Political Financing Handbook for Registered Parties and Chief Agents (EC 20231) – June 2021
6. Registered Party's Expenses
This chapter takes a broad look at a registered party's expenses and how they are administered. It covers the following topics:
- What are the registered party's expenses?
- Who can incur and pay the registered party's expenses?
- How do expenses relate to non-monetary contributions and transfers?
- What invoices have to be kept?
- Auditor's fees
- Repaying and reporting unpaid claims
Note: 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.
What are the registered party's expenses?
The registered party may incur operating expenses that include the normal administrative costs of maintaining the party as an ongoing entity. These expenses must be reported in the party's annual financial return.
If a general election or by-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 separately for a general election. See Chapter 8, Election Expenses, for more information on managing these expenses.
In the year of a fixed-date general election, a registered party might also incur partisan advertising expenses for the pre-election period. Partisan advertising expenses are subject to a limit and must be reported along with the party's election expenses. See Chapter 7, Partisan Advertising Expenses for the Pre-election Period, for more information on managing these expenses.
Non-monetary contributions and transfers are also expenses or assets
The registered party incurs an expense or acquires an asset when it accepts a non-monetary contribution or a non-monetary transfer of property or services.
Keep in mind that if a service is provided free of charge by an eligible volunteer, there is no contribution and no expense. See Volunteer labour is not a contribution in Chapter 2, Contributions, for details.
|Received from an individual at no charge||The full commercial value is a non-monetary contribution.*|
|Purchased from an individual for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary contribution.*|
|Received from an affiliated political entity at no charge||The full commercial value is a non-monetary transfer.**|
|Purchased from an affiliated political entity for less than commercial value||The difference between the purchase price and the commercial value is a non-monetary transfer.**|
The full commercial value of the property or service is an expense or an asset.
*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 no expense has to be reported.
**All non-monetary transfers provided by a candidate or a registered association must be reported, regardless of commercial value.
- After the election is called, Simon donates office supplies—packages of paper, ink cartridges and binders—to the registered party. Buying the same items in the local stationery store would cost $300; therefore, this is the commercial value of the donated goods. The chief agent has to record the following: $300 as a non-monetary contribution from Simon and $300 as an election expense.
- The chief agent accepts tablets from a registered association during an election period for use by party volunteers. The association paid $1,000 for the tablets and provides the chief agent with a copy of the original supplier invoice. The chief agent has to record the following: a non-monetary transfer of $1,000 from the registered association and an election expense of $1,000.
Note: Some examples in the handbook use "cost" as the amount of an expense. This is because most purchases are made at a retail price. However, if the registered party pays less than a retail price, the expense to report for the property or service is its full commercial value.
Who can incur expenses?
The chief agent can incur the registered party's expenses. Other registered agents authorized in writing by the chief agent can also incur the registered party's expenses, but only in accordance with that authorization.
An expense is incurred when the party becomes legally obligated to pay. The timing will vary based on how the property or service is procured. For example:
- Where a written contract is executed, such as an office lease or a loan agreement, the expense is incurred when the contract is signed.
- Where there is no written contract, the expense is incurred when a verbal agreement is reached. Generally, this is when property or services are ordered or, for retail purchases, at the point of sale.
For a non-monetary contribution of property or services, the expense is incurred when the party accepts the contribution.
Who can pay expenses?
Only the chief agent and authorized registered agents can pay registered party expenses in most cases.
There is one exception to this rule. A person authorized in writing by the chief agent or an authorized registered agent can pay petty expenses for office supplies, postage, courier services and other incidentals from the petty cash. The chief agent or registered agent must set the maximum amount that may be paid.
Note: If the candidate is a party leader, a registered agent of the registered party can also incur expenses for the leader's campaign as a candidate and pay them from the party's bank account.
If an expense of $50 or more was incurred by the registered party, either the chief agent or the authorized registered agent who incurred the expense must keep a copy of the supplier invoice setting out the nature of the expense. Once it is paid, the agent must also keep the proof of payment.
If an expense of less than $50 was incurred by the registered party, either the chief agent or the authorized registered agent who incurred the expense must keep a record of the nature of the expense. Once it is paid, the agent must also keep the proof of payment.
For payments made from the petty cash, the person who is authorized to pay petty expenses has to provide the documents mentioned above to the chief agent or registered agent within three months after the date the petty expense was incurred.
Fees charged by the auditor to audit the registered party's returns are an expense of the party. The Canada Elections Act does not provide a subsidy in relation to audit services for a registered party.
Repaying and reporting unpaid claims
All invoices for claims have to be submitted to the chief agent or authorized registered agents. Claims have to be paid within 36 months after payment is due.
The party's annual financial return must include the following schedules related to unpaid claims:
- statement of unpaid claims (claims past due as of December 31 or claims with no due date)
- previously reported claims that have been paid in full since the last fiscal period
- statement of claims that remain unpaid 18 or 36 months after their due date
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-09, Unpaid Claims and Reporting Requirements, on the Elections Canada website.