Backgrounders

Elections Canada: General Information: Backgrounders

Political Financing of Candidates – New Rules on January 1, 2004 New rules for the financing of federal election candidates came into effect on January 1, 2004. The rules are part of important changes to the Canada Elections Act made by Parliament in June 2003. This backgrounder summarizes the main changes affecting candidates in the amended Canada Elections Act,and is not intended to be a comprehensive outline of the Act's new provisions. Six other backgrounders summarize changes affecting individuals, corporations and trade unions, registered political parties, electoral district associations, leadership contestants and nomination contestants. The most significant changes affecting candidates concern contributions and the reimbursement of expenses. Limits on contributions by individuals Any individual who is a Canadian citizen or permanent resident of Canada may make these contributions: up to $5,000* in total in a calendar year to a particular registered political party and its registered electoral district associations, nomination contestants and candidates   up to $5,100* in total to a candidate for a particular election who is not the candidate of a registered political party A candidate may also contribute an additional $5,000* out of his or her own funds to his or her own election campaign. For a candidate of a registered party, the additional $5,000* is the total amount allowed for both the nomination and election campaigns. Contribution limits are adjusted annually for inflation*. Unlimited contributions There is no limit to a contribution made in an individual's will as an unconditional, non-discretionary contribution ("testamentary disposition"). Limits on contributions by corporations and trade unions A corporation or trade union may contribute: up to $1,000* in total in any calendar year to the registered associations, nomination contestants and candidates of a particular registered party   up to $1,000* in total to a candidate for a particular election who is not the candidate of a registered party Certain corporations and trade unions are not eligible to make a contribution: a corporation that does not carry on business in Canada   a trade union that does not hold bargaining rights for employees in Canada   a corporation that is wholly and directly owned by the Crown, and its wholly owned subsidiary, or   a corporation that receives more than 50 percent of its funding from the federal government A special provision applies if two elections are held in an electoral district in a single calendar year, and a corporation or trade union has already made a contribution to the candidate of a registered party in that electoral district before the first election day. In that case, the corporation or trade union may make further contributions of up to $1,000* to the candidate of the registered party in the same electoral district during the election period for the second election. Another special provision concerns a contribution to an unsuccessful nomination contestant. A corporation or trade union may have made a contribution to a nomination contestant in an electoral district, but the contestant is not endorsed by the registered party as its candidate. In that case, during the same year the corporation or trade union may make contributions not exceeding $1,000* in total to the endorsed candidate after he or she is endorsed. Those contributions to the candidate of a registered party are allowed only for one election in one electoral district in any calendar year. Indirect contributions A candidate must not normally receive an indirect contribution – one that comes from the money, property or services of another person or entity (including companies, unions and associations), if that other person or entity gave it to the contributor to make a contribution to the candidate. Nevertheless under certain circumstances, an unincorporated organization or association is allowed to make contributions to a candidate that come from money provided by an individual who is a Canadian citizen or permanent resident of Canada. The contributions must not exceed: $1,000* in total in any calendar year to the candidate of a registered party   $1,000* in total to a candidate for a particular election who is not the candidate of a registered party With each contribution, the association must also provide a statement containing the following information: the name and address of the individual who is responsible for the association   the amount of the contribution   the name and address of each individual whose money forms part of the contribution, the amount of money provided by that individual included in the contribution, and the date on which it was provided A special provision applies if two elections are held in an electoral district in a single calendar year, and an unincorporated association has already made an indirect contribution to the candidate of a registered party in that electoral district before the first election day. In that case, the association may make further contributions of up to $1,000* to the candidate of the registered party in the same electoral district during the election period for the second election. Another special provision concerns a contribution to an unsuccessful nomination contestant. An unincorporated association may have made a contribution to a nomination contestant in an electoral district, but the contestant is not endorsed by the registered party as its candidate. In that case, during the same year the unincorporated association may make contributions not exceeding $1,000* in total to the endorsed candidate after he or she is endorsed. Those contributions to the candidate of a registered party are allowed only for one election in one electoral district in any calendar year. Transferring funds A transfer of funds is permitted and is not considered to be a contribution if it is: from a registered party to a candidate endorsed by the party   from a registered association to a candidate endorsed by the party with which it is affiliated   from a candidate endorsed by a registered party to the party or a registered association of the party   from a candidate to himself or herself in his or her capacity as a nomination contestant in the same election, or   from a nomination contestant of a registered party to the official agent of the candidate endorsed by the party in the electoral district in which the nomination contest was held A candidate of a registered party may not transfer to the party any amount: received as an indirect contribution from an unincorporated association (see the Indirect contributions section above), or   received from a corporation or a trade union that made an allowable contribution of up to $1,000 in total in any calendar year to the registered associations, nomination contestants and candidates of a particular registered party Providing goods and services Providing goods or services is permitted and is not considered to be a contribution if it is: from a registered party to a candidate endorsed by the party   from a registered association to a candidate endorsed by the party with which it is affiliated   from a candidate endorsed by a registered party to the party or a registered association of the party, or   from a candidate to himself or herself in his or her capacity as a nomination contestant in the same election   Providing paid leave of absence Providing paid leave of absence is permitted and is not considered to be a contribution if it is: provided by an employer who is eligible to make a contribution   provided during an election period to an employee to allow him or her to be a candidate Receipts The official agent must issue a receipt for each contribution over $25. If the official agent organizes a candidate's campaign meeting or fundraising event and collects anonymous contributions of $25 or less per person, the official agent must record a description of the function and its date, the approximate number of people present, and the total amount of anonymous contributions accepted. Income tax credit When Parliament changed the Canada Elections Act, it also changed the Income Tax Act to allow higher income tax credits for political contributions by an individual: for contributions up to $400, a credit of 75 percent (for example, a $300 credit for a contribution of $400)   for contributions from $401 to $750, a credit of $300 plus 50 percent of the amount over $400 (for example, a $475 credit for a contribution of $750)   for contributions over $750, the lesser of $650 or $475 plus 33⅓ percent of the amount over $750 (for example, a $650 credit for a contribution of $1,275) The credits apply to monetary contributions – supported by authorized receipts – to a registered party, a provincial division of a registered party, a registered electoral district association and a candidate. New allowable expense A new allowable election expense for candidates is the cost of – or a non-monetary contribution to – conducting election surveys or other surveys or research during an election period. Reimbursement of expenses Immediately after the return of the writ in an election, a candidate who receives 10 percent or more of the valid votes cast is eligible for the first instalment of a reimbursement payment from public funds for his or her election expenses and personal expenses. Previously the candidate had to receive 15 percent of the votes to be eligible. The candidate is eligible for payment of the final instalment after the official agent gives the Chief Electoral Officer the candidate's electoral campaign return and associated documents. That instalment is the lesser of: 60 percent of the sum of the candidate's paid election expenses and paid personal expenses, less the partial reimbursement, or   60 percent of the maximum election expenses allowed for the election, less the partial reimbursement. Previously the portion was 50 percent. Offences and punishment The Act itemizes a number of offences, such as attempting to circumvent or collude in circumventing the rules for ineligible contributors, for concealing a contributor's identity and for contribution limits. Depending on the seriousness of the offence and the type of court proceeding, maximum penalties include a fine of $1,000 to $25,000, or imprisonment for a term of up to five years, or both. The court may also impose additional penalties, such as performing community service and compensating for damages.   *  Click here to access the limit in effect.   For more information, please contact: Elections Canada 257 Slater Street Ottawa, Ontario K1A 0M6 Telephone 1 800 463-6868 toll-free in Canada and the United States 001 800 514-6868 toll-free in Mexico (613) 993-2975 from anywhere in the world For people who are deaf or hard of hearing: TTY 1 800 361-8935 toll-free in Canada and the United States Fax (613) 954-8584 1 888 524-1444 toll-free in Canada and the United States This publication is available in alternative formats. June 2004