Political Financing Handbook for Registered Parties and Chief Agents (EC 20231) – April 2020
8. Election Expenses
This chapter explains what election expenses are, describes how limits are calculated and applied, and gives examples of typical election expenses. It covers the following topics:
- What are election expenses?
- Limits on election expenses
- Reimbursement of election expenses
- Typical election expenses (election advertising, voter outreach, travel, etc.)
- Use of existing resources (intellectual property, office expenses, websites, etc.)
What are election expenses?
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 or oppose a registered party or its leader during an election period
The concept of "directly promoting or opposing a registered party or its leader" is not limited to election advertising. It is to be understood broadly and includes expenses for running a campaign, such as office rental, telecommunication services, etc.
This means that most expenses reasonably incurred for property or a service used during the election period in relation to an electoral campaign are election expenses, unless they are:
- non-promotional fundraising expenses (see Chapter 5, Fundraising)
- accessibility expenses (see Chapter 9, Accessibility Expenses)
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 registered parties.
The limit applies to the total of all election expenses, whether paid, unpaid or accepted as non-monetary contributions or transfers.
The chief agent 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.
The registered party will need an expense approval process to help ensure that the chief agent and any 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 to manage finances effectively.
Note: A registered party that exceeds its election expenses limit will have its reimbursement reduced based on a sliding scale. See Chapter 14, Reimbursements, for details.
How are the limits calculated?
Elections Canada calculates the election expenses limit for each registered party as follows:
- For electoral districts where the party has endorsed a candidate, $0.735 is multiplied by the number of names appearing on the preliminary lists of electors or on the revised lists of electors, whichever is greater.
- The limit is then adjusted by the inflation adjustment factor in effect on the day the election is called.
Note: During an election, expenses limits are published on the Elections Canada website in the Political Participants section.
Limits on election expenses for by-elections
When a by-election is called, Elections Canada calculates the registered party election expenses limit for the electoral district.
If multiple by-elections are being 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 has endorsed a candidate. A party with candidates in more than one electoral district may distribute its election expenses limit among the electoral districts as it sees fit.
Typical election expenses
The following are examples of typical election expenses.
Traditional election advertising
What is election advertising?
Election advertising is the transmission to the public of an advertising message promoting or opposing a registered party during the election period.
Promoting or opposing a registered party may include but is not limited to:
- naming the party
- identifying the party, including by its logo
- providing a link to a web page that names or identifies the party
Expenses incurred for advertising conducted during the election period, including the expenses for production and distribution, are to be reported as election expenses.
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 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."
The Canada Elections Act prohibits the transmission of election advertising to the public in an electoral district on election day before the close of all polling stations in the electoral district.
The blackout does not apply to distributing pamphlets or posting messages on signs, posters or banners during that period. Nor does it apply to transmitting a notice of an event that the party leader will attend or an invitation to meet or hear the party leader.
- 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 expense for the flyers—including their design, printing and distribution—is an election expense. 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 a radio station, promoting the party. The expense for the advertisement—including its design, recording and transmission—is an election expense of the party. The advertisement is election advertising and has to include an authorization statement from the chief agent.
Election signs are election advertising and are subject to the tagline and blackout requirements mentioned above for traditional election advertising. Signs installed before election day do not need to be removed as part of the blackout requirements.
Expenses incurred to obtain election signs for the registered party's campaign are election expenses. Even if some signs are never installed, the expense to obtain the signs counts toward the election expenses limit.
Sometimes election signs are vandalized or stolen. If the party has many affected signs, it may want to report the expense to replace vandalized or stolen signs as a registered party expense not subject to the limit instead of an election expense. This can be done if the party:
- replaces the vandalized or stolen signs with signs of the same cost (or, if the signs are more expensive, reports the increase in cost as an election expense)
- files a police report that includes a description of the signs, their location and costs
- keeps the police report and evidence of the vandalism or theft in its records (for example, photographs or a statement from the property owner)
Signs are often used for more than one election. For details, see the Use of existing resources section below.
Note: Because uninstalled signs count toward the election expenses limit, a registered party should be mindful to purchase only the quantity of signs that it intends to install.
Election advertising on the Internet
What qualifies as election advertising on the Internet?
Election messages communicated over the Internet are election advertising only if:
- they meet the general criteria for election advertising (see What is election advertising? above), and
- they have, or would normally have, a placement cost (such as sponsored or boosted content)
For greater certainty, the following are not election advertising:
- messages sent or posted for free on social media platforms such as Twitter and Facebook
- messages sent by email or through other messaging services (including texts sent through a cellular or mobile network)
- videos posted for free on social media platforms such as YouTube and Instagram
- content posted on the party's website (the ongoing expenses for creating and maintaining a website are not placement costs)
However, any associated costs are election expenses. See the Websites and web content section below.
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.
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 period, regardless of whether or not they are election advertising.
Information to be held in an online registry
Regulated online platforms (that is, websites or applications that meet certain criteria for monthly visitors or users) have to maintain a registry of political advertising.
When a registered party purchases election advertising online, to make sure it complies with the law, it should:
- inform the platform that it is conducting political advertising
- ask if the platform is regulated by the rules in the Canada Elections Act and needs information for its registry (unless the platform has already made this clear)
If the platform is regulated, the party must provide it with:
- an electronic copy of the advertisement
- the name of the registered agent who authorized its distribution on the platform
The platform must publish this information in its registry from the day the ad runs until two years after election day.
The Canada Elections Act prohibits the transmission of election advertising to the public in an electoral district on election day before the close of all polling stations in the electoral district.
The blackout does not apply to the transmission of a message on the Internet that was placed before the blackout period began and was not changed during that period—for example, an advertisement placed in a weekly online magazine.
However, if an Internet advertisement is actively transmitted to different users daily and the registered party is able to control the transmission date—for example, a paid social media or search engine advertisement—the blackout must be respected.
The blackout also does not apply to transmitting a notice of an event that the party leader will attend or an invitation to meet or hear the party leader.
- 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. Because the banners have a placement cost and promote the party, they are election advertising and have to be authorized by the registered agent. They are subject to the blackout on election day. 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 during an election, promoting the party. The content 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.
Websites and web content
Registered parties commonly use their websites as a promotional tool during elections. This means some portion of the costs to design, host and maintain the websites are election expenses. Social media accounts might also be used to promote the registered party during the election period.
New or pre-existing website
For a general election, the election expense is calculated by:
- determining the commercial value of designing an equivalent website (or the actual expense incurred to produce the website, whichever is lower)
- adding the prorated cost to host and maintain the website
For a by-election, the election expense is calculated by:
- identifying the pages that contain by-election content and determining the commercial value of designing equivalent pages (or the actual expense incurred to produce those pages, whichever is lower)
- adding the prorated cost to host and maintain those pages
In both cases, the backend costs for contribution pages and online stores are excluded because non-promotional fundraising expenses are excluded from election expenses.
The registered party keeps its website online during a general election. The website's design, maintenance and hosting cost must be reported as an election expense. The chief agent calculates the expense in three parts:
- The party paid to produce the website several years ago, so the chief agent determines the commercial value of designing an equivalent website and includes it as an election expense.
- He excludes backend costs for the contributions page and online store.
- He adds the prorated cost to host and maintain the website for the length of the election period.
The chief agent determines separately the election expense for pre-existing content on the website and its social media pages.
New web content
Expenses to produce and distribute web content are usually election expenses when the content is first posted during an election period to promote or oppose a party or its leader. Web content includes text, audio, visuals, videos and promotional applications.
If content was produced entirely or in part using volunteer labour, only the actual expense incurred by the party is an election expense. This may include materials, equipment rental or paid labour.
- The registered party produces a promotional video and posts it online during the election period. The video contains footage created by the party and footage obtained at no cost in the public domain. The full expense to create, assemble and edit all parts of the video must be reported as an election expense. The footage obtained at no cost, if it would be available for free to any other registered party, is not included in the calculation. If a segment of one video is recycled into other videos of the party in the same election, the production cost of that segment is counted only once.
- One of the registered party's volunteers attends a speaking event of the leader outside her working hours and records a short video on her cell phone. She then posts the video for free on the party's social media accounts. There is no expense to report for producing and distributing this web content.
Pre-existing web content
Expenses to produce and distribute pre-existing web content that remains accessible during an election, whether on the registered party's website or social media pages, is an election expense if the party:
- incurred the expense to produce the content for the election, or
- promoted the content during the election period
Promotion, in the context of pre-existing web content, is to transmit or draw attention to an item of content through any means, such as advertising, mass emails, social media postings, re-posting of content, or coordinated promotion through another entity, person or group.
For greater certainty:
- If the party directs users to the home page of its website or social media accounts (for example, "Visit us online at party.ca or facebook.com/party"), only content produced for the election that is displayed on that page is an election expense.
- Despite the above, if the party directs users to a page of its website or the home page of its social media account that hosts only videos (for example, "Visit us online at party.ca/videos or youtube.com/party"), all the videos on the linked page are election expenses.
- To limit the number of videos that will count as election expenses, the party could set up a separate page for videos it intends to promote (for example, by creating a YouTube playlist or a party.ca/electionvideos page on its website) and direct users to that particular page.
- Social media icons that appear in a communication (for example, at the end of an email) are not in themselves a means of promotion, even if they contain a link to the related home page.
- Coordinated promotion includes any agreement or any other form of coordination—written or otherwise, express or implied—under which another entity, person or group promotes the party's pre-existing web content that the party is not otherwise promoting (for example, by agreeing to post links to the content).
It is important to note that, unlike election advertising, promotion can be considered to have taken place even if there was no placement cost.
Despite the above, there will be no election expense if the party can show that the content was clearly promoted solely for an event or circumstance other than the election, such as a leadership or policy convention.
At the end of a general election, the registered party has 200 videos across its website and social media accounts, of which 180 were posted before the election period. The chief agent must determine which of these pre-existing videos are election expenses.
First, she determines which of the 180 videos were promoted during the election. The party had linked to its pre-existing videos in the following ways:
- It posted links to its YouTube election playlist in emails and social media posts. The playlist contained 10 pre-existing videos.
- It embedded 5 other pre-existing videos in its Facebook and Twitter posts.
- It tweeted links to 6 other pre-existing videos on its website.
- It displayed social media icons at the bottom of its digital communications. This does not count as promotion of the pre-existing content.
This means that 21 of the 180 pre-existing videos were promoted during the election and are likely election expenses. The chief agent does not find any videos to exclude based on their being clearly promoted solely for an event or circumstance other than the election.
Next, by looking at the totality of circumstances, the chief agent determines which of the 159 remaining pre-existing videos were produced for the election:
- Among the 159 videos, 40 were posted in the 12 months before the general election, when the party began ramping up its election strategy.
- The chief agent looks at those 40 videos and finds that 30 were not produced for the election—they are speeches from a leadership contest, holiday messages from the previous year, etc.
- The chief agent determines that the other 10 videos are election expenses because they mention voting in the next election or are policy videos posted shortly before the election.
As a result, the chief agent reports the production and distribution costs incurred for the 31 pre-existing videos as election expenses.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-04, Pre-existing Web Content of Registered Parties in an Election, on the Elections Canada website.
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 on 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 election expenses.
Note: A registered party must register with the Canadian Radio-television and Telecommunications Commission (CRTC) if it uses a calling service provider or automatic dialing-announcing device to make voter calls during an election period. Refer to the CRTC's Voter Contact Registry web page for details.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2019-11, Application of Partisan and Election Advertising Rules to Telephone Calls, on the Elections Canada website.
Rental of a temporary party office
The registered party may rent temporary office space for the duration of the campaign. The portion of the rent incurred before and after the election period has to be recorded as a registered party expense. Only the portion of the rent used during the election period is an election expense.
The party rents an office on March 1, a month before the election is called. The rental agreement is for three months and the rent is $300 a month. The election period is 37 days. The election expense to be recorded is the rent for the month of April, plus the rent for 7 days in May: $300 + (7/31 x $300) = $367.74. The remaining amount, $532.26, has to be recorded as an expense of the party.
The installation cost incurred for items used during the election period is an election expense even if the installation takes place before the election is called, as long as the item itself is an election expense. Installation costs cannot be prorated.
Other office expenses include the cost of buying office supplies, such as paper or toner cartridges, or supplying refreshments during meetings. As long as these supplies are used during the election period, the cost of buying them is an election expense.
Expenses related to surveys or research conducted during the election period are election
expenses. Expenses related to surveys or research conducted outside the election period are not election expenses, even if the results of the survey are used during the election.
After the election was called, the chief agent engaged Election Polling Inc. for $1,500 to conduct a survey. Once the survey was completed, the chief agent issued a cheque from the party's bank account to pay Election Polling Inc., recorded the amount as an election expense and kept the invoice to submit later with the party's return.
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 incurred for return trips of the party leader, staff or campaign workers after the election period are not election expenses.
Note: If the party is paying to relocate campaign workers to a municipality and return them home after the election, the travel costs incurred are not election expenses, no matter when the travel occurs. Per diems and lodging paid by the party for days during the election period are election expenses.
If employees on the staff of a parliamentarian 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 parliamentarian.
However, if the employees work on the party's campaign outside normal business hours or are on leave, their involvement is volunteer labour. For more information, refer to Volunteer labour is not a contribution in Chapter 2, Contributions.
Communications during a by-election
When does a communication expense count as an election expense for a by-election?
As part of their everyday operations, registered parties may conduct activities that sometimes overlap with a by-election period. Expenses incurred by the registered party to produce a communication and distribute it during a by-election period are election expenses only if the communication was distributed for the by-election.
The totality of circumstances should be considered, including whether the content mentions the by-election or an issue of particular interest in the electoral district, how many days into the election period it was transmitted, whether the communication was planned close to the 180-day limit for the by-election being called, and how the communication fits into the party's overall strategy.
Calculating the expense for production and distribution
If a communication is distributed during and for the by-election, 100% of the production cost (or the commercial value, if it was contributed or transferred) is an election expense. This is true even if the communication is distributed to a broader area than the by-election riding.
If the communication is distributed to a broader area than the by-election riding, the election expense for distribution is what it would actually cost to distribute to the smallest area that includes the by-election riding. If there is no smaller distribution area for the specific medium used, then 100% of the distribution cost is an election expense.
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 ridings. A registered party purchases election advertising for the by-elections 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 ridings and reports them as election expenses.
- There is a by-election underway in Scarborough–Agincourt. The party runs an ad on XYZ News across Ontario, in part to influence voters in that by-election. An election expense must therefore be reported. The party paid $4,000 to produce the ad and $2,000 to run the ad on XYZ Ontario. For this advertising, the smallest distribution area that includes Scarborough–Agincourt is XYZ Toronto. The actual cost to run the ad on XYZ Toronto would have been $1,600. The total election expense is therefore $5,600 ($4,000 production + $1,600 distribution).
- There are by-elections underway in Victoria and St. John's East. The registered party sponsors a Facebook post opposing a registered party, targeted to Canadian users aged 18 to 65 with an interest in politics, in part to influence voters in the by-election ridings. An election expense must therefore be reported. The party paid $500 to produce the post and $8,000 to sponsor it for one week.
Because sponsored posts can be targeted by postal code, and ridings can be linked to postal codes, the smallest distribution areas for this advertising are the postal codes linked to Victoria and St. John's East. In this case, prorating the cost based on targeted users in the two ridings is a reasonable way to arrive at the actual cost for distribution:
- Targeted Facebook users: Canada, 4,000,000; Victoria, 12,000; St. John's East, 7,000
- $8,000 / 4,000,000 users in distribution area x 12,000 users in Victoria =
$24 election expense for distribution
- $8,000 / 4,000,000 users in distribution area x 7,000 users in St. John's East =
$14 election expense for distribution
- There is a by-election underway in Winnipeg Centre. Before the by-election was called, the registered party had planned to send a national fundraising email to its supporters with an embedded video that solicits contributions. After the by-election is called, the party adds content to the email about issues of particular interest in the by-election riding. The cost to produce the email, including the video, is $2,000. Because the registered party adjusted its content for the by-election, the production cost of $2,000 is an election expense. The party used a free email service to send the message, so there is no election expense for distribution.
For a detailed discussion of this topic, please refer to Elections Canada's interpretation note 2018-05, Communication Expenses of Registered Parties in a By-election, on the Elections Canada website.
Use of existing resources
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. The chief agent 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.
- During a by-election, the registered party assigns some of its existing staff to perform work directly related to the campaign. The chief agent has to determine the compensation and benefits paid to these employees for the hours spent working on the campaign and report them as election expenses. As well, the employees' campaign work is tied to overhead expenses such as office space, computers, supplies and printers. The chief agent has to allocate overhead expenses for these employees on a reasonable basis and include them as election expenses.
- During a by-election, volunteers use the registered party's office after hours to perform work directly related to the campaign. No compensation is paid to the volunteers. However, their campaign work is tied to overhead expenses such as office space, computers, supplies and printers. The chief agent has to allocate overhead expenses for these volunteers on a reasonable basis and report them as election expenses.
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. Even if the party uses the data during the election period, the intellectual property and the systems used to store and process the information are not election expenses.
The party, as an ongoing political entity, might own capital assets that are used in more than one election.
Under the Canada Elections Act, a capital asset is any property with a commercial value of more than $200 that is normally used outside an election period other than for the purposes of an election (for example, buildings, computers, software, printing equipment and furniture).
If the registered party purchases a capital asset and uses it during the election period, the election expense is the lower of the commercial value of renting a similar asset for the same period or the purchase price.
A capital asset may be eligible for an election expenses reimbursement after one or more elections, depending on how the asset is reported. For example:
- If the asset is reported at the commercial value of renting a similar asset during the election period, it may be eligible for a reimbursement each time it is used in an election.
- If the asset is reported at the purchase price, it may be eligible for a reimbursement only once, after the election for which it was obtained.
For non-capital assets such as office supplies, the purchase price must be recorded as an election expense.
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.
Note: Amortization may not be used as a method of calculating the commercial value of the use of the asset.
If a registered party uses signs in a subsequent election, the amount of the election expense to be recorded is the current commercial value of equivalent signs.
The commercial value, including design, production and installation costs, of any pre-existing billboards that remain in place during the election period are election expenses. Billboards include the sign and the supporting structure. Elections Canada will accept the commercial value of an equivalent sign (that is, the same size and design) that would be temporarily installed just for the election period.
Similarly, with respect to the supporting structure, Elections Canada will accept the commercial value of an equivalent structure that would typically be used for an election period rather than the commercial value of a structure designed to be more permanent in nature. Note that the commercial value of the structure is the lower of its purchase price or its rental cost for the length of the election period.