Political Financing Handbook for Third Parties, Financial Agents and Auditors – June 2021
To be used for non-fixed-date general elections and by-elections
3. Financial Administration: Overview of Resources
This chapter describes the resources—monetary and non-monetary—that a third party can use to conduct its regulated activities and the related reporting that must take place.
It covers the following topics:
- Third party's own funds
- Volunteer labour
Third party's own funds
A third party that exists outside the election, such as a corporation or union, can use its own funds to pay for regulated activities that take place during the election. However, to do this:
- the funds must first be transferred from the third party's general bank account to its campaign bank account
- the regulated expenses paid with these funds must be reported in the third party's financial returns
- if the third party has revenues from a mix of foreign and domestic sources, it must transfer an amount no greater than its domestic funding to its campaign account so that foreign funds are not used (see Prohibition on using foreign funds later in this chapter)
There is no limit on the amount of its own funds that a third party can deposit into its campaign account to pay for regulated activities.
A third party can obtain loans to finance regulated activities. The loans must be reported in the third party's financial returns, and the funds must be deposited into the campaign bank account.
Loans can come from individuals who are Canadian citizens or permanent residents or from financial institutions, businesses or other organizations that operate in Canada. They cannot come from foreign entities. (see Prohibition on using foreign funds later in this chapter).
There is no limit on the amount that a third party can borrow to pay for regulated activities.
What is a contribution?
A contribution is donated money (monetary contribution) or donated property or services (non-monetary contribution).
In the case of registered third parties, the Canada Elections Act regulates only contributions provided for the purpose of regulated activities.
|A monetary contribution is an amount of money provided that is not repayable. It must be deposited into the campaign bank account.
Monetary contributions include cash, cheques or money orders, credit card or debit card payments, and online payments (other than contributions of cryptocurrency).
|The amount of a non-monetary contribution is the commercial value of a service (other than volunteer labour) or of property, or the use of property or money, to the extent that it is provided without charge or at less than commercial value.
This includes contributions of cryptocurrency and forgone interest on loans.
What is commercial value?
Non-monetary contributions are recorded at commercial value.
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 that business), or
- 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.
A self-employed graphic designer who is a Canadian citizen offers to design an advertising pamphlet for the third party free of charge. The commercial value of this service has to be recorded as a non-monetary contribution from the graphic designer. In this case, the commercial value is the lowest amount the graphic designer normally charges for the service.
Note: 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 amount is deemed to be nil.
Who can contribute to a third party, and who can accept contributions?
Individuals who are Canadian citizens or permanent residents, and businesses or other organizations that operate in Canada, can make contributions to a third party for regulated activities.
A third party must not use funds from a foreign entity to pay for regulated activities or for advertising that promotes or opposes a political entity at any time.
There is no limit on the amount of contributions that may be made by contributors. Contributor types must be reported in the third party's financial return, as follows:
- businesses and commercial organizations
- trade unions
- corporations without share capital other than trade unions
- unincorporated organizations or associations other than trade unions
Third parties can make contributions to other third parties as long as, based on the context of the transaction, it is not an attempt by the third parties to circumvent the limit on regulated expenses (see Prohibitions on exceeding or circumventing the limit in Chapter 4).
The third party is prohibited from using a contribution for regulated activities if:
- it does not know the name and address of the contributor, or
- it is unable to determine the type of contributor
Contributions provided during the election period for regulated activities must be accepted by the third party's financial agent or a person authorized in writing by the financial agent.
Note: Delegating a person to accept contributions for regulated activities does not limit the responsibility of the financial agent.
Prohibition on using foreign funds
A third party must not use funds from a foreign entity to pay for regulated activities. It must not circumvent, or attempt to circumvent, the prohibition or collude with any other person or entity for that purpose.
A foreign entity includes:
- an individual who is not a Canadian citizen or permanent resident
- a corporation or entity organized outside Canada
- that does not carry on business in Canada, or
- whose only activity in Canada is to influence electors to vote or refrain from voting, either in general or for a particular candidate or registered party in the election
- a trade union that does not hold bargaining rights for employees in Canada
- a foreign political party
- a foreign government or an agent of a foreign government
Contributions received for regulated activities must be reported in the third party's financial returns. Other contributions may also have to be reported. The table below explains what to keep in mind.
|What to keep in mind
|Up to $200 from an individual or group
|Contributions up to $200 are aggregated by contributor type. The third party must keep a record of the contributor's name and address.
|Totalling more than $200 from an individual or group
|The contributor's name, address and type, as well as the amount and date of contributions, must be reported.
If a contributor is a numbered company, the name of the chief executive officer or president must also be reported.
|Made for various identified purposes, including for regulated activities
|The third party needs to report in detail only the contributions that were received for the purpose of regulated activities.
Other contributions made for general purposes that the third party decides to use for regulated activities are reported as the third party's use of its own resources.
|Some made for regulated activities, but third party cannot identify which ones
|The third party must list the name and address of every contributor who made contributions totalling more than $200 for any purpose from the day after the previous general election to the last day of the election being reported on.
- A Canadian not-for-profit association makes a $50,000 contribution to a third party for regulated activities. The third party deposits the amount in the bank account that was opened for the campaign and reports the contribution in its financial return.
- After an election is called, a third party decides to organize an event in support of a candidate. Olga, a self-employed event planner who is a Canadian citizen, offers to organize the event free of charge. Olga would normally charge $2,000 for this service. The third party reports the commercial value of the service, $2,000, as a non-monetary contribution from Olga.
- Jared, a permanent resident of Canada, donates a $175 software licence to the third party to create election advertising. Because Jared is not in the business of selling or renting office supplies and the commercial value of the licence is $200 or less, the non-monetary contribution is deemed to be nil and is not reported.
- During a by-election, a Canadian polling firm conducts an election survey free of charge on behalf of the third party. The commercial value of the service is a non-monetary contribution from the corporation. Even if the commercial value is $200 or less, the contribution has to be reported because it is not from an individual.
- An organization's website solicits contributions for various named initiatives. One initiative is the promotion of a registered party through advertising and get-out-the-vote activities in the next election. The third party receives many contributions in response to its general solicitation, but it is not clear which contributions are provided specifically to fund its regulated activities. In its financial return, the third party must therefore list the name and address of every contributor who has donated more than $200 for any purpose from October 22, 2019, up until the last day of the election being reported on.
Accepting contributions of cryptocurrency
A contribution of cryptocurrency is non-monetary. The contribution amount is the commercial value of the cryptocurrency at the time that it was received.
For contributions up to $200, if the contributor is an individual and not in the business of selling cryptocurrencies, the contribution amount is deemed nil.
In all instances, third parties should be mindful of the rules in the Canada Elections Act against circumventing contribution restrictions and watch for unusual amounts or patterns in contributions that they receive.
For a detailed discussion of this topic, please refer to Elections Canada’s interpretation note 2019-12, Cryptocurrencies, on the Elections Canada website.
What is volunteer labour?
Volunteer labour is any service provided free of charge by a person outside of their working hours, excluding a service provided by a self-employed person who normally charges for that service.
Volunteer labour is not a contribution.
Who is eligible to volunteer?
Any person (who is not a corporation, trade union, association or group) can volunteer for a third party, even if they are not a Canadian citizen or permanent resident.
But a self-employed person cannot volunteer a service that they would normally charge for. That is a non-monetary contribution and not volunteer labour.
People who work on-call or variable hours can volunteer for a third party, as long as they are not self-employed in the field and their employer has not instructed them to work for the third party while receiving standby pay or other compensation.
Volunteer labour cannot be provided by corporations, trade unions, associations or groups. In providing free or discounted labour, an organization would be making a non-monetary contribution to a third party.
Note: To know whether a person is an employee or self-employed, ask whether they receive a salary or wages, payroll deductions and a T4 slip from their employer or corporation at tax time. If they do, the person is an employee for the purpose of the Canada Elections Act and can volunteer in the same capacity as their line of business, outside their working hours.
- Nana, who is employed as a teacher, makes phone calls for the third party during the evenings, asking voters to support a candidate. This is volunteer labour and is therefore not a contribution.
- Eve works for an advertising firm and is paid to be on standby on weekends. When she is not doing work for the corporation during these hours, Eve folds flyers provided to her by the third party and distributes them in her neighbourhood. This is volunteer labour and is therefore not a contribution.
- Erik, a self-employed accountant, offers to become the third party's auditor free of charge. Because Erik is self-employed and normally charges for that service, this is not volunteer labour but a non-monetary contribution. However, Erik could volunteer other services: for example he could volunteer to be the financial agent.
Paying volunteers for part of their work
Volunteers can be paid for part of their work related to regulated activities, but the paid work is not volunteer labour. An agreement must be in place before the work is performed. It can specify incentive- or performance-based terms of remuneration rather than a fixed rate. The expenses incurred under the agreement (the payments for the work) are regulated expenses and have to be reported.