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

8. Leadership Contest Expenses

This chapter explains what leadership contest expenses are and gives typical examples. It covers the following topics:

  • What are leadership contest expenses?
  • Who can incur and pay leadership contest expenses?
  • Limits on leadership contest expenses
  • Typical leadership contest expenses (advertising expenses, Internet communications, voter outreach, and expenses related to the campaign office and workers)
  • Use of parliamentary resources (staff and websites)

What are leadership contest expenses?

A leadership contest expense is:

  • any cost incurred or non-monetary contribution received by a leadership contestant to the extent that the property or service that the cost was incurred for, or that was received as a non-monetary contribution, is used to directly promote or oppose a leadership contestant during a leadership contest
  • any non-monetary transfer received from a registered party or a registered association of the registered party to the extent that the property or services are used to directly promote or oppose a leadership contestant during a leadership contest

The concept of "directly promoting or opposing a leadership contestant" is not limited to advertising. It is to be understood broadly and includes expenses for running a campaign, such as office rental, telecommunication services, etc.

This means that most expenses reasonably incurred for property or a service used during the contest period are leadership contest expenses, unless they:

The leadership contest period runs from the contest start date to end date (contest day) indicated in the leadership contest report provided by the registered party.

Who can incur and pay leadership contest expenses?

The financial agent, the leadership contestant or an authorized leadership campaign agent can incur leadership contest 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 leadership contest expenses, other than petty expenses paid from the petty cash with the financial agent's written authorization.

Limits on leadership contest expenses

The Canada Elections Act does not set a limit on leadership contest expenses.

Registered parties usually set their own rules, in addition to those in the Canada Elections Act, for holding leadership contests. They may provide other restrictions on political financing aspects of the contest, which they administer themselves (e.g. expenses limits for leadership contestants). As long as these rules do not conflict with the requirements of the Canada Elections Act, this is acceptable.

Typical leadership contest expenses

The following are examples of typical leadership contest expenses.

Advertising expenses

Advertising is the transmission of an advertising message promoting the leadership contestant's campaign.

Expenses incurred for advertising conducted during the leadership contest period, including the cost of production and distribution, are reported as leadership contest expenses.

Examples
  1. The financial agent purchases flyers before the contest starts and mails them to party members during the contest period to promote the contestant. The expense for the flyers—including their design, printing and distribution—is a leadership contest expense.
  2. The contestant's campaign hires a media firm to place banners on websites and social media platforms during the contest period, directing users to a video posted on YouTube. The placement cost for the banners is a leadership contest expense, together with all expenses related to designing and developing the video.

Note: Unlike other political entities, when a leadership contestant's campaign runs ads online in a pre-election or election period, the ads do not have to be filed in a platform's political advertising registry.

Websites and web content

Leadership contestants often create websites and social media accounts specifically for their campaigns, either during or in the lead up to a contest. Pre-existing websites and social media accounts might also be used to promote the contestant during the contest period.

The following table shows when a website or web content that remains online during the contest period is a leadership contest expense, taking into account the purpose of the material.

Type of website or web content Leadership contest expense
Campaign's website and social media accounts The expenses incurred for the campaign website itself—including its design, hosting and maintenance—are leadership contest expenses.

Expenses to produce and distribute content on the website or social media accounts are also leadership contest expenses. Because the site and accounts exist for the purpose of the campaign, all content that is online during the contest period counts as a leadership contest expense, regardless of when it was posted.

If content was produced entirely or in part using volunteer labour, only the actual expense incurred by the contestant is a leadership contest expense. This may include materials, equipment rental or paid labour.
Contestant's personal website and social media accounts A contestant's pre-existing personal website is a leadership contest expense if it is used for the purpose of the campaign. Elections Canada will accept the current commercial value of an equivalent website as the commercial value of a pre-existing website.

Expenses to produce and distribute content on the website or social media accounts for the purpose of the campaign are also leadership contest expenses. Pre-existing content is only an expense if it was posted for the purpose of the campaign or promoted during the campaign.

The expenses are also non-monetary contributions from the contestant. However, if the contestant did not incur any expenses for the website or web content, there is no expense or contribution to report.
Parliamentarian's website or social media accounts See the Use of parliamentary resources section below.
Examples
  1. A group page has been created for the contestant on a free social networking site. Volunteers manage the page and post articles related to the leadership contestant. As long as the volunteers are helping outside their regular working hours and are not self-employed in the business of managing social media, the volunteer labour is not an expense.
  2. The financial agent hires a media firm to post content on the contestant's website, promoting the campaign. All expenses related to designing, developing and posting the content are leadership contest expenses.
  3. The contestant has a personal Twitter account and continues to tweet from that account during the contest period. Sometimes she tweets about her campaign. If the contestant is tweeting for free, there is no expense to report.
OGI reference

For a detailed discussion of a similar topic, please refer to Elections Canada's interpretation note 2018-04, Pre-existing Web Content of Registered Parties in an Election, on the Elections Canada website.

Surveys

Expenses related to surveys or research conducted during the contest period are leadership contest expenses. Expenses related to surveys or research conducted outside the contest period are not leadership contest expenses, even if the results of the survey are used during the contest.

Example

During the contest period, the financial agent engaged Election Polling Inc. for $1,500 to conduct a survey. Once the survey was completed, the financial agent issued a cheque from the campaign bank account to pay Election Polling Inc., recorded the amount as a leadership contest expense and kept the invoice to submit later with the contestant's return.

Capital assets

Under the Canada Elections Act, a capital asset is any property with a commercial value of more than $200 that is normally used outside a leadership contest other than for the purposes of a contest (for example, computers, software, printing equipment and furniture).

If the contestant's campaign purchases a capital asset and uses it during the contest period, the leadership contest expense is the lower of the commercial value of renting a similar asset for the same period or the purchase price.

For non-capital assets such as office supplies, the purchase price must be recorded as a leadership contest expense.

Capital assets might be received in the form of a contribution from an individual. In that case, the commercial value of the asset is a non-monetary contribution. If the asset was used during the contest period, the leadership contest expense is the lower of the commercial value of renting a similar asset for the same period or the purchase price. The remaining amount, if any, is an other leadership campaign expense.

Note: Amortization may not be used as a method of calculating the commercial value of the use of the asset.

Note: Capital assets acquired during the campaign must be disposed of at the end of the campaign. They must be sold at fair market value and the funds transferred to the party or to a registered association of the party. The assets themselves cannot be transferred.

Examples
  1. The contestant's campaign rents two computers from a local office supplier for $600 during the contest period. The rental agreement is for three months (92 days) and extends 15 days past the end of the contest period. The cost of renting the computers during the contest period is a leadership contest expense, and it is calculated as follows: $600 / 92 x (92 – 15) = $502.17. The remaining amount, $97.83, is recorded as an other leadership campaign expense.
  2. The financial agent pays $100 at a garage sale for the purchase of a printer for the campaign. The commercial value of renting a similar printer during the contest period would have been $150. The financial agent records $100 as a leadership contest expense since the purchase price, $100, is lower than the rental rate.
  3. A volunteer uses his personal laptop to do work for the campaign during the contest period. The commercial value of renting a similar laptop for the 40-day contest period would be $80. This is a non-monetary contribution from the volunteer. However, because the amount is $200 or less and the volunteer is not in the business of providing electronics, the non-monetary contribution is deemed to be nil and there is no expense to report.

Rental of a campaign office

The campaign may rent an office for the leadership contestant's campaign. Only the portion of the rent used during the contest period is a leadership contest expense. The portion of the rent used before and after the contest period is an other leadership campaign expense.

Example

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.

Installation costs and other office expenses

The expense incurred to install items used during the contest period is a leadership contest expense even if the installation takes place before the contest is called, as long as the item itself is a leadership contest expense. Installation expenses cannot be prorated.

Other office expenses include the cost of buying office supplies, such as paper or toner cartridges, or supplying refreshments during meetings.

Examples

The campaign pays $500 in labour for a worker to install telephones, computers and printers in the office before the contest starts. The full $500 is a leadership contest expense because the installed equipment is used during the contest period.

The campaign also pays a monthly rate of $200 for telephone usage. The prorated cost for days during the contest period is a leadership contest expense, while the prorated cost for days outside the contest period is an other leadership campaign expense.

Compensation paid to the financial agent or other campaign workers

The campaign may choose to pay compensation to the financial agent or other campaign workers. In that case, the compensation related to work performed during the contest period is a leadership contest expense, while the compensation related to work performed after the contest period is an other leadership campaign expense.

Note that work performed prior to the contest period may also be a leadership contest expense if the output of that work is used during the contest period. For example, if mailings are prepared by campaign workers before the contest starts and are sent during the contest period, any compensation paid would be a leadership contest 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.

Example

When the contest starts, the leadership contestant decides to pay her financial agent a salary of $2,500 for the contest period. The financial agent prepares a contract setting out the terms of compensation. This amount has to be recorded as a leadership contest expense.

Expenses of volunteers

Unpaid campaign workers are generally providing volunteer labour, which is not a leadership contest expense. But expenses for items used by volunteers during the contest period (for example, the cost of refreshments, lodging or transportation related to the campaign) are leadership contest expenses.

If a volunteer pays for an expense incurred as an incidence of the leadership contest, the amount is a
non-monetary contribution and an expense. However, if the amount is $200 or less and the individual is not in the business of providing the service, the non-monetary contribution is deemed to be nil and no expense has to be reported.

Examples
  1. Late one night during the contest period, volunteers help in the campaign office to prepare hundreds of flyers for mailing. The financial agent orders pizza and pays $83.50 to the pizza delivery person. The amount of $83.50 is a leadership contest expense.
  2. A volunteer is driving around in her own car to deliver flyers during the contest period. She pays $30 to fill up her car. If the amount is not reimbursed by the campaign, the volunteer made a non-monetary contribution. However, because the amount is less than $200, the non-monetary contribution is deemed to be nil and no expense has to be reported.

Campaigning by parliamentarians

If a federal or provincial parliamentarian campaigns on behalf of the contestant, the expenses related to that person's involvement in the campaign are leadership contest expenses and have to be authorized in advance by the financial agent, an authorized leadership campaign agent or the contestant.

Any expense incurred in relation to the leadership campaign has to be reimbursed using campaign funds or accepted as a non-monetary contribution if paid by an eligible contributor. In the case of a non-monetary contribution, the expense is a leadership contest expense.

In the event that a parliamentarian has travelled to a particular destination for purposes unrelated to the contest and campaigns on behalf of the contestant while there, any incremental expenses incurred to assist with the campaign are leadership contest expenses.

Use of parliamentary resources

Leadership contestants who are parliamentarians might sometimes make use of parliamentary resources, such as websites and office staff, for their leadership campaigns.

The use of parliamentary resources during the contest period is a leadership contest expense. If the expense is not paid by the campaign, the use of the resource is a non-monetary contribution from the parliamentarian and is subject to the contribution limit.

Note: The use of parliamentary resources is governed by other rules as well, including the Members By-law of the House of Commons (available on the Parliament of Canada website).

OGI reference

For a detailed discussion of a related topic, please refer to Elections Canada's interpretation note 2014-02, The Use of Member of Parliament Resources Outside of an Election Period, on the Elections Canada website.

Staff of a parliamentarian

If employees on the staff of a parliamentarian engage in political activities to support the parliamentarian as a leadership contestant during the contest period, the salaries of these persons are leadership contest expenses and, if not paid by the campaign, are non-monetary contributions from the parliamentarian.

However, if the employees work on the contestant's campaign outside their normal business hours or are on leave, their involvement is volunteer labour and is therefore neither a leadership contest expense nor a non-monetary contribution.

Website and social media accounts of a parliamentarian

Leadership contestants may have websites and social media accounts that are designed and maintained using parliamentary resources.

If the leadership contestant uses the website for the purpose of their campaign, its commercial value—including design, maintenance and hosting—is a leadership contest expense. Elections Canada will accept the current commercial value of an equivalent website as the commercial value of a pre-existing website.

Expenses to produce and distribute content on the website or social media accounts for the purpose of the campaign are also leadership contest expenses. Pre-existing content is only an expense if it was posted for the purpose of the campaign or promoted during the campaign.