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Political Financing Handbook for Nomination Contestants and Financial Agents (EC 20182) – June 2016

Note: This handbook is to be used for contests that started before December 21, 2018. For later contests, please use the 2018 version of the handbook.

Chapter 1 – Starting the Nomination Contestant's Campaign

This chapter covers the following topics:

Introduction

This chapter focuses on the beginning of the nomination contestant's campaign. It explains what a nomination contest is and who is eligible to become a nomination contestant.

The second part discusses in detail certain tasks that have to be completed at the beginning of the nomination contest, such as appointing a financial agent and an auditor, and opening a bank account. These and other tasks are important to ensure efficient campaign administration and financial management.

1.1 About the nomination contest

Definition

A nomination contest is a competition to select a person who will be proposed to a registered party for endorsement as its candidate in an electoral district.

A registered party or a registered association may decide to hold a nomination contest at any time.

Nomination Contest Report

Elections Canada does not need to be notified before the contest is held, but the registered party or the registered association that held the contest must submit a Nomination Contest Report to Elections Canada within 30 days after the selection date.

Note: A nomination contest report must be submitted in all cases where the contest was open to more than one person even if only one contestant entered the contest.

For details, please see Section 4.2, Documents to be filed.

1.2 How to become a nomination contestant

Definition

From a political financing perspective, a person is deemed to be a nomination contestant from the date a contribution, a loan or a transfer is accepted or a nomination campaign expense is incurred. Contributions, loans or transfers may be accepted before or after the start date of the nomination contest.

Note: Funds provided specifically to pay for expenses incurred outside the contest period are not subject to the controls on contributions and loans in the Canada Elections Act.

A person remains a nomination contestant until the campaign fulfills all financial reporting requirements.

Eligibility

The registered party or registered association holding a contest sets the requirements that any person must meet to be a nomination contestant.

Persons holding the following positions have to step down once they become nomination contestants:

  • auditors of: candidates, nomination contestants, leadership contestants, registered parties, electoral district associations
  • financial agents of nomination contestants
The nomination contestant's responsibilities and obligations

The nomination contestant has to appoint a financial agent before accepting a contribution, transfer or loan, or incurring a nomination campaign expense. However, if the contestant's campaign does not accept contributions, transfers or loans or incur nomination campaign expenses, the contestant does not have to appoint a financial agent.

A nomination contestant who has accepted contributions totalling $10,000 or more, or incurred nomination campaign expenses totalling $10,000 or more, must appoint an auditor without delay. Note that transfers to affiliated political entities are not nomination campaign expenses.

The Canada Elections Act imposes a limit on nomination campaign expenses. During the contest period, both the contestant and the financial agent are responsible for budget control and for making sure that the limit is respected.

The nomination contestant must prepare the Nomination Contestant's Statement of Personal Expenses within three months after the selection date. This statement sets out the amount of any personal expenses paid by the nomination contestant and provides documentation of the payments, or declares that the nomination contestant did not pay for any personal expenses.

1.3 What has to be done at the beginning of the nomination contest

If the nomination contestant's campaign accepts contributions, transfers or loans, or incurs nomination campaign expenses, certain tasks have to be completed at the beginning of the campaign. The order in which these tasks are completed may vary. This section presents a typical sequence of events.

Appoint a financial agent

The nomination contestant is required to appoint a financial agent before the campaign can accept contributions, loans or transfers, or incur nomination campaign expenses.

Definition

The financial agent is responsible for administering the nomination contestant's financial transactions and reporting those transactions to Elections Canada as required by the Canada Elections Act.

The contestant may have only one financial agent at a time.

The financial agent's role continues until the contestant's campaign fulfills all financial reporting requirements.

Note: If the contestant's campaign does not accept contributions, loans or transfers, or incur nomination campaign expenses, the contestant does not have to appoint a financial agent.

Eligibility

Who can become a financial agent?

  • Only an individual can become a financial agent. Corporations, partnerships, etc. are not eligible to act in this capacity.
  • The individual must be capable of entering into contracts in the province or territory in which he or she ordinarily resides.

Note: Although it is not a legal requirement, the individual who becomes a financial agent should be experienced in managing finances. The role requires a strong ability to control, record and administer financial transactions, as well as to create financial reports.

Who is not eligible to be a financial agent?

  • a candidate or a nomination contestant
  • an election officer or a member of the staff of a returning officer
  • an undischarged bankrupt
  • an auditor appointed as required by the Canada Elections Act
  • a person who is not qualified to be an elector
  • a person who does not have the capacity to enter into contracts in the province or territory in which the person ordinarily resides
Appointment process

When appointing a financial agent, the contestant must obtain his or her signed consent to act in that capacity.

If for any reason the financial agent is no longer able to continue in that role, the contestant must appoint a new financial agent immediately and notify Elections Canada in writing within 30 days of the new appointment. The notice has to include a signed statement from the new financial agent.

The financial agent's responsibilities and obligations
  • The financial agent has to open a separate bank account in his or her name, to be used exclusively for the contestant's campaign.
    The Open a bank account section contains more information on the process of opening an account.
  • All monetary transactions related to nomination campaign expenses must go through the bank account.
  • Only the financial agent can accept contributions, loans or loan guarantees on the contestant's behalf.
  • Only the financial agent can accept transfers or transfer funds on the contestant's behalf.
  • The financial agent must issue receipts for contributions greater than $20 made to the contestant's campaign.
  • Only the financial agent or the contestant can enter into contracts and incur nomination campaign expenses in relation to the contestant's campaign.
  • Only the financial agent can pay nomination campaign expenses. There are two exceptions: petty cash expenses can be paid by persons authorized by the financial agent, and the contestant can pay contestant's personal expenses. The Canada Elections Act imposes a limit on nomination campaign expenses.
  • During the contest period, the contestant and the financial agent are responsible for budget control and for making sure that the limit is respected.
  • The financial agent has to prepare and submit financial returns as required by the Canada Elections Act.
  • The financial agent has to manage and report on unpaid claims and loans.
  • The financial agent has to send an updated contestant's return or returns to Elections Canada as required.
  • Finally, the financial agent has to dispose of any surplus, close the bank account, and provide Elections Canada with the Nomination Contestant's Statement of Surplus and the final bank statement.

Establishing internal controls

Only the nomination contestant and the financial agent can incur nomination campaign expenses during the nomination contest period.

It is strongly recommended that the financial agent put in place effective controls to monitor nomination campaign expenses to ensure that the nomination campaign expenses limit is not exceeded. One good practice is to introduce a purchase requisition form so every purchase will have to be authorized by the financial agent.

Although a campaign budget is not mandatory, it is strongly advised to create one.

Creating a campaign budget with the contestant and the financial agent helps to control, oversee and communicate about nomination campaign expenditures. The financial agent should insist that he or she is kept informed of the financial transactions of the campaign, and should intervene to address any non-compliance in a timely fashion.

Appoint an auditor

Definition

The auditor examines the contestant's financial return and prepares a report that states the auditor's opinion as to whether the financial return presents the information contained in the financial records on which it is based.

The contestant may have only one auditor at a time.

Note: The nomination contestant is required to appoint an auditor if the campaign accepts contributions or incurs nomination campaign expenses totalling $10,000 or more. Note that transfers to affiliated political entities are not nomination campaign expenses.

Eligibility

Who can become an auditor?

  • a person who is a member in good standing of a corporation, an association or an institute of provincially incorporated professional accountants
  • a partnership of which every partner is a member in good standing of a corporation, an association or an institute of provincially incorporated professional accountants
  • provincially incorporated professional accounting designations include: Chartered Professional Accountant (CPA), Chartered Accountant (CA), Certified General Accountant (CGA), Certified Management Accountant (CMA)

Who is not eligible to be an auditor?

  • a candidate, the official agent of that candidate or any other candidate
  • an election officer or a member of the staff of the returning officer
  • the chief agent of a registered party or an eligible party
  • a registered agent of a registered party
  • electoral district agents of registered associations
  • leadership contestants, their financial agents and leadership campaign agents
  • nomination contestants and their financial agents
  • financial agents of registered third parties
Appointment process

The nomination contestant has to appoint an auditor if the campaign accepted contributions totalling $10,000 or more or incurred nomination campaign expenses totalling $10,000 or more. Note that transfers to affiliated political entities are not nomination campaign expenses.

After appointing the auditor, the nomination contestant has to provide Elections Canada with the auditor's name, address, telephone number and occupation, as well as a declaration signed by the auditor accepting the appointment.

If for any reason the auditor is no longer able to continue in that role, the contestant must appoint a new auditor immediately and notify Elections Canada in writing within 30 days of the new appointment. The notice has to include a signed consent from the new auditor.

The auditor's responsibilities and obligations

The auditor has to prepare a report at the end of the nomination contest if the campaign accepted contributions totalling $10,000 or more, or incurred nomination campaign expenses totalling $10,000 or more. Note that transfers to affiliated political entities are not nomination campaign expenses.

The auditor has a right to access all documents of the contestant, and may require the contestant or the contestant's financial agent to provide any information or explanation that is necessary to enable the auditor to prepare the report.

In accordance with generally accepted auditing standards, the auditor has to examine the contestant's financial records and give an opinion in a report as to whether the contestant's return presents the information contained in the financial records on which it is based.

Open a bank account

The financial agent has to open a separate bank account to be used exclusively for the contestant's campaign. The account has to be with a Canadian financial institution or in an authorized foreign bank, as defined by the Bank Act. The financial agent must be named as the account holder as follows: (name), financial agent. For example: "Peter Raymond, financial agent". It is also acceptable to add the nomination contestant's name to the name of the bank account. For example: "Peter Raymond, financial agent for Anne Thomas".

On the Elections Canada website, please refer to the document entitled Access to Banking Services by the Nomination Contestant's Financial Agent. This is based on information provided by the Canadian Bankers Association and the Office of the Superintendent of Financial Institutions concerning the opening of campaign accounts for federal electoral purposes.

All monetary transactions in relation to nomination campaign expenses have to go through the campaign bank account.

Note: Expenses incurred outside the contest period cannot be paid using campaign funds.

After the contest, any unpaid claims, loans and surplus have to be dealt with. Once that has been done, the financial agent has to close the bank account and provide Elections Canada with a final bank statement.

Note: The bank account has to remain open until the campaign fulfills all financial obligations.

Note: The bank account opened for the nomination contest cannot be subsequently used for an electoral campaign.