CGA-Canada Elections E-Guide 2011 Table of Contents. Foreword. Candidate. Official Agent. Auditor. Sample Letters. gareth12468/bigstockphoto.

Transcription

1 CGA-Canada Elections E-Guide 2011 Table of Contents Foreword Candidate Official Agent Auditor gareth12468/bigstockphoto.com Sample Letters

2 FOREWORD... 3 INTRODUCTION... 4 Certified General Accountants Association of Canada... 4 Additional Material... 4 Mandate of the Chief Electoral Officer... 4 CANDIDATES... 5 Nomination Contests... 5 Nomination Papers... 6 Best Practices... 6 Official Agents and Auditors... 7 Leave of Absence from a Candidate s Employment... 7 Making Contributions to Your Own Campaign... 7 Gifts and Other Advantages... 8 Campaign Expenses... 8 Election Expenses... 9 Personal Expenses... 9 Reimbursements Offences and Penalties Financial Checklist OFFICIAL AGENTS Qualifications and Eligibility Bank Accounts Maintaining Books and Records Managing Campaign Expenses Election-Specific Expenses Election Expenses Limits Volunteer Labour Campaigning by Elected Members or Senators Expenses of Other Volunteers Election Day Costs for Poll Agents Recycled Signs Capital Assets Election Advertising Liability for Contracts Presentation of Accounts Deadline for Payment Exclusions from Election Expenses Expense Reporting Requirements Non-monetary Expenses Supporting Documentation Exclusions from Campaign Expenses Pre-writ Expenses Nomination expenses Fund-raising expenses Unused inventory Expense Reimbursements Contributions Types of Contributions Contribution Limits CGA Canada Elections e Guide

3 Prohibited Contributions Donations Not Reportable as Contributions Paid leave of absence Anonymous contributions Transferring funds Trust Funds Loans Unpaid Claims Fundraising Activities Official Tax Receipts Income Tax Credits Reporting to the Canada Revenue Agency Campaign Reporting Requirements Auditor s Report and Checklist Candidate s Statement of Personal Expenses Common Problems with Campaign Returns Supporting Documentation Deadline for Filing Amended Return Closing out the Campaign Disposal of Surpluses Closing the Bank Account Checklist for Official Agents AUDITORS Appointment of Auditors Replacement Eligibility Why a Professional Accountant? Ineligibility Effect of Ineligible Appointees Accounting Partnerships Accepting the Engagement Responsibilities Auditors Access Representation Letter Understanding the Nature of a Campaign Assessing Risks of Material Misstatement Determining whether Misstatements are Material Reasonable Assurance Audit Procedures Documentation Requirements Communications Quality Control Updated Returns Compliance with bank account requirements Audit Program CGA Canada Elections e Guide

4 Foreword Whether they are national, provincial, territorial or local, elections in Canada are scrutinized closely to ensure transparency and integrity. Certified General Accountants contribute to that process by providing an important public service based on expertise acquired through rigorous education and experience as well as ongoing professional development. CGAs are valuable members of any political campaign especially as official agents and/or auditors, roles which demand expertise in finance, taxation and senior business leadership. This CGA-Canada Elections E-Guide is a practical adjunct to the Canada Elections Act, a valuable tool for those who audit federal political campaigns, either for general elections or by-elections. It also will help candidates and official agents to understand the stringent accounting and financial reporting requirements of the Act. This 2011 revision incorporates the new Canadian Auditing Standards which came into effect in December It should be noted that this guide does not constitute an official position of CGA-Canada and is not intended as a substitute for legislation, regulations or related documents. I trust that when used in concert with other available resources developed with the invaluable help of professionals, it will facilitate compliance with what has become an increasingly complex electoral environment. Anthony Ariganello, CPA (Delaware), FCGA President and Chief Executive Officer The Certified General Accountants Association of Canada CGA Canada Elections e Guide

5 Introduction Certified General Accountants Association of Canada The Certified General Accountants Association of Canada (CGA-Canada) is a national association of 75,000 members here and abroad. Certified General Accountants (CGAs) work in government, industry, commerce, education and public practice. One of CGA-Canada s tasks is providing programs, tools and support to help our members to provide every aspect of high-quality service to their clients. Many CGAs are active in electoral campaigns as volunteers, financial agents or auditors. Additional Material Elections Canada ( is a resource for prospective candidates, Official Agents and auditors to familiarize themselves with the Election Handbook for Candidates, Their Official Agents and Auditors and other documentation. Mandate of the Chief Electoral Officer In Canada s multi-party democracy, federal elections are coordinated by Elections Canada, an independent, non-partisan agency which reports to Parliament and ensures that voting is open and fair. Its powers are outlined in the Canada Elections Act. Responsibilities of the Chief Electoral Officer (CEO) include: Administering election statutes and regulations; Registering political parties and interest groups which advertise during elections; Maintaining the national register of electors; Appointing returning officers in all electoral districts; Tracking political contributions, examining financial returns and reimbursing expenses to candidates and parties according to formulas laid down in the Canada Elections Act; Making political participation accessible to all citizens, through infrastructure, public education and information programs; and Ensuring that changes in electoral boundaries meet the terms of the Electoral Boundaries Readjustment Act. Throughout this Elections E-Guide, links to specific sections of the Canada Elections Act and to Elections Canada forms are provided for quick reference. Many are identified by brackets; for example, Clicking on [section 1] will link to section 1 of the Act on the Elections Canada website. CGA-Canada acknowledges CGA-Ontario s contribution to this project. CGA Canada Elections e Guide

6 Candidates Most candidates contest a seat in the House of Commons on behalf of a party, but some run independently. Each runs in the electoral district (less formally called a constituency or riding) in which they are nominated and the candidate with the most votes becomes the Member of Parliament for that district. The key participants in each district are the candidates, their official agents (OA) and auditors, and the Returning Officer (RO). The right to be a candidate in a federal election is constitutionally enshrined in the Charter of Rights and Freedoms. Candidacy is open to Canadian citizens who are at least 18 years old by election day and not specifically disqualified under the Canada Elections Act [section 65] [sections 3 and 4]. Also, prospective candidates must learn the Act s procedural requirements. From the decision to seek the nomination to the filing of final financial papers, often months after the election, each step of the process of contesting a seat in the House of Commons is carefully laid out. Candidates may run under the banner of a political party if that party has endorsed them in accordance with the Act. Party members in each electoral district participate in nominating candidates, who must be approved by the national party leader to represent the party in the election. Candidates also may choose to be listed on the ballot as an independent candidate or with no affiliation [section 117]. See the Elections Canada backgrounder on Important Considerations for Prospective Candidates. Appropriate selection of campaign staff particularly OAs who often are accountants is crucial because the Act s rules demand meticulous attention. Nomination Contests Persons seeking nomination and party endorsement may have to contest the nomination. If so, and contestants intend to accept contributions to help to promote their campaigns, they must first appoint a financial agent who will be responsible for accepting and approving all contributions as well as approving and paying nomination expenses. Details are accessible at but Canada Elections Act financial requirements for prospective candidates and their financial agents include: Opening and operating a separate nomination bank account; Accepting contributions only from eligible individuals, and only within their contribution limits; Issuing receipts for contributions over $20; Not accepting any transfers from the political party or association; except goods or services offered to all contestants; Submitting a contestant s return and declarations; and CGA Canada Elections e Guide

7 Submitting an auditor s report if contributions or expenses reach $10,000. Nomination Papers Once a candidate names an OA and an auditor, a Nomination Paper [EC 20010] must be filed with the RO for the electoral district. Most must be signed and witnessed by at least 100 electors registered in the district; some large or remote districts (Schedule 3 of the Canada Elections Act) require only 50 signatures. Nomination papers must be submitted to the RO with a sworn consent from the candidate and include: Statements signed by the OA and auditor consenting to those roles; The name, permanent address and occupation of the candidate and OA, and the name, business address and occupation of the auditor; A $1,000 nomination deposit which is reimbursed if the OA meets deadlines for submitting election expense returns and unused official receipts; and A letter of endorsement signed by the leader of a political party if the candidate wants party affiliation on the ballot; otherwise candidates may run as an independent or without designation. Nominations close at 2:00 p.m. local time on the 21st day prior to election day. Electronic filing is allowed provided ROs receive the deposit and electronic filing by the close of nominations and the original documents no later than 48 hours after the close. Candidates can withdraw from the race until 5:00 p.m. on the closing day for nominations. ROs have 48 hours after receiving nominations to confirm or reject them. If the latter, corrected or revised nomination papers may be filed up to the close of nominations. Write-in nominations are not permitted in federal elections. Best Practices Elections Canada encourages prospective candidates to take the following precautions when preparing nomination papers: File as early as possible, allowing for corrections if the RO finds the nomination papers incomplete; Ensure that the names and addresses of nominating electors are legible and complete, enabling the RO to verify information and confirm the nomination quickly; and Provide more than the required number of signatures against the possibility that the RO may have difficulty validating some and hence be unable to accept them. All signatures must be submitted by 2:00 p.m. local time on the 21st day prior to the election. CGA Canada Elections e Guide

8 Official Agents and Auditors Candidates must appoint OAs before accepting campaign contributions or spending money. As soon as OAs are in place, candidates must appoint auditors. [section 83] Selecting OAs requires candidates to take care not to appoint someone who is ineligible, such as: Election officers or members of an RO s staff; Candidates in the election; Undischarged bankrupts; Auditors appointed under the Canada Elections Act; Persons under 18 years of age; Persons who are not citizens; or Persons who cannot enter into contracts in their province of residence. Candidates must ensure that a prospective auditor is eligible, i.e., is a member in good standing of a professional accounting organization (CGA, CA or CMA) and is licensed or registered by that organization. Accountants are ineligible if they are: Election officers or members of an RO s staff; Candidates in the election; OAs; Agents (as specified in subsection 85(2)) of a political party or a registered association, Financial agents of a registered third party; Party leadership contestants or their campaign agents; or Nomination contestants or their financial agents. OAs and auditors must consent to appointment in writing and if either becomes incapable or the appointment is revoked, candidates must appoint replacements and notify the CEO. Leave of Absence from a Candidate s Employment The Canada Elections Act requires employers under federal jurisdiction to grant employees a leave of absence, with or without pay, to seek nomination and, if successful, to be candidates. Persons considering federal candidacy should determine whether they are eligible for a leave of absence under the Act or whether a collective agreement or provincial legislation affords similar protection. [section 80] Making Contributions to Your Own Campaign The amount of contributions to political campaigns is tightly controlled, including any a person may wish to make to his or her own campaign. Prospective and nominated candidates who wish to contribute funds to their own campaigns may contribute: CGA Canada Elections e Guide

9 Up to the same limit as for contributions received by other individuals. [$1,100 in See Limits on Contributions by Individuals ]; plus: Up to an additional $1,000 which is not counted against the contribution limit for the campaign but must still be reported. As with other contributions, the donation must go through the OA. [subsection 404.2(1)] [subsection 405(4)] Gifts and Other Advantages While campaign contribution limits are specified by the Canada Elections Act, candidates might also be offered gifts or other advantages outside of the campaign. During their candidacy, candidates may not accept gifts or other advantages that could reasonably be viewed as attempts to influence a MP. However, gifts or other advantages provided by a relative (as defined by the Canada Elections Act) or provided as a normal expression of courtesy or protocol may be accepted. Gifts or other advantages accepted by candidates are reportable [form EC 20053] to the CEO within four months after election day. No report is required for gifts or other advantages received: from a donor if the total value received from that donor is $500 or less; from a relative; or by way of an unconditional, non-discretionary testamentary disposition. For the purposes of these prohibitions and reporting requirements, gifts and other advantages do not include contributions or transfers received in relation to candidates campaigns, and are defined as: Money received without an obligation to repay; Services or property or the use thereof, provided free or below commercial value; or Either of the above, given by a relative or as a normal expression of courtesy or protocol received during the period beginning on the date the person becomes a candidate and ending on election day (or at the end of the candidacy). Campaign Expenses The Act categorizes expenses incurred during a campaign so that candidates will know which are subject to spending limits and which may be eligible for federal reimbursement. Campaign expenses include election expenses, candidates personal campaign expenses, audit fees, and costs incurred by a recount of votes unless reimbursed. CGA Canada Elections e Guide

10 Election Expenses Tight restrictions on election spending mandate careful budgeting. Candidates are subject to limits [See Election-specific expenses ] based on a formula that considers the area of the electoral district, the number of registered voters, and population density. [see Election expenses limit ] It is an offence to exceed the spending limit, so candidates must ensure that their OA monitors spending closely. Generally, candidates are personally responsible for all expenses related to the election, including contracts authorized by themselves, their OA or anyone authorized in writing by the OA. While candidates will rely on OAs to prudently manage funds, it is the candidate, not the OA, who is ultimately responsible for the payment of any outstanding accounts at the end of the campaign. The exception is federal government over-reimbursement; the OA is responsible for prompt repayment. [section 446] [section 464] Personal Expenses When candidates purchase goods or services for personal use in the campaign, which would not have been purchased outside the context of an election, those expenses are personal. Since they are not subject to the election expenses limit, they must be tracked separately from election expenses. All personal expenses must be reasonable, incurred only for candidates benefit, and be over and above the expenses candidates would have incurred in the absence of an election. For example, the cost of meals at home are not campaign expenses, but a candidate who relocates to run in another electoral district might incur additional expenses for the costs of meals, which would be considered a personal expense. If other campaign workers also use goods or services acquired for candidates, any additional costs incurred by the workers are election expenses subject to the spending limits. The Election Handbook for Candidates, Their Official Agents and Auditors provides an example: An OA rents a minibus instead of a car so the candidate can travel in the electoral district with several campaign workers. If a car is rented, the cost is the candidate s personal expense. The additional cost of the minibus is an election expense since its cost would not have been needed if the candidate travels alone. However, if a car is rented for the candidate and workers also travelled in it, the entire rental would be considered the candidate s personal expense because no additional costs were incurred to transport the workers. Candidates must submit a Candidate s Statement of Personal Expenses [EC_ PDF ], together with relevant receipts and invoices to OAs within three months of election day. OAs then file those and the campaign returns with the CEO, who determines whether they are reasonable. Personal expenses to be tracked and reported are: CGA Canada Elections e Guide

11 Transportation costs to and within the electoral district; Costs of temporary lodging necessary for the election; Costs of meals and incidental expenses related to the campaign; Remuneration to candidates polling station agents; and All other necessary personal expenses, including childcare, care for incapacitated dependents, and costs arising from disability of the candidate incurred as a result of the campaign.[sections 409, 409.1] Reimbursements If a candidate is elected or receives at least 10 per cent of valid votes in the electoral district, the federal government will reimburse up to 60 per cent of the election expenses limit for that district. [section 464] OAs receive an interim 15 per cent of eligible expenses immediately after election day. Once post-election requirements of the Canada Elections Act are met, a second payment equal to 60 per cent of election and personal expenses is made, less the interim payment to a maximum of 60 per cent of the expenses limit. Any election or personal expenses not paid by the time the OA submits the Candidate s Electoral Campaign Return (EC20120) will not be eligible for reimbursement unless subsequently paid and included on a revised Candidate s Electoral Campaign Return (EC20120). No unpaid expense may be paid later than four months after election day unless authorized by the CEO. Candidates are reimbursed their full $1,000 nomination deposit if their OAs return unused official tax receipts to the RO within a month after election day and submit the required reports and other related documents within the time required by the Act. In the event of a recount, candidates may apply for reimbursement of reasonable recount costs up to $500 per day. The federal government will also subsidize audit fees up to $1,500 or three per cent of the candidate s election expenses if expenses are less than $50,000. Audit fees are subject to agreement between candidates and auditors. Offences and Penalties Candidates or other persons guilty of an offence under the Canada Elections Act may be subject to a fine and/or imprisonment. If found guilty of a corrupt or illegal practice, they lose the right to be elected or hold office for up to seven years. Considering that it is illegal to willfully exceed allowable election expenses and because candidates can be held personally liable, their choice of OAs and workers is critical. [sections ] Financial Checklist The CGA Candidate s Financial Checklist outlines steps to be taken by a candidate relating to the financial aspects of the election campaign. The checklist should be reviewed thoroughly. [Candidate s Financial Checklist] CGA Canada Elections e Guide

12 Official Agents Before candidates accept contributions or spend money on campaigns, they must appoint OAs who become responsible for administering and reporting all financial transactions in accordance with the Act. [section 436] One of an OA s first duties is to complete Part 3 of the nomination papers, which the prospective candidate must submit promptly because a candidacy is not official until the local Returning Officer (RO) confirms the candidate. Qualifications and Eligibility OAs must be legally able to enter into contracts in the province or territory where the candidate is seeking election. They also should be capable of managing finances, including monitoring and recording contributions to ensure legal limits are not exceeded, preparing and working within a budget, authorizing and recording expenses, managing petty cash, and preparing the Candidate s Electoral Campaign Return and other forms. Bank Accounts The Canada Elections Act requires OAs to open a campaign-specific bank account through which all receipts and disbursements of funds must be made. Once statutory requirements are met, OAs must close accounts and forward final statements to the CEO. Also, OAs are responsible for ensuring that: The campaign bank account is opened in a Canadian financial institution or an authorized foreign bank; The account holders are the OAs in their official capacity; the name on the account should be, for example: Michael James, official agent ; The financial institution is instructed to provide monthly statements of account and cancelled cheques (or copies of cheques) to OAs; All of the candidate s financial transactions for the campaign are paid from, or deposited to, the account by their OA; and Cheques received for contributions or other deposits are made payable to the OA. [section 437] Candidates and OAs will be asked by the bank for personal information to open a campaign account, and to provide written confirmation of the OA s appointment. [Sample Banking letter] Before opening an account, OAs should review the Elections Canada information package, which is based on information provided by the Canadian Bankers Association and the Office of the Superintendent of Financial Institutions. [Access to Banking Services by the Candidate s Official Agent] CGA Canada Elections e Guide

13 Maintaining Books and Records Candidates and OAs are responsible for budget control and for ensuring that spending limits are not exceeded, predicated on each OA s maintenance of accurate records of contributions, loans, expenses, and all other funds received or paid out. [subsection 443(1)] Once their candidate s nomination is confirmed, the OA can pick up from the RO the books, records and forms supplied by Elections Canada. Some are available at With careful planning, OAs can set up an accounting system that will be easy to maintain and audit. An initial meeting with auditors to discuss accounting systems should yield valuable insights into advantages and pitfalls of various record-keeping methods. Elections Canada provides manual report forms and reporting software (Electronic Financial Returns - EFR). OAs may choose either. Appendix A in EFR Quick Reference Guide [EC 20049] is an example of a spreadsheet format that could be used to track contributions. The advantages of a spreadsheet that matches the reporting format are that the software accepts imported data and that the OA can set up spreadsheets and other time-saving procedures. Managing Campaign Expenses OAs are the only persons permitted by the Act to pay campaign expenses, except for authorized petty cash payments and candidates personal campaign expenses. Campaign expenses include election expenses, candidates personal expenses and audit fees, and any costs for a recount of votes not reimbursed by the federal government. (See the Candidates section for a review of personal expenses, audit fees, and recount costs.) Election-Specific Expenses In addition to paying and recording expenses paid from bank accounts, OAs must record any unpaid expenses as well as the value of in kind donations of goods and/or services. To be considered election-specific, all goods or services must be used for the candidate s campaign after being nominated and after the writ is issued up to election day. Expenses to promote a nomination are not election expenses. [subsection 407(1)] Examples of election expenses: Lease/rental of campaign office space and equipment; Production, distribution, broadcast or publication of advertising or promotional material; Payment to a person or on behalf of that person for services as an OA or in any other capacity except as a candidate s polling station agent; The cost of meeting space and light refreshment for meetings; and CGA Canada Elections e Guide

14 Election surveys or other surveys or research during a campaign. OAs may decide that certain campaign workers need to spend small amounts on incidental expenses such as office supplies, postage, courier fees, or meals while travelling. If so, the Act requires OAs to specify in writing who is authorized to make those payments and how much is authorized. Also, OAs should advise the authorized person, in writing, of all other relevant requirements, including: The maximum amount authorized, normally the amount issued for petty cash expenses. Any expense of $50 or more requires an invoice and proof of payment and any expense of less than $50 requires a record of the nature of the expense and proof of payment; The date by which all records must be provided to the OA (election day or an earlier date chosen by the OA); That spending more than the maximum is an offence even if the worker does not wish to be reimbursed (except for incidental expenses less than $200, which may be donated by a volunteer without having to be reported as an election expense); and Failure to meet any of these requirements is an offence under the Canada Elections Act. It is an offence for campaigns to exceed spending limits, so OAs must monitor spending closely. [subsections 497(1)(s), 497(3)(p)] [subsection 502(1)(c)] To avoid exceeding spending limits, OAs must record the maximum amount authorized and consider the funds spent until the actual amount is known. [section 411] When completing their Candidate s Electoral Campaign Return, OAs should record petty cash advance cheques as amounts not included in election expenses, since the specific use of the funds was not yet determined when cheques were issued. When receipts are eventually provided to OAs, another entry records the actual election expense as well as the amount not included in election expenses. An example of how to record a petty cash transaction is shown in the Candidate s Electoral Campaign Return Specimen [EC A]. Election Expenses Limits Using a formula that considers the area of the electoral district, the number of registered voters, and population density, the Act limits candidates electionspecific spending. Personal expenses related to the campaign are not limited. [section 440] CGA Canada Elections e Guide

15 Campaign spending limits are available at soon after the lists of electors are published. Shortly after preliminary lists are published, no later than 31 days before election day, the RO notifies candidates or their OAs of their spending limits. Later in the campaign, when the revised list of electors is published, no later than one week before election day, candidates are advised by the CEO of any changes to the spending limit. These changes never reduce the limit; that would be unmanageable late in a campaign. However, if the number of registered voters has risen since publication of the preliminary list, candidates are entitled to an increased limit. To start planning a campaign, OAs may need estimated spending limits, which will be available on request from the CEO, whose office calculates the limit annually for each district each October 15. OAs also may be able to obtain this information from the Member of Parliament for the district or from a registered party that endorsed a candidate in the district in the previous election, since they receive annual updates from the CEO. Since the spending limit could decrease between October 15 and voting day, care must be taken to avoid commitments that rely heavily on the CEO s estimate. [section 442] Volunteer Labour Although the value of donated services is reportable as an election expense, the value of volunteer labour need not be reported. The Act defines volunteer labour as any service provided free of charge by a person outside their working hours, but does not include such a service provided by a person who is self-employed if the service is one that is normally charged for by that person. Examples of donated services that qualify are: Campaign sign painting services provided by a painter who is not selfemployed, working outside his or her normal working hours; Accounting or bookkeeping by a person employed in that capacity by an accounting firm, who is on vacation from his or her position; A self-employed insurance salesman doing free door-to-door campaign canvassing; and Unemployed or retired persons working on a campaign. Conversely, here are examples of donated services that must be evaluated and reported as election expenses and as campaign contributions (subject to the contribution limit): Campaign sign painting services provided by a self-employed painter; Accounting services provided by a self-employed accountant; and The production of campaign material free of charge by a self-employed printer. CGA Canada Elections e Guide

16 The commercial value of donated services that do not qualify as volunteer labour constitutes an election expense which must be authorized by OAs. Contributions (including donated services) cannot be accepted from corporations, labour unions, or associations. Only individuals may contribute to an election campaign; all services obtained from businesses that are not sole proprietorships must be paid for at full commercial value. [See Contributions] Incidental volunteer costs such as meals, lodging and transportation, if paid by the campaign, are considered election expenses. Travel expenses must be supported by a log. If incidental expenses of $200 or more are paid for by a volunteer and the volunteer intends to cover the cost personally, their commercial value will be reportable as both a non-monetary contribution and an election expense. Incidental expenses of less than $200 may be donated by a volunteer without having to report them as a contribution or expense. Campaigning by Elected Members or Senators If a federal or provincial legislator wishes to support a candidate by campaigning, OAs must authorize related expenses in advance. Typical expenses would include the cost of travel to the district and the cost of meals, lodging and travel in the district. If a cabinet minister campaigns in a district for the candidate while on ministerial business, a proportion of the trip cost must be allocated and paid for by the OA as an election expenditure by the candidate. This should be based on the proportion of time spent by the minister on each activity. OAs need to record how this is determined and can expect reasonable allocations to be accepted by the CEO provided the auditor agrees the allocation is reasonable and in keeping with the Canada Elections Act. These expenses must normally be paid by OAs because appointed and elected MPs may only contribute to candidates campaigns as individuals, subject to the contribution limits. Expenses of Other Volunteers Persons who provide volunteer services may include employees or political parties or party leaders, or ministers exempt staff (whose political activities may be otherwise restricted). Any costs related to their work during normal business hours are election expenses, must be approved and paid by OAs, and are subject to individual contribution limits. Election Day Costs for Poll Agents Poll agents or scrutineers are often unpaid volunteers, but OAs may pay incidental costs, such as meals, relating to their services. Such costs are reportable as election expenses. However, if any remuneration is paid to poll agents, it must be reported as a candidate s personal expense. CGA Canada Elections e Guide

17 Recycled Signs If a campaign uses signs from a previous election campaign, OAs should determine how much it would cost to purchase similar signs and record that replacement cost as a non-monetary contribution and an election expense. If the campaign refurbishes, restores, or repaints used signs, the value the OA should record is what it would cost to purchase signs similar to the refurbished ones. Capital Assets OAs may borrow, rent or purchase capital assets such as fax machines, computers and office furniture. Rental is an election expense, but for assets borrowed or bought, OAs need to determine how much would have been paid to rent equivalent items for the time they are used during the election period. That rental value is considered the commercial value of the benefit received by the campaign and should be reported as an election expense. The rental value of borrowed items must also be reported as contributions (except if valued at less than $200 when provided by a person not in the business of providing such items) and are subject to the contribution limits. If a capital asset is transferred or donated to the campaign, the full commercial value of the item must be reported as a contribution (except if valued at less than $200 when donated by a person not in the business of providing such items). However, only the rental value for the period it is used is reportable as an election expense. At the end of the campaign, OAs may sell the asset or transfer it to the registered party or a registered association. Any proceeds from a sale should be reported as a cash inflow on the Candidate s Electoral Campaign Return (EC 20120), but the proceeds do not affect the election expenses. Costs of setting up a campaign office must be reported as campaign expenses at full value even if items were installed and used before as well as during the campaign and even if the items are used subsequently. For example, if the installed items are election expenses such as computers or telephones, installation costs must also be reported as election expenses. Similarly, the full cost of leasehold improvements of a campaign office must be reported as election expenses. Election Advertising Advertising which promotes or opposes a registered party or candidate, or taking a position on an issue with which either is associated during a campaign, is considered election advertising. This must be authorized and paid by OAs and reported as an election expense, including items such as billboards and other signs, broadcasting (including production costs), flyers, pamphlets, stickers, lapel buttons or pins, T-shirts and caps. All election advertising must indicate that OAs authorized it and must be broadcast or published prior to election CGA Canada Elections e Guide

18 day. (For a list of activities that are not considered election advertising, see the Canada Elections Act, section 319.) [sections ] OAs should ensure that the amount paid for election advertising does not exceed: For broadcast media, the lowest rate charged any other advertiser for the same amount of time purchased during the allowable election advertising period in the same or equivalent time slot; and For print media, the lowest rate charged other advertisers for the same or equivalent space. Liability for Contracts Payment of election-related expenses is the candidates personal responsibility but only if a contract was authorized in writing by candidates, their OAs or persons authorized in writing by the OAs. While OAs are responsible for administering candidates financial transactions, they are not personally responsible for campaign debts. Presentation of Accounts OAs may only pay invoices for campaign expenses if invoices or comparable documentation are received during the campaign or within three months after voting day. If a valid invoice is received after that deadline, OAs cannot settle the account unless authorized by the CEO in response to the claimant, the candidate or the OA. Paying a late invoice without authorization is an offence under the Act. If a claimant dies before the end of the three-month period without having sent the invoice or other document supporting the claim, a new three-month period begins on the day on which the claimant s legal representative becomes entitled to act for the claimant. Deadline for Payment OAs must pay all campaign expenses within four months after election day. It is an offence to pay any invoice after four months without the CEO s authorization, which is sought by filing a Request for the Chief Electoral Officer s Authorization to Pay an Unpaid Claim (EC 20158). If authorization is refused, or its conditions cannot be met, the candidate, the OA or the claimant may seek judicial authorization. When a late claim is approved, OAs must update the Candidate s Electoral Campaign Return within 30 days of payment. Generally, if a claim has not been settled within 18 months after election day, it is deemed a contribution to the candidate on the day the expense was incurred, subject to the contribution limits. The CEO will publish this information. CGA Canada Elections e Guide

19 Exclusions from Election Expenses Pre-writ expenses and post-election expenses do not qualify as election expenses unless the property or service obtained is used during a campaign. While the following are examples of expenditures that need to be recorded, they would not qualify as election expenses: Rent and other costs of campaign offices incurred before the writ Is issued or after polling day; Nomination deposit; Salary paid to a candidate; Interest accruing after polling day on loans outstanding; Parties held after the close of polls; Audit fees; and Legal fees. Expense Reporting Requirements Whenever a campaign expense is $50 or more, OAs must obtain and keep a copy of the invoice, and proof that it was paid. A numbered voucher system, required by Elections Canada to track such expenditures of $50 or more, will help OAs to organize campaign expenses. A voucher cover template is available at on the Candidate s Optional Forms webpage. When the expense is less than $50, OAs also must obtain and keep a record of the nature of the expense and proof that it was paid. OAs must train volunteers on their spending caps and what receipts are required. Non-monetary Expenses OAs must report non-monetary donations as a contribution and an expense. They must secure information from the donors on the commercial value of the goods or services being donated, including available documentation, and donors names and addresses. See Types of Contributions for discussion of nonmonetary contributions. Supporting Documentation OAs must provide details of all expenses on the Candidate s Electoral Campaign Return, which must be filed with the CEO within four months of election day, along with: Signed declarations by the OA and the candidate; A signed auditor s report and all audit documents; Expense vouchers such as invoices, packing slips, bills of lading and contracts; All other supporting documents such as bank statements, deposit slips and cancelled cheques; and The Candidate s Statement of Personal Expenses (EC 20220). CGA-Canada Elections e-guide

20 Exclusions from Campaign Expenses Certain campaign expenses, not considered election expenses, are not subject to the spending limit. If OAs pay any such expenses from the campaign bank account, they must be reported in column 9 of the Candidate s Electoral Campaign Return. See Candidate s Electoral Campaign Return Specimen [EC A]. Examples include: Goods and services consumed before the election is called; Nomination and/or fund-raising expenses; Cost of any unused supplies or services on election day; Nomination deposit; Cost of parties held after the polls close; Cost of legal services; Post-election loan interest; and Costs of preparing reports required by the Act, except for remuneration of OAs for services during the election period. Pre-writ Expenses Items consumed before the election is called are pre-writ expenses, not campaign expenses. However, flyers or other promotional material mailed before the election is called but not delivered by Canada Post until after the election is called, would not be an election expense because candidates have no control over an election call. Nomination expenses Nomination expenses are not election expenses, except for advertising costs when the advertising takes place after the writ is issued. In that case, OAs must authorize, pay, and report as election expenses all production, distribution, broadcast and publication costs. During the campaign, the cost of nomination meeting notices cannot exceed one per cent of the election expenses limit for the last general election in the same district. If boundaries have changed, the one per cent limit is based on an amount determined by the CEO and can be obtained from the Elections Canada website or from the RO. Notices of nomination meetings may only identify the party and state the purpose, date, time and location. Photographs of prospective candidates are not permitted. Fund-raising expenses OAs must authorize all expenses incurred by fund-raising activities. See subsection 438(5). Typically, fundraising expenses consist of expenses incurred for a ticketed fund-raising function where there is a fixed admission charge that exceeds the CGA Canada Elections e Guide

21 value of everything the person is entitled to by paying admission. The costs of promotional material for such a fundraising event (including production, distribution, broadcast or publication costs) and costs to promote or oppose a candidate are election expenses subject to the limit. All other expenses incurred for such a fundraising event are not election expenses. See subsections 407(1), 407(2). See explanation below of the portion of the admission charge to be reported as a contribution. Unused inventory Material not used during a campaign and which does not promote or oppose election of a candidate is considered a campaign expense, not an election expense. However, it should be retained since it is subject to audit. The cost of unused inventory will be considered part of the surplus, so unused inventory must be sold at its commercial value or transferred to the registered party or association. Expense Reimbursements Candidates who are elected or receive at least 10 per cent of the valid votes are entitled to a reimbursement of 60 per cent of their paid election and personal expenses, to a maximum of 60 per cent of the election expenses limit. There is no reimbursement to candidates who receive less than 10 per cent of the votes. Reimbursement cheques are payable to OAs or their designated recipients. The Act also permits OAs or auditors to receive payment by direct bank deposit. [See EC Direct Deposits] Expenses that qualify for the 60 per cent reimbursement are those paid from the campaign bank account and candidates personal campaign expenses paid either from the account or by a candidate. Contributions OAs must authorize, record and report all campaign contributions. Familiarity with the current Canada Elections Act rules is essential. Types of Contributions Monetary campaign contributions are defined by the Act as an amount of money provided that is not repayable. Limits on cash contributions are much lower than contributions by cheque or draft. (See discussion below.) Non-monetary contributions are defined as the commercial value of a service, other than volunteer labour, or of property or of the use of property or money to the extent that they are provided without charge or at less than their commercial value. CGA Canada Elections e Guide

22 For each monetary contribution of more than $20, OAs must: Ensure the contribution is not received in cash; Obtain the contributor s name (and address if all contributions from this source exceed $200); Inform contributors that the names and addresses of all contributors of more than $200 will be published by the CEO; Confirm the contributor is an individual; Confirm the contributor has not already reached the maximum allowable amount; and Issue a tax receipt which includes the date and amount of the contribution and the contributor s name and address. If there is any doubt whether the contributor is a citizen or permanent resident of Canada, OAs must ask because they may not accept contributions from anyone who does not meet those requirements. That applies also to nonmonetary contributions. Non-monetary contributions must be valued at their commercial value and included in the campaign return as a contribution and a campaign expense. This includes property and services provided at discounts not generally available to the public. Income tax receipts cannot be issued for donations of property or services. For each non-monetary contribution, OAs must: Determine the proven commercial value of the property or services; Obtain or prepare a no-charge invoice or other voucher with the date, contributor s name and address, and description and commercial value of the contribution (the address is not required if the combined commercial value of contributions from one source amount to $200 or less); Confirm the contributor is an individual; Confirm the contributor has not already contributed the maximum allowable amount; and Inform contributors that the names and addresses of all contributors of more than $200 will be published by the CEO. If the commercial value of the property or services is $200 or less and is provided by persons not in that business, the contribution is deemed to be zero and no further action is needed. However, OAs should record them for auditors to confirm the exemption. OAs also must record the commercial value in the campaign record of contributions, as well as in the record of expenses. If the item is an election expense, it is subject to the spending limit. Commercial value is defined as the lowest amount charged at the time that a property or service was provided for the same kind and quantity of property or service, or for the same usage of property or money, by: CGA Canada Elections e Guide

23 The provider, if that person is in the business of providing that property or service; or Another person who provides that property or service commercially in the area where it was provided, if the provider is not in that business. Contribution Limits For the 41 st general election in 2011, any Canadian citizen or permanent resident may contribute: Up to $1,100 per calendar year to each registered political party; Up to $1,100 in total per calendar year to registered electoral district associations, nomination contestants and candidates of each registered party; Up to $1,100 in total to contestants in a particular party leadership contest; and Up to $1,100 to each independent candidate in a particular election. These limits are subject to an inflation adjustment on April 1 of each year, which is published in the Canada Gazette. The April 1, 2011 adjustment results in limits of $1,200, applicable to the 2012 calendar year, to elections whose writ is issued between April 1, 2011 and March 31, 2012, and to leadership contests that begin between April 1, 2011 and March 31, Nomination contestants or candidates may contribute up to $1,000 per election from their own funds to their own campaign in addition to their own contribution limits as listed above. This is a fixed limit, not indexed to inflation. There is no limit to contributions made in an individual s will as an unconditional, non-discretionary contribution. Prohibited Contributions OAs may not accept: contributions from a particular individual that, in total, exceed the limits described above contributions from non-residents who are not Canadian citizens indirect contributions from a person or entity other than the one making the contribution a cash contribution of more than $20 contributions from corporations, trade unions or unincorporated associations If OAs become aware of a prohibited contribution, it must be returned unused to the contributor within 30 days of the problem becoming known. Should that not be possible, the value of the contribution must be paid to the CEO. Also, CGA Canada Elections e Guide