What you need to know before you donate or advertise during an election

A federal election has been called in Canada for September 20th. If you choose to take part, either as an individual or an organization, there may be rules and restrictions that apply to you under the Canada Elections Act (the “CEA” or the “Act”).[1]

The federal election in 2019 was the first to run under the amendments introduced in Bill C-76, the Elections Modernization Act, which made significant amendments to third party spending limits, rules on how third parties can interact with political entities, and election advertising. These amendments will continue to apply to the 44th federal general election. 

This election law primer is intended to convey some important considerations with regard to political donations and election advertising. It is intended as general guidance only. If you have any specific questions or concerns, please contact Awanish SinhaHartley LeftonAmanda D. IarussoJacob KlugsbergAndrew Butler, or Adam Kanji of our firm’s Public Sector. We would be pleased to assist you.

Contribution limits

Contributions to political entities (parties, candidates, riding associations, and candidates for nomination) may only be made by individuals who are Canadian citizens or permanent residents. This means that corporations, trade unions, associations, and groups are not permitted to make contributions to political entities.[2] Eligible individuals may make monetary or non-monetary contributions, as long as the contribution is of their own funds. This means that individuals are prohibited from making indirect contributions, such as funds or property given to them by another person or by a corporation for the purpose of making a donation.[3] Individuals are also not permitted to make cash contributions in excess of $20.[4]

If you are contributing over $200 to a political entity, you should be mindful that your name, address, and contribution amount(s) will be disclosed publicly by the political entity or entities to which you have contributed in their financial return statements. These financial return statements are published on the Elections Canada website.[5] If you are contributing more than $20 but less than $200, then only your first and last name must be disclosed on the political entity’s financial return. Individuals can make anonymous contributions of $20 or less.

How much can Canadians contribute per year?

In 2021, eligible individuals can contribute a maximum of $1,650[6] per calendar year (i.e., January 1 to December 31, 2021 – the “contribution period”) to each of the following categories:

·         to each registered party (e.g., you can donate $1,650 each to the Liberal Party, Conservative Party, New Democratic Party, Green Party, Bloc Québécois, etc.);

·         in total to all the registered associations, nomination contestants and candidates of each registered party (e.g., you can donate a total of $1,650 split up among three nomination contestants for the Conservative Party in three different ridings, and you can also split up another $1,650 among three Liberal Party candidates in those same (or different) ridings, and so on);

·         in total to all leadership contestants in a particular party leadership contest; and

·         to each independent candidate (someone who is not a candidate of a registered party).[7]

An amount that an individual loans to a campaign is subject to that individual’s contribution limit. In other words, all monetary and non-monetary contributions, the unpaid balance of loans made during the contribution period, and any amount of any outstanding loan guarantees made during the contribution period all count toward the individual’s annual contribution limit.[8]

What about donated goods and services?

Eligible individuals are also allowed to make non-monetary contributions, such as providing property or services without charge or for less than their commercial value.[9] The contribution amount is the commercial value of the property or service – typically the lowest amount usually charged for that property or service.

However, if the commercial value of the property or service is less than or equal to $200 and it is from an eligible individual who is not in the business of providing that property or service, then the contribution amount is zero.[10] For example, work done to build furniture in a campaign office would be deemed contributed at market value if the person doing the work is in the business of furniture building, but would be deemed contributed at a value of $0 if the person doing the work is in a different line of work.

As discussed, non-monetary contributions count toward an individual’s annual contribution limit.

Can I donate cryptocurrency?

Yes.

The rise in popularity of cryptocurrencies has caused Elections Canada to publish specific guidance on cryptocurrency contributions.[11] Elections Canada has determined that a contribution of cryptocurrency is a non-monetary contribution, with an amount equal to the commercial value of the cryptocurrency at the time it is received by the political entity.

Contributions of cryptocurrency may result in the donor’s name and address being documented by the political entity, and disclosed to Elections Canada. If a cryptocurrency contribution is valued at over $200, the political entity must report the contributor’s name and address in its financial return. If the cryptocurrency contribution is $200 or less and the contributor is not in the business of selling cryptocurrencies, then the contribution amount is considered zero.[12] However, the political entity still has an obligation to record the contributor’s name in its financial return. Cryptocurrency contributions of $20 or less can be anonymous.

What if I attend or sponsor a partisan event?

You, your employer, or your employees may consider getting involved in the upcoming election by showing your support for particular candidates or political parties at fundraising events or conventions. Doing so is subject to limitations and disclosure requirements under the CEA.

If you attend a party convention or leadership convention, then the fees paid to attend the convention will be counted as a contribution. The contribution amount will be the difference between the amount paid to attend the convention and the commercial value of any tangible goods or services received at the convention, such as meals or lodging.[13] Furthermore, any amounts paid to a political entity in exchange for advertising or promotional opportunities are considered contributions; the full amount paid to the political entity is subject to the contribution limit rules.[14] It follows that only individuals who are Canadian citizens or permanent residents may pay such amounts.

If you attend fundraising events during the campaign, you may be provided with benefits, such as a T-shirt or dinner. The contribution amount would then be the difference between the amount paid to attend the fundraiser and the fair market value of the benefit received. In certain instances, the benefit amount may be zero if the fair market value of the benefit is less than $75 or is less than 10% of the amount paid to attend the fundraiser.[15] In this scenario, the entire amount paid to attend the fundraiser would be the contribution amount.

If a fundraising event is a regulated fundraising event under the Act,[16] then the registered party organizing the fundraiser may be required to disclose information about you to Elections Canada. These disclosure requirements include, among other things, reporting the name of the entities or persons that the fundraiser financially benefits as well as the name, municipality, province or territory, and postal code of each attendee aged 18 or older.[17]

Third parties

Corporations and interest groups (collectively, “third parties”) may want to show their support for certain political parties or candidates by organizing political events or producing campaign-related advertising. They may also want to provide their views on certain federal policies or legislative initiatives. Bill C-76 introduced new rules respecting third party spending on regulated activities during the “election period”, as described below.

Under the CEA, a third party is generally a person or group that wants to participate in or influence elections other than as a political party, electoral district association, nomination contestant, or candidate.[18] In this context, “group” means, among other things, a group of people acting together by mutual consent for a common purpose. Two groups with related aims, such as two trade union locals of the same parent union, may separately register as third parties.[19] The CEA includes various rules that prohibit groups from combining expenditure limits in order to circumvent the various spending limits.

In broad terms, there are two distinct features of an individual or group’s activities that determine whether or not those activities are captured by theCEA and require that individual or group to register as a third party: (1) the time period in which that activity takes place; and (2) the nature of the activity.

When?

The “election period” begins when the Governor General, on the Prime Minister’s advice, dissolves Parliament and issues the writs of election (i.e., the day that the election is called), and ends on polling day. The election period runs anywhere from 36 to 50 days.[20] In this case, the election period began on August 15, 2021 and ends on September 20, 2021.

What?

When third parties engage in “partisan activities”, “election surveys”, and/or “election advertising” (collectively, “registrable activities or “regulated activities”) within the election period[21], then the applicable third party will have to register under the CEA, subject to certain caveats and conditions.

Here are some important definitions from the Act that may apply to your activities if you are a third party engaging in the election:

·         Partisan activities: Activities carried out by a third party during the election period that promote or oppose a political party, nomination contestant, potential candidate, candidate, or party leader, other than by taking a position on an issue with which the party or person is associated. Activities such as door-to-door canvassing, making telephone calls to electors, and organizing rallies are considered partisan activities. Election advertising or an activity to fundraise for the third party are excluded from the CEA’s definition of partisan activities.[22]

·         Election surveys: Surveys about voting that a third party conducts or causes to be conducted during the election period, if the survey results are used (a) in deciding whether or not to organize and carry out partisan activities or to transmit “partisan advertising messages” or “election advertising messages”, or (b) to inform the carrying out of “partisan activities” by a third party or to inform their transmission of partisan messages.[23]

·         Election advertising: The transmission to the public by any means during the election period of an advertising message that promotes or opposes a registered party or candidate, including by taking a position on an issue with which the party or person is associated. Some activities are not captured by election advertising, including the transmission to the public of an editorial, a debate, a speech, an interview, a column, a letter, a commentary or news, as well as the transmission of a document directly by a person or a group to their members, employees or shareholders, as the case may be.[24]

If you are taking part in any of these registrable activities, you may need to register as a third party under the CEA, as described below.

Who?

A person, corporation or group must register with Elections Canada as a third party immediately after incurring expenses totalling $500 or more for registrable activities that take place during an election period.[25]

“Expenses” has a broad meaning under the CEA.[26] Registration cannot take place before the relevant election period starts.[27]

In order to register, third parties must complete an application process which involves opening a separate bank account, appointing a financial agent and auditor, and fulfilling the disclosure requirements in the Elections Canada application form. Third parties are also required to submit updates following successful registration.[28]

Foreign third parties are prohibited from registering and/or participating in federal elections.[29]

Can I donate to third parties?

Even if you are not organizing events or producing advertising, you may still choose to engage in the election by making contributions to third parties to support their regulated activities. Unlike political contributions, individuals, businesses, and other organizations are permitted to make contributions to third parties, and are not subject to any monetary or non-monetary limit on the amount of their contributions.[30] A third party, however, must not use funds from a foreign entity to pay for regulated activities.[31]

Each contributor’s name and their contribution amounts must be reported in the third party’s financial returns, which are then published on the Elections Canada website.[32]

The bottom line

Participating in an election campaign is a crucial form of civic engagement. Still, individuals as well as private entities and those who work for them should be cognizant of the potential limits on their own involvement.

If you or others in your organization will engage in the political process in the 2021 federal election, take the time to ensure that your internal policies and procedures comply with the rules outlined above.

Authors: Awanish SinhaHartley LeftonAmanda D. IarussoJacob KlugsbergWill Dandie

 


[1] Canada Elections Act, S.C. 2000, c. 9.

[2] Elections Canada, Political Financing Handbook for Registered Parties and Chief Agents (June 2021) at p. 30 [Political Financing Handbook].

[3] Canada Elections Actsupra at s. 370(1).

[4] Canada Elections Actsupra at s. 371.

[5] Canada Elections Actsupra at s. 432(2); Political Financing Handbooksupra at p. 36.

[6] In 2015, the contribution limit was set at $1,500 and provided to increase by $25 per year. Canada Elections Actsupra at s. 367(1.1).

[7] Political Financing Handbooksupra at p. 27; Canada Elections Actsupra at s. 367(1).

[8] Elections Canada, Political Financing Handbook for Registered Parties and Chief Agents (June 2021) at p. 27.

[9] Canada Elections Actsupra at s. 2(1).

[10] Canada Elections Actsupra at s. 2(2).

[11] See Elections Canada, Interpretation Note: 2018-10 (March 2019).

[12] Political Financing Handbooksupra at p. 37.

[13] Political Financing Handbooksupra at p. 32.

[14] Political Financing Handbooksupra at p. 32.

[15] Political Financing Handbooksupra at p. 50.

[16] A regulated fundraising event is typically an event that is organized to financially benefit a registered party with a seat in the House of Commons or a party that had a seat on dissolution, is attended by one of the political actors that financially benefit from the event, and has at least one person paying or contributing $200 or more to attend the event: seeCanada Elections Actsupra at s. 384.1(1); Political Financing Handbooksupra at p. 52.

[17] Canada Elections Actsupra at ss. 384.2 and 384.3; Elections Canada, Political Financing Handbooksupra at p. 55.

[18] Canada Elections Actsupra at s. 349 (“third party”); Elections Canada, Political Financing Handbook for Third Parties, Financial Agents and Auditors (June 2021) at p. 10 [Third Party Handbook].

[19] Canada Elections Actsupra at s. 349 (“third party”); Third Party Handbooksupra at p. 17.

[20] Canada Elections Actsupra at s. 2(1) (“election period”); Elections Canada, The 36-Day Election Calendar.

[21] Canada Elections Actsupra at ss. 2 (“election advertising” and “partisan advertising”) and s. 349 (“election survey” and “partisan activity”).

[22] Canada Elections Actsupra at s. 349 (“partisan activity”).

[23] Canada Elections Actsupra at s. 349 (“election survey”).

[24] Canada Elections Actsupra at s. 2(1) (“election advertising”).

[25] Third Party Handbooksupra at p. 15.

[26] Canada Elections Actsupra at s. 349 (“expenses”).

[27] Third Party Handbooksupra at p. 15.

[28] Third Party Handbooksupra at p. 18.

[29] Canada Elections Actsupra at s. 349.4.

[30] Third Parties Handbooksupra at p. 23.

[31] Third Parties Handbooksupra at p. 23.

[32] Canada Elections Act, supra at s. 349.91(4).

Authors