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Political Financing Handbook for Leadership Contestants and Financial Agents (EC 20195) – October 2015

This document is Elections Canada's DRAFT guideline: OGI 2015-06.

Chapter 1 – Starting the Leadership Contestantís Campaign

This chapter covers the following topics:

Introduction

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

The second part discusses in detail certain tasks that have to be completed at the beginning of the leadership 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 Notice of leadership contest

If a registered party decides to hold a leadership contest, the chief agent of the party has to notify Elections Canada about the start and end dates of the contest. A notice with that information is published on the Elections Canada website.

1.2 How to become a leadership contestant

Definition

From a political financing perspective, a person is deemed to be a leadership contestant from the date a contribution, a loan or a transfer is accepted or a leadership campaign expense is incurred. Contributions, loans or transfers may be accepted before or after the start date of the leadership 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 leadership contestant until the campaign fulfills all financial reporting requirements.

Eligibility

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

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

  • auditors of: candidates, nomination contestants, leadership contestants, registered parties, electoral district associations
  • financial agents of leadership contestants
  • leadership campaign agents

Registration process

Every person who accepts contributions, loans or transfers, or incurs leadership campaign expenses has to register as a leadership contestant even if he or she later decides not to run for the leadership.

The application for registration must include the following:

  • the name of the leadership contestant
  • the address of the place where the leadership campaign's records are maintained, and to where communications may be addressed
  • the name and address of the leadership contestant's financial agent
  • the name and address of the leadership contestant's appointed auditor

The following documents must accompany the application for registration:

  • signed consent from the financial agent to act in that role
  • signed consent from the auditor to act in that role
  • a declaration signed by the chief agent of the registered party, certifying that the party accepts the applicant as a leadership contestant
  • a statement in the prescribed form of contributions and loans received prior to the first day of the leadership contest

Elections Canada maintains the registry of leadership contestants.

Within 30 days after a change in the information contained in the leadership contestant's registration, the contestant has to inform Elections Canada in writing about the change.

The leadership contestant's responsibilities and obligations

The leadership contestant has to appoint a financial agent before accepting contributions, transfers or loans, or incurring leadership campaign expenses. The contestant has to appoint a financial agent and an auditor before filing the application for registration.

Note: Contributions directed through the registered party may not be accepted by the campaign until after the contestant has registered with Elections Canada.

Within 30 days after a change that affects the leadership contestant's registration information, the contestant has to inform Elections Canada in writing about the change.

The leadership contestant must send the signed Leadership Contestant's Statement of Personal Expenses and supporting documents to the financial agent within five months after contest day. The statement must include all personal expenses that were paid by the leadership contestant and not reimbursed by the financial agent.

Note: The leadership contestant must submit the signed Leadership Contestant's Statement of Personal Expenses even if his or her personal expenses were nil.

If a leadership contestant withdraws from the contest after registration, he or she has to send a signed statement to Elections Canada, indicating the date of withdrawal. If the registered contestant is withdrawn by the registered party, the party's chief agent has to send a written statement to Elections Canada, indicating the date of withdrawal.

The registered leadership contestant who withdraws still has to fulfill the reporting requirements up to the date of withdrawal, but is relieved of the interim reporting obligations for any period after the withdrawal. However, he or she must submit the Leadership Contestant's Campaign Return to Elections Canada. For details about financial reporting, see Chapter 4, Reporting Requirements.

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

Other tasks also have to be completed at the beginning of the leadership contest. The order in which the tasks are completed may vary. This section presents a typical sequence of events.

Appoint a financial agent

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

Definition

The financial agent is responsible for administering the leadership 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.

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 leadership 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 leadership campaign expenses must go through the bank account.
  • Only the financial agent and authorized leadership campaign agents can accept contributions, loans or loan guarantees on the contestant's behalf.
  • Only the financial agent and authorized leadership campaign agents can accept transfers or transfer funds on the contestant's behalf.
  • The financial agent or authorized leadership campaign agents must issue receipts for contributions greater than $20 made directly to the contestant's campaign.
  • Only the financial agent, the contestant, or authorized leadership campaign agents can enter into contracts and incur leadership campaign expenses in relation to the contestant's campaign.
  • Only the financial agent or authorized leadership campaign agents can pay leadership 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 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 Leadership Contestant's St a te m ent of Surplus / Amended Campaign Return and the final bank statement.

Appoint leadership campaign agents

Definition

A leadership campaign agent is appointed by the leadership contestant and is authorized to perform specific financial tasks during the campaign.

The leadership contestant may appoint one or more leadership campaign agents.

Eligibility

Eligibility requirements for this role are the same as for the role of financial agent. In addition, the leadership contestant has to specify the terms and conditions of the appointment(s) in writing.

Appointment process

The leadership contestant has to inform Elections Canada within 30 days about an appointment. The written notice has to be certified by the financial agent. It must include:

  • the name and address of the leadership campaign agent
  • any terms and conditions that apply to the appointment
The leadership campaign agent's responsibilities and obligations

A leadership campaign agent may be authorized to perform one or more of the following tasks:

  • accept contributions or loans
  • accept or send transfers
  • incur leadership campaign expenses
  • pay leadership campaign expenses
  • issue contribution receipts

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:  An auditor's report is required if the campaign accepts contributions or incurs leadership campaign expenses totalling $5,000 or more. Note that transfers to affiliated political entities are not leadership 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, as well as 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 contestant has to appoint an auditor before registering as a contestant. The auditor has to sign a statement consenting to act in that capacity. The statement has to be submitted to Elections Canada with the contestant's registration.

If for any reason the auditor is no longer able to continue in that role, the contestant must appoint a new auditor without delay 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 leadership contest if the leadership contestant accepted contributions totalling $5,000 or more, or incurred leadership campaign expenses totalling $5,000 or more. Note: transfers to affiliated political entities are not leadership 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. This could happen before or after the contestant's registration. 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 leadership contestant's name to the name of the bank account. For example: “Peter Raymond, financial agent for Anne Thomas”.

All monetary transactions in relation to leadership 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.