
- What is a transfer?
- Transfers sent to the leadership contestant
- Transfers sent by the leadership contestant
- Party memberships purchased by the leadership contestant's campaign
- Irregular transfers
What is a transfer?
A transfer is a provision of funds, property or services between specified political entities of the same political affiliation. Where specifically permitted under the Canada Elections Act, a transfer is not considered to be a contribution, and contribution rules therefore do not apply.
|Monetary transfer||Non-monetary transfer|
|A monetary transfer is a transfer of funds.||A non-monetary transfer is a transfer of property or services. The amount of a non-monetary transfer is the commercial value of the property or service.
Unlike non-monetary contributions from individuals not in the business of providing that property or service, a non-monetary transfer has to be reported even if its commercial value is $200 or less.
Transfers are permitted only between related political entities (registered party, electoral district association, candidate and leadership or nomination contestant) of the same political affiliation.
However, not all types of entities are authorized to provide all types of transfers. For a quick reference guide to eligible and ineligible transfers, see the Transfers—types and rules table in Chapter 1, Reference Tables and Timelines.
Note: If an invoice requiring payment is prepared by one political entity and sent to its related political entity, together with the original supplier invoice representing the commercial value of the goods or services provided, this is not a transfer but a sale of goods or services from one entity to another.
Transfers sent to the leadership contestant's campaign
Only the financial agent or leadership campaign agents can accept transfers on the campaign's behalf. The following transfers may be accepted by the leadership contestant's campaign:
- property or services from the registered party or from any registered association of the registered party, as long as it is offered equally to all contestants
- funds in the form of directed contributions from the registered party
The registered party creates a web page on its site for each leadership contestant for use during the contest period. The commercial value of creating the web pages is $150 per contestant. The party sends each contestant a copy of the original supplier invoice for $150 and reports a non-monetary transfer of $150 to each contestant. Each contestant reports a non-monetary transfer from the party and a leadership contest expense of $150.
Note: Transfers may not be accepted from provincial parties or electoral district associations of provincial parties. Transfers from a registered provincial division of a federal registered party are considered transfers from the registered party.
Transfers sent by the leadership contestant's campaign
Only the financial agent or leadership campaign agents can send transfers on the campaign's behalf.
The following transfers may be sent by the leadership contestant's campaign:
- funds to the registered party
- funds to a registered association of the party
After contest day, the financial agent pays all campaign expenses and calculates $3,000 in surplus funds. The financial agent transfers $3,000 to a registered association of the party to dispose of the surplus.
Party memberships purchased by the leadership contestant's campaign
Voting in a leadership contest is generally restricted to party members. For this reason, a leadership contestant's campaign will sometimes buy party memberships for its supporters. This is not prohibited by the Canada Elections Act. When a leadership campaign pays for memberships, the payment is recorded as a transfer to the registered party.
More commonly, a campaign will collect party membership fees from individuals, deposit the funds into its bank account and then send the funds to the registered party. This transaction is also a transfer. If the membership fee is no more than $25 per year for a period of no more than five years, the individuals have not made contributions and the registered party does not need additional information from the campaign. Above those thresholds, the campaign will need to provide the registered party with details to record contributions from the individuals.
Note: Some registered parties have internal rules that prohibit contestants from buying memberships for supporters. Campaigns should be aware of the rules that apply to their contest.
When the leadership contestant's campaign sends or accepts a transfer that is not permitted under the Canada Elections Act, the consequences will depend on the sender, recipient and transfer type.
The tables below deal with irregular transfers between affiliated political entities only.
|Recipient of irregular transfer sent by leadership contestant||Transfer type||Consequence|
|Candidate||Monetary||Improper surplus disposal with offence for sender; not a contribution|
|Candidate||Non-monetary||If capital asset, improper surplus disposal with offence for sender; not a contribution*|
|Non-monetary||If capital asset, improper surplus disposal with offence for sender; not a contribution*|
*Remaining non-capital assets or services can be provided to the candidate, association or party, but they must either be sold to that political entity or contributed by the contestant as a personal non-monetary contribution.
After contest day, the leadership contestant's campaign gives tablets it had purchased for $300 each to the registered association in the contestant's riding. This is not an allowable transfer. It is an improper disposal of surplus by the contestant that will need to be corrected. To properly dispose of the tablets, which are capital assets, the campaign should have sold the tablets at fair market value and transferred the proceeds of the sale to the association or party.
|Sender of irregular transfer accepted by leadership contestant||Transfer type||Consequence|
|Monetary||Prohibited transfer with offences for sender and recipient; not a contribution|
|Non-monetary, not offered equally to all contestants||Prohibited transfer with offence for sender; not a contribution|
*If the transfer is non-monetary and the candidate offered it equally to all contestants, it is not a contribution. It may be an improper surplus disposal.
A leadership contestant's campaign accepts funds from another campaign whose contestant plans to withdraw. This is not an allowable transfer. It is an illegal contribution. Within 30 days of becoming aware of the contravention, the financial agent must return the contribution to the sender (if unused) or remit the amount to Elections Canada.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2020-07, Irregular Transfers Between Affiliated Political Entities, on the Elections Canada website.