As we enter the second week of the federal election campaign, we take a closer look at the financial contribution rules at the federal level.
Campaign Financing Rules
1. Only individuals, not corporations, can make political contributions
The Canada Elections Act ("CEA") is Canada's primary federal electoral legislation. As such, it governs and regulates the process by which Members of Parliament are elected to the House of Commons. Under Section 363(1) of the CEA, no person or entity other than an individual who is a citizen or permanent resident as defined in subsection 2(1) of the Immigration and Refugee Protection Act shall make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.
2. Contribution Limits
It is worth emphasizing that under section 367(1) of the CEA, no individual shall make contributions that exceed:
(a) $1,500 in total in any calendar year to a particular registered party;
(b) $1,500 in total in any calendar year to the registered associations, nomination contestants and candidates of a particular registered party;
(c) $1,500 in total to a candidate for a particular election who is not the candidate of a registered party; and
(d) $1,500 in total in any calendar year to the leadership contestants in a particular leadership contest.
The contribution limits set out in subsection (1) increase by $25 on January 1 in each year. The 2021 total annual limit $1,650.
3. Spending Limits
The CEA defines an election expense as any cost incurred by a registered party or a candidate to the extent that the property or service that the cost was incurred is used to directly promote or oppose a registered party, its leader or a candidate during an election period. However, it is worth noting that such expenses are subject to limits for candidates and registered political parties, which are calculated according to a specific formula. On that basis, candidate spending limit amount varies from one district to another, depending on the length of the election period.
The list of preliminary election expense limits for candidates by electoral districts for this general election has been posted on the 2021 federal election website of Elections Canada1.
4. Third Parties
Despite clear restrictions on political contributions, corporations are not precluded from making contributions to third parties for partisan activities, partisan advertising and election surveys during pre-election and election periods in the event they wish to do so. However, the third party must report a contribution of $200 and over in addition to the identity of the person who made the contribution in expenses returns to Elections Canada.
A corporation that carries on business in Canada can also register as a third party. The corporation must register as a third party when it incurs costs of $500 or more on regulated activities that take place during the election period, and must comply with limits on expenses for regulated activities (i.e. election advertising, election surveys, partisan activities), which are capped at $525,700 for this general election and $4,506 in a given electoral district 2. In addition, third parties must comply with stringent financial reporting rules and obligations under Part 17, Division 3 of the CEA.
The Commissioner of Canada Elections is responsible for enforcing the CEA, which governs the administration of federal elections and referenda in Canada. The Commissioner is an independent officer and is appointed by the Chief Electoral Officer following consultation with the Director of Public Prosecutions.
We would be pleased to discuss further.