Political Financing Handbook for Nomination Contestants and Financial Agents (EC 20182) – June 2019
Note: This handbook is to be used for contests called on or after June 13, 2019. For earlier contests, please use the December 2018 version of the handbook..
7. Nomination Campaign Expenses
This chapter takes a broad look at nomination campaign expenses and how they are administered. It covers the following topics:
- What are nomination campaign expenses?
- How do they relate to non-monetary contributions and transfers?
- Who can incur and pay nomination campaign expenses?
- What invoices have to be kept?
Note: The financial agent is responsible for administering expenses and keeping receipts and invoices, as required by the Canada Elections Act.
What are nomination campaign expenses?
The Canada Elections Act defines a nomination campaign expense of a nomination contestant as
an expense reasonably incurred as an incidence of the nomination contest, regardless of when the expense was incurred.
There are five categories of nomination campaign expenses:
- nomination contest expenses
- nomination contestant's personal expenses
- nomination contestant's travel and living expenses
- nomination contestant's litigation expenses
- other nomination campaign expenses, including auditor fees
It is important to understand the differences between the expense categories and the way each is administered. The chart below gives an overview, and the next five chapters provide details on each one.
|Nomination campaign expenses||Examples||Who can incur?||Who can pay and from what source?Note 1||Spending limit?|
|Nomination contest expenses||
|Contestant's personal expenses||
travel and living expenses
|Contestant's litigation expenses||
|Other nomination campaign expenses||
Note 1 A person authorized by the financial agent can pay petty expenses from the petty cash. The financial agent must set the maximum amount that may be paid.
Note 2 The contestant's personal or litigation expenses can be paid directly by another person or group, with the contestant's consent. This is considered to be a payment from the contestant's own funds. It is not a contribution but must still be reported in the contestant's return.
Note 3 If not repaid by the campaign, this is a contribution from the contestant and is subject to the limit.
What qualifies as a nomination campaign expense?
Nomination campaign expenses include:
- amounts paid
- liabilities incurred
- the commercial value of donated property and services (other than volunteer labour)
- the difference between an amount paid or liability incurred and the commercial value of the property or services (when they are provided at less than their commercial value)
The amount charged to the campaign is a nomination campaign expense. Generally this amount is the commercial value of the property or service received.
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
- 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)
In other words, commercial value is generally the amount charged in a store for an item or a service.
- The campaign rents office furniture from an office equipment rental company for four months. The amount charged for the rental is the commercial value, and it is a nomination campaign expense.
- Wendell, a self-employed web designer, offers to design the nomination contestant's website for a discounted price. He charges $400 instead of his regular fee of $700. The commercial value, which is the amount Wendell normally charges for his work (in this case $700), is a nomination campaign expense. The difference between the commercial value and the actual amount paid ($300) is a non-monetary contribution from the web designer.
Non-monetary contributions and transfers are also expenses
The nomination contestant's campaign incurs an expense when it accepts a non-monetary contribution or a non-monetary transfer.
Keep in mind that if a service is provided free of charge by an eligible volunteer, there is no contribution and no expense. See Volunteer labour is not a contribution in Chapter 2, Contributions, for details.
|Received from an individual at no charge||The full commercial value is a non-monetary contribution.*|
|Purchased from an individual for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary contribution.*|
|Received from an affiliated political entity at no charge||The full commercial value is a non-monetary transfer.**|
|Purchased from an affiliated political entity for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary transfer.**|
The full commercial value of the property or service is a nomination campaign expense.
*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 is deemed to be nil and no expense has to be reported.
**All non-monetary transfers provided by the candidate, the registered party or a registered association of the party must be reported, regardless of commercial value. Transfers from the registered party or a registered association can only be accepted if offered equally to all contestants.
- After the contest starts, Simon donates office supplies—packages of paper, ink cartridges and binders—to the campaign. Buying the same items in the local stationery store would cost $300; therefore, this is the commercial value of the donated goods. The financial agent has to record the following: $300 as a non-monetary contribution from Simon and $300 as a nomination contest expense.
- The registered association that is holding the contest provides all contestants with free mailing envelopes and postage. The financial agent uses the items to distribute campaign flyers during the contest period. The association paid $1,000 for the items and provides the financial agent with copies of the third party supplier invoices. The financial agent has to record the following: a non-monetary transfer of $1,000 from the association and a nomination contest expense of $1,000.
Note: Some examples in the handbook use "cost" as the amount of an expense. This is because most purchases are made at a retail price. However, if a campaign pays less than a retail price, the expense to report for the property or service is its full commercial value.
Who can incur expenses?
Only the financial agent and the nomination contestant can incur nomination campaign expenses.
Who can pay expenses?
Only the financial agent can pay nomination campaign expenses in most cases. There are three exceptions:
- The nomination contestant can pay their personal expenses, travel and living expenses, and litigation expenses.
- Any other person or group can pay the contestant's personal expenses or litigation expenses, with the contestant's consent.
- A person authorized in writing by the financial agent can pay petty expenses for office supplies, postage, courier services and other incidentals from the petty cash. (The financial agent must set the maximum amount that may be paid.)
Property or services provided by the registered party or a registered association
Contestants may receive property or services from the registered party or any registered association of the party. These can be received as non-monetary transfers if they are offered equally to all contestants or can be paid by the contestant's campaign.
If the property or service is being paid by the contestant's campaign, a copy of the original supplier invoice as well as the invoice from the party or association must be included with the contestant's return. The documentation should confirm the amount reported in the contestant's return.
The registered association in the contestant's riding offers to sublet its office to the campaign for three months. The association charges the campaign the same amount as its own rental cost for the period. The association must send an invoice to the contestant's campaign together with its original rental agreement. The rent paid by the contestant is a nomination campaign expense. The registered association has to report the income in its financial statement at the end of the fiscal year.
All invoices have to be submitted to the financial agent.
The nomination contestant should send invoices for their personal expenses, travel and living expenses, or litigation expenses to the financial agent only after preparing the Nomination Contestant's Statement of Expenses.
If an expense of $50 or more was incurred as an incidence of the contest, the financial agent must keep a copy of the supplier invoice setting out the nature of the expense. Once it is paid, the financial agent must also keep the proof of payment.
If an expense of less than $50 was incurred as an incidence of the contest, the financial agent must keep a record of the nature of the expense. Once it is paid, the financial agent must also keep the proof of payment.
For payments made from the petty cash, the person who is authorized to pay petty expenses has to provide the financial agent with the documents mentioned above within three months after the date the petty expense was incurred.