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Political Financing Handbook for Registered Parties and Chief Agents (EC 20231) – June 2019

2. Contributions

This chapter defines what is and is not a contribution, explains the rules for administering contributions and provides practical examples. It covers the following topics:

  • What is a contribution?
  • What is commercial value?
  • Who can contribute to whom and how much?
  • Are paid leave, volunteer labour, convention fees, sponsorship or advertising, and coordinated activities contributions?
  • What are the rules for contribution receipts, anonymous contributions and ineligible contributions?

What is a contribution?

A contribution is donated money (monetary contribution) or donated property or services (non-monetary contribution).

Monetary contribution Non-monetary contribution
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 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)

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.

Examples
  1. David, who is not in the business of renting office supplies, lends a photocopier to the registered party's office for the duration of the campaign. The chief agent or a registered agent has to determine the commercial value of this non-monetary contribution by checking with local suppliers to see how much they would charge for renting similar equipment for the same period. If that amount is greater than $200, a non-monetary contribution must be reported. If it is $200 or less, the contribution is deemed nil and does not have to be reported.
  2. Paula, a self-employed individual in the business of providing information technology services, offers to set up the computers in the registered party's office and does not charge for the service. This is a non-monetary contribution from Paula. The commercial value is equal to the lowest amount she normally charges for the same kind of service of similar scope.

Who can contribute?

Only individuals who are Canadian citizens or permanent residents of Canada can make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.

Contributions can be accepted from minors, but political entities should consider whether the person is contributing willingly and using their own property or money.

Note: Corporations, trade unions, associations and groups cannot make contributions.

Limits on contributions, loans and loan guarantees to a registered party

This table displays the limits for registered parties. The limits for all entities are available in Chapter 1, Reference Tables and Timelines.

Limits on contributions, loans and loan guarantees to a registered party
Political entity 2019 annual limit Limit per election called between Jan. 1 and Dec. 31, 2019
To each registered party $1,600* n/a

Notes

  • 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 is an exception 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 increase by $25 on January 1 in each subsequent year.

Examples
  1. Max decides to contribute $1,600 to the registered party he supports. In addition, he makes a $600 contribution to the party's registered association in his riding. When a federal election is called in the same year, he makes a $1,000 contribution to the candidate representing the party in his riding. With that, Max reaches the annual limit for contributions to the registered party as well as the annual limit for contributions to any combination of candidates, registered associations and nomination contestants of the registered party. He could still make a contribution to political entities of other registered parties.
  2. Clara made a $1,600 contribution to the registered party she supports. Later that year an election is called and Clara makes another $100 contribution to the same party. The chief agent, however, is aware of the contribution made earlier in the year and returns the cheque to Clara because she has already reached her annual limit.
  3. Peter gave a $1,600 loan to a registered party early in the year. The full amount is still outstanding on December 31. Consequently, Peter could not have made another loan, contribution or loan guarantee that year to the registered party. The sum of contributions, loans and loan guarantees cannot at any time exceed the contribution limit.

Note: These examples use the limits in effect for 2019.

Volunteer labour is not a contribution

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 can volunteer for a political entity, even if they are not a Canadian citizen or permanent resident.

But a self-employed person cannot volunteer a service they would normally charge for. That is a non-monetary contribution and not volunteer labour. The person would have to be an eligible contributor under the contribution rules and stay within their contribution limit.

People who work on-call or variable hours can volunteer for a political entity, as long as they are not self-employed in the field and their employer has not instructed them to work for the political entity while receiving standby pay or other compensation.

Volunteer labour cannot be provided by corporations, trade unions, associations or groups.

Note: To know whether a person is an employee or self-employed, ask if 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.

Examples
  1. Nana, 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.
  2. Alex, a self-employed graphic designer offers to design a pamphlet for the registered party free of charge. Because Alex is self-employed and normally charges for that service, the pamphlet design is not volunteer labour. The commercial value of the service has to be recorded as a non­monetary contribution. In this case, the commercial value is the lowest amount Alex normally charges for that service.

Paying volunteers for part of their work

Volunteers can be paid for part of their work, 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.

Example

Suzanne is being paid to manage the registered party's social media accounts. Suzanne has signed an agreement that lists the tasks she will perform and her hourly wage. Often, when she has finished her paid work, Suzanne volunteers for the party. This is an acceptable combination of paid and volunteer work. The expenses incurred under the agreement are expenses that have to be reported. The volunteer labour is not reported.

Nominal gifts and thank-you parties

The registered party can give each volunteer nominal gifts (but not money) up to a total value of $200 and throw a thank-you party after an election without this being considered compensation. The associated expenses are not subject to the election expenses limit.

Example

After the election, the registered party holds a pizza party for its volunteers. They are each given a $50 travel bag and a $100 gift card in appreciation of their hard work. The cost of the gifts and thank-you party is a registered party expense not subject to the election expenses limit.

OGI reference

For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2019-01, Volunteer Labour, on the Elections Canada website.

Party convention or leadership convention fees are contributions

The payment of fees by or on behalf of an individual to attend a party convention or a leadership convention is a contribution to the registered party. Ineligible contributors cannot pay attendance fees for themselves or on behalf of others.

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 at a political event is a contribution

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.

Example

The registered party holds a golf tournament as a fundraiser. The party encourages individuals to sponsor a hole: for $200, they can have their names printed on a small sign attached to the flag pole. The full amount paid by each individual is a contribution to the party. The party does not ask corporations or unions to sponsor a hole because only individuals can make contributions.

Activities conducted by others in coordination with the party may be contributions

Whether outside or during an election, people or groups other than affiliated political entities (that is, third parties) will sometimes conduct activities that benefit a registered party. As a general rule, if the third party acts independently of the party, there is no contribution. Rather, the activity is an expense of the third party and is subject to all applicable rules.

However, if the party works with the third party, the third party activity may be a contribution.

If the third party directly provides goods or services to the party, this is clearly a contribution. As well, if an activity was coordinated with the registered party, the expense that the third party incurs for the activity may be a non-monetary contribution. Any such contribution will be subject to all the contribution rules, including the contribution limit and the prohibition on anyone other than an individual who is a Canadian citizen or permanent resident making a contribution.

Note: The following are indicators of what is and is not coordination that results in a contribution being made, but each situation is different and must be evaluated based on all relevant facts. As a best practice, registered parties should act independently of third parties to avoid accepting possibly ineligible or illegal contributions.

The coordination of an activity that benefits the registered party may result in a contribution if the registered party did one or more of the following:

  • requested or suggested that the third party undertake the activity
  • was materially involved in decisions about the activity
  • gave the third party information about the plans or needs of the registered party that influenced how the third party organized or undertook the activity

On their own, the following types of coordination do not result in a contribution:

  • the third party publicly endorses the registered party
  • the registered party gives the third party information about its policy positions
  • the registered party gives the third party publicly available information
  • the registered party and third party attend the same event or invite one another's members to an event

Note: In cases where there was no coordination because the registered party was not aware of the activity, or did not act in a manner that would indicate that it accepted the contribution, a third party may nevertheless be contravening the prohibition against circumventing the contribution limits or the restrictions on the source of contributions. This would be the case, for example, if the third party assumed the costs related to the holding of a party's convention or to carry out a party membership drive.

Examples
  1. During the election period, the party leader makes a campaign announcement in a company's factory with employees standing in the background. This is not a contribution. However, if the third party incurs any incremental costs (such as additional security) to hold the activity, the registered party must pay those costs.
  2. During the election period, a party leader is invited to address a meeting of a community association or religious congregation. This is not a contribution. However, if the third party incurs any incremental costs to hold the activity (such as catered refreshments that are not usually provided), the registered party must pay those costs.
  3. During the election period, a third party decides to hold an event to endorse a registered party. The third party and the party decide together on the time and place of the event and work together to establish a speakers list. The cost of the event must be borne by the registered party (or eligible contributors) as the third party coordinated the organization of the activity with the party.
  4. During the pre-election period, a registered party asks a third party corporation to use its internal resources to help recruit volunteers for an upcoming event. The third party must not agree to the request. Recruiting volunteers in this way would be a contribution to the party.

Note: Some situations that are not coordination may still be collusion during a pre-election period or election period, especially if they involve the sharing of information. See Chapter 11, Interacting with Third Parties in the Pre-election and Election Periods.

Accepting and recording contributions

Only the chief agent and authorized registered agents can accept contributions to the registered party.

Contribution What to do
Anonymous contributions Anonymous contributions of $20 or less can be accepted.
Contributions over $20 and up to $200 The contributor's full first and last names (initials are not acceptable) have to be recorded, and a contribution receipt must be issued. To issue a tax receipt, the agent has to record the contributor's home address as well.
Contributions over $200 The contributor's full first and last names (initials are not acceptable) and home address have to be recorded, and a contribution receipt must be issued.
Note: When total contributions from an individual are over $200, their name, partial address and contribution amounts disclosed in the financial return will be published on the Elections Canada website.

This table summarizes some important points about accepting contributions and issuing receipts.

Contribution received What to keep in mind
Cheque from a joint bank account
  • Generally reported under the name of the individual who signed the cheque.
  • 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 to be reported in accordance with that agreement.
Through an online payment service
  • An online 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 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 a registered party expense of $10.
From a partnership
  • The partnership should provide the following information in writing:
    • names and home addresses of each contributor
    • the voluntary nature of each contribution
    • who it is intended for
    • the amount of each contribution
  • The instructions should be signed and dated by each contributor.
  • Each contributing partner's next draw of income from the partnership should be reduced by the amount of that partner's contribution.
From an unincorporated sole proprietor
  • Must be recorded in the individual's name (not the business name), using the contributor's home address when an address is required.
Note: It is recommended that registered parties only accept contributions made by way of a traceable instrument.

Accepting contributions of cryptocurrency

A contribution of cryptocurrency is non-monetary and not eligible for a tax receipt.

The contribution amount is the commercial value of the cryptocurrency at the time that it was received. There are two ways to determine the commercial value:

  • If the transfer passed through a payment processor (such as BitPay) that provided an exchange rate, use that rate.
  • If the transfer did not go through a payment processor or no exchange rate was provided, use a reasonable rate on a major exchange platform (such as Coinbase) at the time closest to when the transfer was sent. The valuation must be readily ascertainable and verifiable.

A transaction in cryptocurrency will almost always involve a processing fee. The full amount sent by the individual is a contribution to the political entity, and the processing fee is an expense.

Political entities should set up a two-step process to identify contributors of over $20 and record transaction information from the blockchain so that contributions can be audited.

For contributions up to $200, if the contributor is not in the business of selling cryptocurrencies, the contribution amount is deemed nil. But the contributor must still be eligible under the contribution rules. Over $20, the registered party must keep a record of the contributor's name.

In all instances, registered parties should be mindful of the rules in the Canada Elections Act against circumventing contribution rules and watch for unusual amounts or patterns in contributions that they receive.

OGI reference

For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-10, Cryptocurrencies, on the Elections Canada website.

Issuing contribution receipts

A receipt has to be issued for each monetary contribution over $20 or non-monetary contribution over $20 that is not deemed nil.

Only the chief agent and authorized registered agents can provide official receipts for contributions, including tax receipts. Tax receipts can be issued only for monetary contributions.

It is recommended for the chief agent to use Elections Canada's Electronic Financial Return (EFR) software to issue all receipts. EFR is free and can be accessed from the Elections Canada website.

Example

Clara contributed $500 to the registered party she supports. Later in the same year when an election was called, Clara contributed $300 to Peter, a candidate for that party in her riding. Clara will receive a receipt for $500 from the registered party and a receipt for $300 from Peter's campaign.

Determining the date a contribution is made

As most contribution limits apply per calendar year, the date a contribution is made is important. It is also important for reporting purposes because this same date will be used as the "date received" in the registered party's return.

The date a contribution is made is generally the date the contribution is in the hands of the chief agent or an authorized registered agent. There are exceptions for contributions made by regular mail, by post-dated cheque and electronically.

How contribution is made Date contribution is made
In person The date the contribution is in the hands of the chief agent or an authorized registered agent.
By regular mail The date of the postmark on the envelope. If the postmark is not legible, the contribution is made on the date the agent receives the mail. The party should keep the stamped envelope as part of its records.
Post-dated cheque by any means The date on the cheque.
Electronically (e-transfer, credit card, PayPal, etc.) The date the contributor initiates the transaction. If the transaction is post-dated, the contribution is made on the date specified by the contributor.
Examples
  1. On December 23, 2018, Lucy goes to the registered party's office and gives a cheque in the amount of $300, dated for the previous day. The chief agent deposits the cheque on January 10, 2019. The contribution is made on December 23, 2018. The chief agent issues a receipt for 2018, and the amount counts toward Lucy's 2018 contribution limit.
  2. Hassim makes an e-transfer to the registered party on December 23, 2018, but the chief agent does not process the amount until January 10, 2019. The contribution is made on December 23, 2018. The chief agent issues a receipt for 2018, and the amount counts toward Hassim's 2018 contribution limit.
  3. The chief agent receives a cheque from Janelle in the mail on January 5, 2019. The cheque is dated December 28, 2018, and the postmark on the envelope is December 30, 2018. The contribution is made on December 30, 2018. The chief agent issues a receipt for 2018, and the amount counts toward Janelle's 2018 contribution limit.
  4. The chief agent receives a cheque from Andrew and deposits it in the registered party's bank account. A few days later, when checking the account online, the chief agent notices that the bank has charged the account a fee because the cheque did not have sufficient funds. No contribution has been made and the bank charge is a registered party expense. If Andrew issues a new cheque later, the contribution is made on the date associated with the new contribution.

Recording anonymous contributions

If anonymous contributions of $20 or less are collected during an event related to the party, 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.

Example

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, one of the organizers 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.

The organizer remits the contributions to the chief agent after the event, along with the following details: a description and the date of the event, the approximate number of people who attended (40), and the amount collected in anonymous contributions ($326). The chief agent records the event details, deposits the amount into the party's bank account and reports the contributions in the annual return.

Remitting anonymous contributions that cannot be accepted

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 ineligible amount (that is, the amount over $20 or $200) without delay to Elections Canada, payable to the Receiver General for Canada.

Ineligible contributions

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 a person who is not a Canadian citizen or a permanent resident
  • contributions an individual makes as part of an agreement to sell goods or services, directly or indirectly, to a registered party or a candidate (for example, a registered party cannot agree to buy signs from a local dealer in exchange for a contribution)

Returning ineligible or non-compliant contributions

The chief agent or a registered agent must not accept a contribution that exceeds the limit and should not accept any other type of ineligible contribution.

The chief agent has to return or remit a contribution within 30 days of becoming aware that:

  • it is ineligible, or
  • it was received as part of a regulated fundraising event for which the publication or reporting requirements were not complied with

An ineligible or non-compliant contribution must be returned to the contributor or remitted to Elections Canada, based on whether or not it was used.

A monetary contribution is considered used if the party's bank account balance fell below the ineligible or non-compliant amount at any time after the contribution was deposited into the bank account.

Flowchart 1 explains how to administer ineligible or non-compliant contributions in different scenarios.

Examples
  1. The chief agent of a registered party deposits a cheque for $625 from a contributor. When he enters the contribution in the books, he notices that the same person has already contributed $1,000 in that year. Within 30 days, assuming the money has not been spent, the chief agent has to issue a cheque for the excess amount, $25, and send it to the contributor. He records a returned contribution of $25.
  2. The chief agent receives a cheque for $2,000 from a contributor. As this is obviously an over-contribution, the chief agent cannot deposit the cheque. She sends it back to the contributor uncashed, and no reporting is required.
  3. An individual makes a non-monetary contribution to the party by offering the use of office equipment for a week. The chief agent later realizes that the commercial value of renting the same office equipment is $1,700, which is higher than the contribution limit. The equipment was used, so he sends a cheque for the excess amount of $100 to Elections Canada, payable to the Receiver General for Canada. He records a contribution of $1,700, a returned contribution of $100 and an expense of $1,700.
  4. The chief agent receives a notice from Elections Canada a couple of months after the reporting deadline. It states that a person who contributed $900 to the party on two occasions exceeded the annual limit by $200. Since the deposit date of the second contribution, the registered party's bank account balance had fallen below the ineligible amount of $200 and the funds were therefore used. The chief agent must remit $200 within 30 days of becoming aware of the contravention. To obtain funds, she could organize a fundraising event or request a transfer from an affiliated political entity. Once the money is available, the chief agent sends a cheque for the excess amount to Elections Canada, payable to the Receiver General for Canada. She records a returned contribution of $200.

Note: These examples use the limits in effect for 2019.

Flowchart 1: Returning ineligible or non-compliant contributions

Flowchart 1: Returning ineligible or non-compliant contributions

Text Description "Flowchart 1: Returning ineligible or non-compliant contributions"

*A monetary contribution was used if the party's bank account balance fell below the ineligible amount at any time after the contribution was deposited into the bank account.

**For example, the contributor's address is known and there are no obstacles to prevent the return.

Collecting online contributions on behalf of candidates

A registered party may set up a system on its website to collect online contributions to candidates, acting only as an intermediary.

The contributions cannot be deposited into the registered party's general bank account. They must be held in a separate account opened for that sole purpose until they are disbursed to the intended recipients. One bank account may be used for all of the party's candidates.

If a contribution to a candidate is processed through the party website:

  • the contribution is made to the candidate and counts toward the limit for contributions to candidates, not to the registered party
  • the party sends the contribution amount, less the actual fees charged by the payment processing company, to the candidate's campaign (the party cannot deduct any additional amount)
  • the party also sends supporting documents that show the contributor's name, contribution amount, date the contribution was made, and so on
  • the official agent reports the full amount given as a contribution from the individual and issues a receipt
  • the official agent reports the processing fee as an other electoral campaign expense
Example

Bernice makes a $50 contribution to a candidate using the registered party's online contribution system. The payment processing company charged a $1 transaction fee, so the registered party sends the candidate's campaign $49 and details about the contribution. The official agent records a contribution of $50 from Bernice and an other electoral campaign expense of $1. The official agent issues a receipt to Bernice for $50, keeping in mind that the receipt is only valid for tax purposes if the contribution was made after the candidate was confirmed and no later than election day.

OGI reference

For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-06, Online Contributions Made to Candidates Through the Registered Party, on the Elections Canada website.