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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..

8. Nomination Contest Expenses

This chapter explains what nomination contest expenses are, describes how limits are calculated and applied, and gives examples of typical nomination contest expenses. It covers the following topics:

  • What are nomination contest expenses?
  • Who can incur and pay nomination contest expenses?
  • Limits on nomination contest expenses
  • Typical nomination 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 nomination contest expenses?

A nomination contest expense is:

  • any cost incurred or non-monetary contribution received by a nomination 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 nomination contestant during a nomination 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 nomination contestant during a nomination contest

The concept of "directly promoting or opposing a nomination 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 nomination contest expenses, unless they:

The nomination contest period starts on the contest start date and ends on the selection date as indicated in the nomination contest report provided by the registered association or the registered party that held the contest.

Who can incur and pay nomination contest expenses?

The financial agent and the nomination contestant can incur nomination contest expenses.

Only the financial agent is allowed to pay nomination contest expenses, other than petty expenses paid from the petty cash with the financial agent's written authorization.

Limits on nomination contest expenses

The Canada Elections Act imposes a limit on nomination contest expenses to facilitate a level playing field among contestants.

The limit applies to each contestant's nomination contest expenses in the electoral district in which they are seeking the party's endorsement. The limit applies to the total of all nomination contest expenses, whether paid, unpaid, or accepted as non-monetary contributions or transfers.

The nomination contestant and the financial agent have to respect the nomination contest expenses limit. They cannot enter into contracts or incur nomination contest expenses that exceed the limit.

It is highly advisable to agree on an expense approval process; this will help ensure that the nomination contestant and the financial agent are informed and co-operate when incurring expenses. An expense approval process and a campaign budget created at the beginning of the campaign help to manage finances effectively.

How are the limits calculated?

The limit allowed for a nomination contestant in an electoral district is:

  • 20% of the limit that was allowed for a candidate's election expenses during the last general election in that electoral district (excluding any increase for a longer election period), or
  • in any other case, the amount determined by Elections Canada

The registered party or registered association holding the nomination contest informs the contestants about the nomination contest expenses limit. The information is also available on the Elections Canada website in the Political Participants section.

Note: The Canada Elections Act does not provide for a reimbursement of nomination contest expenses.

Typical nomination contest expenses

The following are examples of typical nomination contest expenses.

Advertising expenses

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

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

Examples
  1. The financial agent purchases flyers before the contest starts and mails them to party members in the riding during the contest period to promote the contestant. The expense for the flyers—including their design, printing and distribution—is a nomination 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 nomination contest expense, together with all expenses related to designing and developing the video.

Partisan advertising during the pre-election period and information to be held in an online registry

Nomination contests will sometimes take place in the pre-election period of a fixed-date general election, starting from June 30 until the election period begins. A nomination contestant's advertising during that period is called partisan advertising and, if conducted online, may be subject to registry requirements.

Regulated online platforms (that is, websites or applications that meet certain criteria for monthly visitors or users) have to maintain a registry of political advertising.

When a nomination contestant's campaign purchases partisan advertising online, to make sure it complies with the law, it should:

  • inform the platform that it is conducting political advertising
  • ask if the platform is regulated by the rules in the Canada Elections Act and needs information for its registry (unless the platform has already made this clear)

If the platform is regulated, the campaign must provide it with:

  • an electronic copy of the advertisement
  • the name of the financial agent who authorized its distribution on the platform

The platform must publish this information in its registry from the day the ad runs until two years after election day.

Websites and web content

Nomination 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 nomination contest expense, taking into account the purpose of the material.

Type of website or web content Nomination contest expense

Campaign's website and social media accounts

The expenses incurred for the campaign website itself—including its design, hosting and maintenance—are nomination contest expenses.

Expenses to produce and distribute content on the website or social media accounts are also nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 on her own time, 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.

Voter contact calling services

Voter contact calling services are services involving the making of calls during an election period for any purpose related to an election, including:

  • promoting or opposing a nomination contestant or any position on an issue with which a contestant is associated
  • encouraging electors to vote or to refrain from voting
  • providing information about the election, including information about voting hours and the location of polling stations
  • gathering information about how electors voted in past elections, or will vote in the election, or their view on a nomination contestant or on any issue with which a contestant is associated
  • raising funds for a nomination contestant

Expenses incurred for voter calls conducted during the election period, including the cost of production and distribution, are nomination contest expenses.

Note: The nomination contestant's campaign must register with the Canadian Radio-television and Telecommunications Commission (CRTC) if it uses a calling service provider or automatic dialing-announcing device to make voter calls during an election period. Refer to the CRTC's Voter Contact Registry web page for details.

Surveys

Expenses related to surveys or research conducted during the contest period are nomination contest expenses. Expenses related to surveys or research conducted outside the contest period are not nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 nomination 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 candidate endorsed by the party in the electoral district in which the contest was held, to the registered association that held the contest or to the registered party. The assets themselves cannot be transferred.

Examples
  1. The contestant's campaign rents two computers from a local office supplier for $500 during the contest period. The rental agreement is for two months (61 days) and extends 15 days past the end of the contest period. The cost of renting the computers during the contest period is a nomination contest expense, and it is calculated as follows: $500 / 61 x (61 – 15) = $377.05. The remaining amount, $122.95, is recorded as an other nomination 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 nomination 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 nomination contestant's campaign. Only the portion of the rent used during the contest period is a nomination contest expense. The portion of the rent used before and after the contest period is an other nomination campaign expense.

Example

The campaign rents an office on March 1, two weeks before the contest period starts. The selection date is April 30. The rental agreement is for two months and the rent is $300 a month.

The nomination contest expense to be recorded is the rent for the month of April, plus the rent for 17 days in March: $300 + (17 / 31 x $300) = $464.52. The remaining amount, $135.48, is recorded as an other nomination campaign expense.

Installation costs and other office expenses

The expense incurred to install items used during the contest period is a nomination contest expense even if the installation takes place before the contest is called, as long as the item itself is a nomination 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.

Example

The expense to install any equipment (telephones, computers, fax machines, etc.) is a nomination contest expense and cannot be prorated between pre- and post-contest periods regardless of when the installation takes place.

The expense for telephone usage, however, will have to be reported as an other nomination campaign expense for the time before and after the contest period, while the portion of usage during the contest period is a nomination contest 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 nomination contest expense, while the compensation related to work performed after the contest period is an other nomination campaign expense.

Note that work performed prior to the contest period may also be a nomination 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 nomination 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 nomination 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 nomination contest expense.

Expenses of volunteers

Unpaid campaign workers are generally providing volunteer labour, which is not a nomination 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 nomination contest expenses.

If a volunteer pays for an expense incurred as an incidence of the nomination 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 nomination 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 nomination contest expenses and have to be authorized in advance by the financial agent or the contestant.

Any expense incurred in relation to the nomination 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 nomination 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 nomination contest expenses.

Use of parliamentary resources

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

The use of parliamentary resources during the contest period is a nomination 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 nomination contestant during the contest period, the salaries of these persons are nomination 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 nomination contest expense nor a non-monetary contribution.

Website and social media accounts of a parliamentarian

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

If the nomination contestant uses the website for the purpose of their campaign, its commercial value—including design, maintenance and hosting—is a nomination 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 nomination contest expenses. Pre-existing content is only an expense if it was posted for the purpose of the campaign or promoted during the campaign.