Political Financing Handbook for Registered Parties and Chief Agents (EC 20231) – June 2016 – Archived Content
This document is Elections Canada's archived guideline OGI 2016-04 and is no longer in effect.
An updated version of this document is available in Tools for Political Parties.
Chapter 3 – Financial Administration
This chapter covers the following topics:
- 3.1 Contributions
- 3.2 Loans
- 3.3 Transfers
- 3.4 Expenses of a registered party
- 3.5 Leadership and nomination contest finances
This chapter helps to explain how the rules and regulations of the Canada Elections Act apply to the registered party's financial administration.
|Political entity||2016 annual limit|
|To each registered party||$1,525*|
- The contribution limits apply to: total contributions, the unpaid balance of loans made during the contribution period and the amount of any loan guarantees made during the contribution period that an individual is still liable for.
- The sum of these three amounts cannot at any time exceed the contribution limit.
There are some exceptions to the limits on contributions:
- Fees collected for membership in a registered party of no more than $25 per year for a period of no more than five years are not contributions. For example, a party could charge $125 for a five-year membership without a contribution being made. However, this exception applies only if the payment is made by the individual who wishes to become a member of the registered party.
* The limits will increase by $25 on January 1st in each subsequent year.
Max decides to contribute $1,000 to the registered party he supports. Later that year, he makes a $525 contribution to the same party. With that, Max reaches the annual limit for contributions to the registered party.
Note: This example uses the limits in effect for 2016.
This section provides details and practical examples about contributions: Who can contribute what and how much? Is volunteer labour a contribution? What are the rules about anonymous contributions, ticketed fundraising events or directed contributions?
In addition, this section provides basic information about how to administer contributions.
Note: The term "individual" used in the Financial Administration chapter refers to a Canadian citizen or permanent resident.
What is a contribution?
A contribution is donated money (monetary contribution) or donated property or services (non-monetary contribution).
Note: Contributions made to a provincial or territorial division of a registered party are contributions to the party.
A monetary contribution is an amount of money provided that is not repayable.
Monetary contributions include cash, cheques or money orders, credit card or debit card payments, and contributions made using online payment services.
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 forgone interest on loans.
What is commercial value?
Non-monetary contributions are recorded at commercial value. The commercial value 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 it (if the person who provided the property or service 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)
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.
A self-employed web designer offers to design the registered party's website and does not charge for the service. This is a non-monetary contribution from the web designer. The commercial value is equal to the lowest amount charged by that individual for the same kind of service of similar scope.
Volunteer labour is any service provided free of charge by a person outside of that individual's working hours. Volunteer labour is not a contribution.
Note: A service provided by a self-employed person who normally charges a fee for that service is a non-monetary contribution and is not volunteer labour. The person providing the service has to be eligible under the contribution rules.
A person who is employed as a teacher offers to work in the evenings in the registered party's office to answer the phone and help with general office duties. This is volunteer labour and therefore is not a contribution.
Who can contribute?
Only individuals who are Canadian citizens or permanent residents can make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.
Note: Corporations, trade unions, associations and groups cannot make contributions.
Depending on the amount and type of the contribution, the contributor's personal information has to be recorded as follows:
- The chief agent or authorized registered agents can accept anonymous cash contributions of $20 or less.
- For contributions over $20, the contributor's name has to be recorded and a receipt must be issued.
Note: In order to issue a tax receipt, the chief agent or the registered agent has to record the address as well.
- For contributions over $200, the contributor's name and address have to be recorded and a receipt must be issued.
Note: When recording a contributor's personal information, the full first and last name (initials are not acceptable) and the home address have to be recorded.
The chief agent and registered agents are responsible for ensuring that contributions are in accordance with the rules set out in the Canada Elections Act. The following contributions are ineligible:
- cash contributions over $20
- contributions from corporations, trade unions, associations and groups
- contributions that exceed the limit
- indirect contributions (no individual can make a contribution that comes from money, property or the services of another person or entity)
- contributions from an individual who is not a Canadian citizen or a permanent resident
- contributions made as a result of a term of an agreement for the provision for payment of goods or services, directly or indirectly, to a registered party or a candidate.
Returning ineligible contributions
The chief agent or a registered agent must not knowingly accept a contribution that exceeds the limit. It is also advisable not to accept any other type of ineligible contribution.
If the registered party receives an ineligible contribution and it has been deposited into the party's bank account, the chief agent has to return the unused contribution to the contributor within 30 days of becoming aware that it is ineligible. If that is not possible, the chief agent has to send a cheque for the amount of the ineligible contribution to Elections Canada, payable to the Receiver General for Canada.
If the registered party receives an ineligible contribution and it has not been deposited into the bank account, the chief agent has to return the contribution to the contributor and no reporting is required.
A contribution is considered used if the bank account balance was below the contribution amount at some point after the contribution date. In this case, the chief agent has to send a cheque for the amount of the ineligible contribution to Elections Canada, payable to the Receiver General for Canada.
In the case of an ineligible non-monetary contribution that has been used, the chief agent has to send an amount equal to the commercial value of the property or service to the Receiver General for Canada.
- A registered agent deposits a cheque for $600 from a contributor into the party's bank account and later becomes aware that the same person has already contributed $1,000 to the registered party in that year. The chief agent sends a cheque in the amount of $75 to the contributor.
- The chief agent receives a cheque for $2,000 from a contributor. As this is obviously an over-contribution, the chief agent does not deposit the cheque, but sends it back to the contributor.
Note: These examples use the limits in effect for 2016.
If the chief agent or a registered agent receives a contribution that is:
- over $20 and the name of the contributor is not known, or
- over $200 and the name and address of the contributor are not known
the chief agent has to send a cheque for the amount without delay to Elections Canada, payable to the Receiver General for Canada.
If a fundraising activity is held for the primary purpose of soliciting monetary contributions through the sale of tickets, the amount of a ticket purchaser's monetary contribution is the difference between the price of the ticket and the fair market value of the benefit that the ticket entitles the purchaser to receive. The benefit received includes the fair market value of using a rented venue, the cost of dinner and entertainment, etc. The chief agent must authorize all fundraising functions.
A ticketed fundraiser was expected to attract 50 attendees. On the assumption that this number would attend, the following expenses were incurred in an open and competitive market:
- room rental – $500
- meal – $2,500
- decoration – $300
- entertainment – $500
- server staff and gratuities – $200
- total – $4,000
The fair market value of the benefit for each ticket purchaser is $80, calculated by dividing $4,000 by 50. The fair market value remains the same regardless of the number of individuals who actually attend the event.
Forty tickets were sold at $200 each for the event. The amount of each monetary contribution is therefore $120, calculated by subtracting $80 (the fair market value) from the ticket price ($200).
Note: The contribution rules apply to contributions made through ticketed fundraising.
Attending a party convention or a leadership convention
The payment of fees by or on behalf of an individual to attend a party convention or a leadership contest is a contribution to the party.
The contribution amount is the difference between the amount paid by the individual and the commercial value of any tangible benefits received. Tangible benefits include meals, lodging and any other tangible goods or services directly received by the convention attendee. The general expenses incurred by the party in holding the convention, such as room or audiovisual equipment rental, would not be deducted from the convention fee.
Sponsorship or advertising
A transaction involving the receipt of money by a political entity in exchange for advertising or promotional opportunities directed at members or supporters of the political entity is not recognized as a commercial transaction. Any money received as part of such an arrangement is to be treated as a contribution that is subject to the contribution limit and eligibility rules.
Only the chief agent and authorized registered agents can accept contributions to the registered party.
Recording anonymous contributions
If anonymous contributions of $20 or less are collected during an event, the chief agent or an authorized registered agent has to record:
- a description of the function at which the contributions were collected
- the date of the function
- the approximate number of people at the function
- the total amount of anonymous contributions accepted
Anonymous contributions of $20 or less may also be received outside the context of a particular function. In that case, the chief agent or a registered agent has to keep track of the total amount collected plus the number of contributors.
Volunteers of the registered party organize a wine and cheese event one evening and invite local residents. Approximately 40 people show up. During the evening, the chief agent passes a basket around to collect cash contributions from the attendees. She informs the guests about the contribution rules: a maximum of $20 can be accepted from any one individual as an anonymous cash contribution. At the end of the evening there is $326 in the basket.
After the event the chief agent has to record the following: the date and a description of the event, the approximate number of people who attended (40), and the amount collected in anonymous contributions ($326).
Issuing contribution receipts
Only the chief agent and authorized registered agents can provide official receipts for contributions, including receipts issued for income tax purposes.
Receipts have to be issued for each contribution over $20.
The chief agent may use Elections Canada's Electronic Financial Return (EFR) software to issue all receipts, including tax receipts. Please refer to the EFR User Guide for more information. The EFR User Guide can be found under the Help menu within the EFR software application. EFR is free and downloadable from the Elections Canada website.
What to keep in mind when administering contributions
As a best practice, it is recommended to only accept contributions made by way of a traceable instrument – such as a cheque or money order – that links the contributor to the contribution. Here are some important points to keep in mind when recording contributions or issuing receipts:
- Although it is recommended to only accept contributions made by way of a traceable instrument, in the event that a contribution is received on a cheque from a joint bank account, it is generally reported under the name of the individual that signed the cheque. However, if the cheque is accompanied by written instructions signed by both account holders indicating how the contribution is to be allocated to the contributors, the contributions are be reported in accordance with that agreement.
- If a contribution is received through an online payment service, a processing fee might apply. The full contribution amount has to be recorded as a contribution and the processing fee has to be recorded as an expense. For example, if the registered party receives a $500 contribution through an online payment service and the net deposit to the bank account is $490, the chief agent has to record and issue a receipt for a contribution of $500 and record an expense of $10.
- Although it is recommended to only accept contributions made by way of a traceable instrument, in the event that the registered party receives a cheque from a partnership, the partnership has to provide the following information in writing: name and home address of each contributor, the voluntary nature of each contribution, who it is intended for, and the amount of each contribution. The instructions must be signed and dated by each contributor. Each contributing partner's share of a partnership draw should also be reduced by the amount of that partner's contribution.
- A contribution from an unincorporated sole proprietor has to be recorded in the individual's name (not the business name), using the contributor's home address (a contributor's address is required for contributions over $200).
Loans are used as a source of financing. This section discusses how loans are received, reported and repaid.
Getting a loan
A registered party may receive loans from either a financial institution or an individual who is a Canadian citizen or permanent resident. A registered party may also receive a loan from a registered association of the party. Loans from any other person or entity are not permitted.
A written loan agreement must accompany all loans.
Loans from financial institutions
There is no limit to the amount a registered party can borrow from a financial institution. Note however that if the financial institution requires a loan guarantee, only a registered association of the party or individuals who are Canadian citizens or permanent residents can guarantee the loan. The amount an individual guarantees is subject to the individual's contribution limit.
Note: A financial institution must charge a fair market rate of interest on loans made to a registered party. Any forgone interest resulting from the financial institution charging a lower interest rate would constitute a non-monetary contribution from an inadmissible contributor.
Loans from a registered association of the party
There is no limit to the amount a party can borrow from a registered association of the party. The registered association of the party can also guarantee loans obtained from financial institutions. There is no limit to the amount a registered association of the party can guarantee.
Loans from individuals
If an individual obtains a personal loan from a financial institution and lends those funds to the registered party, the lender is the individual and not the financial institution. The loan amount would be subject to the individual's contribution limit.
An individual can lend money to a registered party as long as the total of the individual's contributions, the unpaid balance of loans made that year and the amount of any outstanding loan guarantees made that year does not at any time exceed the contribution limit for the calendar year.
Note: An individual cannot make a loan to a registered party if the loan is made possible by money, property or the services of any person or entity that provided it to the individual for that purpose.
The chief agent has to record the interest rate of each loan in the Registered Party Financial Transactions Annual Return.
Interest incurred on a loan is an expense, whether it is paid or accrued. Interest expense accrued during an election period on a loan obtained to finance an election campaign is an election expense.
If the interest rate on a loan from an individual is lower than the market interest rate, the chief agent will need to record the forgone interest as a nonmonetary contribution from the individual.
Note: If the loan is from an individual who is not in the business of lending money and the forgone interest on the loan is $200 or less, the non-monetary contribution is deemed to be nil.
A demand loan is a loan with no specific payment deadline. It is due whenever the lender demands to be repaid. To report a demand loan, a loan agreement has to be submitted with the registered party's financial return. It is recommended that the agreement include a maximum term for the repayment.
Note: If the demand loan is from an individual, it is subject to the contribution limit.
Overdraft and line of credit
If overdraft protection or a line of credit is used, it has to be recorded as a loan at the maximum amount overdrawn during the reporting period. Note however that if the financial institution requires a guarantee, only a registered association of the party or individuals who are Canadian citizens or permanent residents can guarantee the overdraft or line of credit. The amount an individual guarantees is subject to the individual's contribution limit.
The chief agent has to include the following information when reporting an overdraft or a line of credit:
- the maximum amount used
- the name and address of the financial institution
- the interest rate charged
- the dates and amounts of any repayments of principal and payments of interest
- the full name and address of any guarantors and the amounts they have guaranteed
- the unpaid balance at the end of each calendar year
The registered party's bank account has overdraft protection of $1,000. The account goes into overdraft by $200 and the chief agent pays back $100 within the same day. Later on that day, the chief agent withdraws another $400 from the bank account, bringing the highest amount overdrawn during that year to $500. On December 31, the account is no longer in an overdraft position.
The maximum overdraft amount to be reported in the registered party's annual financial return is $500, while the balance on December 31 to be reported is nil.
The chief agent has to include the following information when reporting a loan:
- the full name and address of each lender
- the full name and address of any guarantors and the amount guaranteed
- the interest rate charged
- the amount of the loan
- the dates and amounts of repayments of principal and payments of interest
A copy of the loan agreement must accompany the return.
Note: If there is any amendment to the above information, the chief agent must send an update to Elections Canada without delay.
The Canada Elections Act does not specify a time period within which loans must be repaid.
A transfer is a provision of funds, property or services between political entities of the same political affiliation. Where specifically permitted under the Canada Elections Act, a transfer is not considered to be a contribution, and contribution rules therefore do not apply.
Transfers are permitted only between related political entities (registered party, electoral district association, candidate, leadership or nomination contestant) of the same political affiliation.
However, not all types of entities are authorized to provide all types of transfers. For a quick reference guide to eligible and ineligible transfers, see the Transfers – types and rules table in the Tables and Reminders section.
Note: If an invoice requiring payment is prepared by one political entity and sent to its related political entity, together with a third party vendor invoice representing the commercial value of the goods or services provided, this is not a transfer but a sale of goods or services from one entity to another.
A monetary transfer is a transfer of funds. A non-monetary transfer is a transfer of property or services.
The following transfers may be accepted by the registered party:
- funds, property or services from any registered association of the registered party
- funds, property or services from a candidate of the registered party
- funds from a nomination contestant of the registered party
- funds from a leadership contestant of the registered party
The registered party may transfer funds, property or services to the following political entities:
- an electoral district association of the registered party (whether it is registered or not)
- a candidate (after election day, monetary transfers to candidates are allowed only to pay claims related to the candidate's campaign)
- directed contributions to a leadership contestant (can be sent after the leadership contestant has registered with Elections Canada)
The registered party may transfer property or services, but not funds, to the following political entities:
- a nomination contestant, if the non-monetary transfer is offered equally to all contestants in that contest
- a leadership contestant, if the non-monetary transfer is offered equally to all contestants in that contest
Note: Transfers to or by a registered provincial division of a federal registered party are considered transfers to or by the registered party.
Property or services provided by the registered party to a candidate, nomination contestant or leadership contestant
When property or a service is provided to a candidate, nomination contestant or leadership contestant by the registered party, a copy of the original supplier invoice as well as the invoice from the party must be sent to the candidate's or contestant's campaign. The documentation should confirm the amount reported in the candidate's or contestant's return. Common items supplied by the party include signs and other promotional material.
The registered party purchases signs and transfers them to the candidate's campaign. The party has to send a copy of the original supplier invoice to the candidate. The candidate's official agent has to report the commercial value of the signs as an electoral campaign expense as well as a non-monetary transfer from the registered party.
The chief agent must include the following information when recording a transfer:
- the full name of the affiliated political entity
- the date the transfer was made or received
- the amount of funds transferred, or the commercial value of property or services provided
3.4 Expenses of a registered party
The registered party may incur operating expenses that include the normal administrative costs of maintaining the party as a continuing entity. These expenses must be reported in the statement of expenses that accompanies the party's annual financial return.
If an election is held in a given year, a registered party might also incur election expenses. Election expenses are subject to a limit and must be reported. In the case of a by-election, elections expenses must be reported in the annual financial return, and in the case of a general election, they must be reported in the return in respect of general election expenses.
- 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 registered party has to report the amount charged to the party for an expense. Generally this amount is the commercial value of the property or service received.
Commercial value 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 it (if the person who provided the property or service 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)
Commercial value is generally the amount charged in a store for an item or a service.
If the party purchases a property or a service from an individual for less than commercial value, the chief agent has to report the difference as a non-monetary contribution from the individual.
Note: The party may purchase property or services for less than commercial value from individuals only, because only individuals can make contributions. However, 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.
If the party receives property or a service from an affiliated political entity for less than the commercial value, the chief agent has to report the difference as a non-monetary transfer from the affiliated political entity.
An election expense is:
- any cost incurred or non-monetary contribution received by a registered party 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 registered party or its leader during an election period
- any non-monetary transfer received from a registered association or a candidate of the registered party to the extent that the property or services are used to directly promote oppose a registered party or its leader during an election period
This generally means that any expense reasonably incurred for property or service used during the election period in relation to an electoral campaign is an election expense of the party. Only some fundraising expenses are exceptions to that rule. The exceptions are contribution processing fees and non-promotional expenses for a fundraising activity. In other words, while expenses related to a fundraising activity are not election expenses, any promotion related to the fundraising activity is.
The term "processing fees" means the expenses for processing contributions, which may include bank charges, credit card processing fees, fees for other payment services (such as PayPal) and salaries for data entry when contributions are received.
The concept of "directly promoting or opposing a registered party or its leader" is not limited to election advertising only. It is to be understood broadly as including expenses necessary to run a campaign, such as office rental, telecommunication services etc.
The election period starts on the day the election is called and ends on election day when the polls close.
Limits on election expenses
The Canada Elections Act imposes a limit on election expenses to facilitate a level playing field among political participants. The limit applies to the total of all election expenses, whether paid, unpaid, or accepted as non-monetary contributions or transfers. The chief agent, registered agents and any person authorized in writing by the chief agent to incur expenses all have to respect the election expenses limit. They cannot enter into contracts or incur election expenses that exceed the limit. It is highly advisable to agree on an expense approval process; this will help ensure that the chief agent and any other authorized persons are informed and co-operate when incurring expenses. An expense approval process and a campaign budget created at the beginning of the campaign help manage campaign finances effectively.
How are the limits calculated?
Elections Canada calculates the election expenses limit for each registered party as follows:
- $0.735 is multiplied by the number of names on the preliminary or revised list (whichever is greater) of electors for electoral districts where the registered party has endorsed a candidate.
- The limit is then adjusted by the inflation adjustment factor in effect on the day the election is called.
Limits for by-elections
If a by-election is called, Elections Canada calculates the limits for each electoral district in which a by-election is to be held. If multiple by-elections are held on the same day, the limit for a particular party is calculated by adding the limits for the electoral districts in which the party endorses a candidate. A registered party with endorsed candidates in more than one electoral district may distribute their election expenses limit among the electoral districts as they see fit.
For an advertising expense to be an election advertising expense, it must:
- promote or oppose a party that has endorsed a confirmed candidate in the election, and
- be transmitted during the election period.
All election advertising expenses, including the production, distribution or placement costs, are election advertising expenses subject to the election expenses limit. This includes expenses for election advertising communicated over the Internet.
Even though the advertising may be distributed to a broader area than the electoral district, 100% of the production cost, plus the actual cost to transmit in the region that includes the electoral district (which may be a broader area than the electoral district), are election expenses.
A party purchases an advertisement in a local newspaper that is distributed in a region that includes an electoral district where a by-election is underway. Despite the fact that the newspaper has a distribution area that goes beyond the electoral district, 100% of the production cost, plus the distribution cost for the area that includes the electoral district, are election expenses of the party, subject to the limit for the by-election.
If multiple by-elections are underway at the same time, and the same election advertising is transmitted in more than one electoral district, a party may allocate the election expense among the affected electoral districts.
- There are by-elections underway in three electoral districts. A party purchases election advertising that is transmitted in the broadcast area where the by-elections are underway. The party splits the production and transmission expenses evenly among the three electoral districts.
- There are by-elections underway in three electoral districts. The electoral districts belong to different broadcast areas. A party purchases election advertising that is transmitted a different number of times in each of these broadcast areas. The party splits the production cost evenly among the three electoral districts and reports the actual transmission cost for each electoral district.
Limit increases for longer election period
If an election period is longer than 37 days, the election expenses limit increases as follows:
- the initial limit is divided by 37
- the result is then multiplied by the number of days by which the longer election period exceeds 37 days
Reimbursement of election expenses
A registered party eligible to receive a reimbursement, will receive 50% of paid election expenses (subject to the limit), as reported in the party's election expenses return.
A registered party is eligible for reimbursement in the following circumstances:
- The party has complied with the general election expenses reporting requirements with respect to the original and any amended returns.
- The auditor's report does not contain a statement indicating any of the following:
- The return does not present the information contained in the financial records on which the return is based.
- The auditor has not received all the required information from the party.
- Based on the examination, it appears that proper accounting records have not been kept.
- Based on the examination, it appears that the registered party and the chief agent have not complied with the requirements of sections 363 to 445 of the Canada Elections Act.
- The candidates endorsed by the party received at least:
- 2% of the valid votes cast at the election, or
- 5% of the valid votes cast in the electoral districts where the party endorsed a candidate
Note: The Canada Elections Act does not provide reimbursement for by-election expenses.
Reduction of reimbursement amount
If the registered party's election expenses exceeded the election expenses limit, the reimbursement amount is reduced as follows:
- by one dollar for every dollar that exceeds the limit by less than 5%
- by two dollars for every dollar that exceeds the limit by 5% or more but by less than 10%
- by three dollars for every dollar that exceeds the limit by 10% or more but by less than 12.5%
- by four dollars for every dollar that exceeds the limit by 12.5% or more
Election expense categories
Election advertising is the transmission to the public of an advertising message promoting or opposing a registered party during the election period. Election advertising has to be authorized by the chief agent or a registered agent of the party. This authorization has to be mentioned in or on the message – for example, "Authorized by the registered agent of the XYZ Party of Canada."
Expenses incurred for advertising conducted during the election period, including the cost of production and distribution, are to be reported as election expenses.
Traditional election advertising
Advertisements distributed through traditional means such as signs, billboards, flyers, pamphlets, radio, television, newspapers or magazines during an election period are election advertising and have to be authorized by a registered agent of the party. This authorization has to be in or on the message.
Some advertising material, such as signs, can often be used for more than one election. If these signs are reused in a second or subsequent election, the amount of the election expense to be recorded is the current commercial value of equivalent signs.
- In anticipation of an upcoming election, the chief agent purchases flyers before the election is called and distributes them during the election period to promote the party. The commercial value of the flyers – including their design, printing and distribution – is an election expense of the party. The flyers are election advertising and have to include an authorization statement from the chief agent.
- The chief agent purchases an advertisement that is broadcast during the election period on the local radio station, promoting the party. The expenses for the advertisement – including its design, recording and transmission – are election expenses of the party. The advertisement is election advertising and has to include an authorization statement from the chief agent.
Election advertising on the Internet
Election messages communicated over the Internet are election advertising only if they have, or would normally have, a placement cost.
The chief agent has to authorize any election advertising, and this authorization must be mentioned in or on the advertisement. Where the authorization statement cannot be included on the advertising message because of its size, this is acceptable if the statement is made immediately apparent to the viewer by following the link in the advertising message.
The following are not election advertising:
- messages sent or posted for free on social media platforms such as Twitter and Facebook
- messages sent by e-mail or through other messaging services (including texts sent through a cellular or mobile network)
- content posted on the party's website
However, any associated costs are election expenses.
If online content such as a video, website or Facebook page stays online during the election period, it has to be reported as an election expense. Alternatively, the party may remove all online content before the election period.
Note: A registered agent has to report as election expenses all the expenses related to the design, development and distribution of online communications used during an election, regardless of whether or not they are election advertising.
- The party hires a media firm to place banners on websites and social media platforms during the election period, directing users to a video posted on YouTube. There is a placement cost for the banners; therefore, they are election advertising and have to be authorized by the registered agent. Because there is no placement cost to post the video, it is not election advertising, but all expenses related to designing and developing the video are election expenses.
- A group page has been created for the party on a free social networking site. Volunteers manage the page and post articles related to the party. This is not election advertising. 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.
- The chief agent hires a media firm to post content on the party's website, promoting the party. This is not election advertising, but all expenses related to designing, developing and posting the content are election expenses.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2015-04, Election advertising on the Internet, on the Elections Canada website.
Broadcasting time allocation
During an election period, every broadcaster must make broadcasting time available for registered parties to purchase for the transmission of political announcements and other programming.
In addition, selected broadcasters must also provide a certain amount of free broadcasting time for registered parties.
The amount of broadcasting time is determined by the Broadcasting Arbitrator. For details about how the broadcasting time is allocated, please consult the Broadcasting Guidelines 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 registered party or its leader or any position on an issue with which a registered party 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 registered party or its leader or any issue with which a registered party or its leader is associated
- Raising funds for a registered party
Expenses incurred for voter calls conducted during the election period, including the cost of production and distribution, are to be reported as election expenses.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2015-11, Application of election advertising rules to telephone calls, on the Elections Canada website.
Surveys and research
Expenses related to surveys or research conducted during the election period are election expenses. Expenses related to surveys or research conducted prior to the election period are not election expenses, even if the results of the survey are used during the election.
Intellectual property assets of the party
The party, as an ongoing political entity, might have databases that contain intellectual property created through surveys and research conducted prior to the election period, and uses them during the election period. The intellectual property created by the party through surveys and research conducted prior to the election period, and the systems used to store and process the information are not election expenses.
The party, as an ongoing political entity, might own property that is used in more than one election.
In the case of a capital asset that is used during the election period, the election expense to be recorded is the lower of: a) the commercial value of renting a similar asset for the same period, and b) the purchase price.
If a capital asset is reported at the commercial value of renting a similar asset during the election period, it will be eligible for the election expenses reimbursement each time it is used in an election.
If a capital asset is reported at the purchase price (the commercial value), it will be reimbursed only once, after the election for which it was obtained.
Property other than capital assets (for example, signs) can also be used for more than one election. If a registered party uses such property in a subsequent election, the election expense to be recorded is the current commercial value of equivalent property. Such election expenses are not eligible for the election expenses reimbursement.
The party, as an ongoing political entity, might maintain national or regional offices. Office expenses incurred during an election period are considered election expenses. These include a portion of the rent or property tax, utility cost, insurance, maintenance services, etc.
The chief agent should allocate the office expenses incurred in accordance with the basic activities carried out by that office. He or she must consider the purpose of each activity to determine whether the costs incurred to carry out the activity qualify as election expenses.
For the salaries of staff members or the cost of facilities, the method of allocation can be based on any breakdown that results in a reasonable allocation of costs.
The chief agent should make a reasonable allocation for each component of costs – salary, equipment, supplies, materials, printing equipment and computers.
The party leader's tour expenses are election expenses of the party and may not be election expenses of the candidates. In addition to the expenses of transportation, the party has to include the expenses of all other related items, such as meals, refreshments, salaries of party staff assigned to the tour, and communications equipment rented for the media.
If the candidate's campaign incurs expenses to attend the leader's tour event, such as transporting its campaign staff, volunteers or supporters to the event, these are expenses of the candidate.
Note: If a leader attends a candidate event unrelated to the leader's tour, the expenses are those of the candidate, not of the party. Any incremental expenses incurred by the leader to attend such an event are to be reported as a transfer from the party to the candidate's campaign.
Expenses incurred for travel during the election period are considered election expenses of the party to the extent that the expenses are incurred to promote or oppose the party or its leader.
During an election period, the incidental expenses of salaried and volunteer campaign workers of the party are considered election expenses of the party. These expenses include meals, transportation, lodging and any other expenses reasonably incurred in relation to the party's campaign.
Expenses of senators and ministers or another candidate
If a senator, a minister or another candidate campaigns on behalf of the registered party, the expenses related to that person's involvement in the campaign are election expenses and must be authorized in advance by the chief agent or a registered agent. Any expense incurred in relation to the campaign has to be reimbursed by the party or accepted as a non-monetary contribution if paid by an eligible contributor.
In the event that a senator, a minister, or another candidate has travelled to a particular destination for purposes unrelated to the election and campaigns on behalf of the registered party while there, any incremental costs incurred to assist with the campaign are election expenses.
If employees on the staff of an elected Member engage in political activities to support a registered party during the election period, the salaries of these persons are election expenses of the party and non-monetary contributions from the elected Member. However, if the employees work on the party's campaign outside normal business hours or are on leave, their involvement is volunteer labour. Volunteer labour is any service provided free of charge by a person outside their working hours. It does not include a service provided by a self-employed person who normally charges for that service.
Administering the registered party's expenses
The chief agent is responsible for reporting the registered party's operational expenses and election expenses, and for keeping supporting schedules, as required by the Canada Elections Act.
All expenses, including by-election expenses, are reported in the party's annual financial return. In addition, election expenses must be reported separately within eight months after election day.
For a detailed discussion on reporting expenses, see Chapter 4, Reporting Requirements.
Expenses cannot be transferred
It is important to differentiate between the candidate's electoral campaign expenses and the expenses of the candidate's registered party. The Canada Elections Act specifies separate expenses limits for the registered party and each of its candidates. The Act prohibits the transfer of expenses without accompanying property or services. Each entity has to report the expenses that it incurred for property and services used to promote that entity in the campaign.
Who can incur expenses?
Only the chief agent and authorized registered agents can incur registered party expenses.
Who can pay expenses?
Only the chief agent and authorized registered agents can pay registered party expenses.
Expenses can be paid from the petty cash by a person authorized in writing by the chief agent. (The chief agent must set the maximum amount that may be paid from the petty cash.)
Note: A registered agent of a registered party may incur or pay expenses for the electoral campaign of the leader of the registered party. This is an exception to the ordinary rule that only the candidate's official agent may incur and pay such expenses.
Non-monetary contributions and transfers are also recorded as expenses or assets
If the registered party receives a non-monetary contribution, the full commercial value of the property or service is a contribution from the individual.
If the registered party purchases property or a service from an individual for less than commercial value, the difference between the purchase price and the commercial value of the property or service is a non-monetary contribution from the individual.
In both cases, the full commercial value of the donated property or service is also an expense or an asset.
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 is deemed to be nil and consequently no expense has to be reported. However, all non-monetary transfers, provided by a candidate or a registered association must be reported, regardless of commercial value.
If the registered party receives property or a service from an affiliated political entity at no charge, the full commercial value of the property or service is a nonmonetary transfer from the affiliated political entity.
If the registered party purchases property or a service from an affiliated political entity for less than commercial value, the difference between the purchase price and the commercial value of the property or service is a non-monetary transfer from the affiliated political entity.
In both cases, the full commercial value of the transferred property or service is also an expense or an asset.
An expense related to a non-monetary contribution or transfer is incurred when the contribution or transfer is accepted.
If an expense of $50 or more was incurred and paid on behalf of the registered party, either the chief agent or the authorized registered agent who made the payment must keep a copy of the supplier invoice setting out the nature of the expense and the proof of payment.
If an expense of less than $50 was incurred and paid on behalf of the registered party, either the chief agent or the authorized registered agent who made the payment must keep a record of the nature of the expense and the proof of payment.
For payments made from the petty cash, the person who is authorized to pay petty expenses has to provide the invoices and proof of payment within three months after the date the petty expense was incurred.
Claims and loans repayment and reporting
All invoices have to be submitted to the chief agent or authorized registered agents.
Claims have to be paid within 36 months after payment is due. There is no time limit for paying loans.
The party's annual financial return must include the following schedules when reporting unpaid claims and loans:
- statement of unpaid claims and loans
- previously reported claims and loans that have been paid in full since the last fiscal period
- statement of claims and loans that remain unpaid 18 or 36 months after due date
Maintaining books and records
The registered party has to maintain proper books and records to ensure accurate reporting and compliance with the Canada Elections Act.
The party's auditor shall have access to the party's books and records at any reasonable time and may require the provision of any additional information or explanation to enable the auditor to prepare the auditor's report.
3.5 Leadership and nomination contest finances
Registered parties usually set their own rules, in addition to those in the Canada Elections Act, for holding leadership and nomination contests. They may provide other restrictions on political financing aspects of the contest, which they administer themselves (e.g. expenses limits for leadership contestants). As long as these rules do not conflict with the requirements of the Canada Elections Act, this is not problematic.
Leadership and nomination contest fees
Leadership and nomination contestants might be required to pay a contest entry fee or other service fees to the registered party. These fees may be refunded to the contestant at the discretion of the party.
A directed contribution is a contribution made to a registered party, with a written request from the contributor that the amount, or part of it, be transferred to a particular leadership contestant. Parties often charge a processing fee for directed contributions. The Canada Elections Act does not restrict the portion of the directed contribution that may be retained by the party.
Contribution processing fees charged to a leadership contestant are considered transfers from the leadership contestant to the party.
The amount directed to the leadership contestant by the contributor is a contribution to the contestant's campaign.
Note: The directed contribution is subject to the limit on contributions made to leadership contestants, not the limit on contributions made to the party.
Administering directed contributions
It is the responsibility of the registered party to provide the leadership contestant's campaign with a Statement of Directed Contributions Received and Transferred to a Leadership Contestant. This form includes the name and address of each contributor, the amount and date of the contribution, the amount of the directed contribution, the amount that the party has transferred and the date of the transfer.
The party and the leadership contestant must also report to Elections Canada any directed contributions received and the amounts transferred.
Note: Income tax receipts are available for directed contributions and are issued by the registered party.
Contributions received during ticketed fundraising events
Because only directed contributions are eligible for income tax receipts, it is common practice during leadership campaign fundraising events for individuals to remit contributions to the registered party, with written instructions requesting that the amount be forwarded to the leadership contestant as a directed contribution.
In the case of a ticketed fundraising event, the contribution amount is the ticket price less the fair market value of the benefit that the ticket entitles the bearer to receive. Since a party may only transfer directed contributions to leadership contestants (no other monetary amount may be transferred from the party to a leadership contestant), only the contribution portion of the ticket price may be sent to the party and directed for transfer to a leadership contestant.
This means the individual who purchases a ticket for a fundraiser must issue two payments: one, paid to the party, for the contribution portion of the ticket price; and another, paid to the leadership campaign, for the difference between the ticket price and the contribution amount.
Tickets are sold at $100 each for a fundraising event organized by a leadership contestant's campaign during a leadership contest. The contribution portion of each ticket is $80, calculated by subtracting $20 (the fair market value of the benefit to be received during the event) from the ticket price ($100).
Ticket purchasers are asked to issue two payments: one for $20, paid to the campaign; and the other for $80, paid to the registered party with written instructions requesting the amount to be forwarded to the leadership contestant as a directed contribution. The registered party issues tax receipts for the contribution amounts and transfers the funds as directed contributions to the leadership contestant.
Note: The contribution rules apply to contributions made through ticketed fundraising.