Malcolm Rivera
Political campaigns in Canada are funded through a mix of private and public sources, with the country's election finance regime recognising political parties and candidates as the primary actors in elections. While private funding comes from individual contributions, these are heavily subsidised by public funds in the form of tax credits and expense reimbursements. The Canada Elections Act regulates the fundraising and spending of political entities, requiring them to register with Elections Canada and report their finances annually and after electoral events. This promotes transparency and fairness, allowing Canadians to make informed decisions at the polls.
| Characteristics | Values |
|---|---|
| Sources of public funding | Election expenses reimbursement, per-vote subsidy, tax credits |
| Election expenses reimbursement | 50-60% of a party's expenses on elections |
| Per-vote subsidy in 2009 | $27.7 million |
| Electoral expense reimbursement in 2009 | $54 million |
| Maximum yearly contribution limit to a federal political party, riding associations, leadership candidates, and independent candidates | $1650 |
| Maximum total contribution | $3300 |
| Total tax credit for all contributions | $650 |
| Total political contributions received in 2009 | $46 million |
| Publicly-funded reimbursements | Up to a maximum of 60% of the election expenses limit established for the electoral district |
| Political contributions | Individuals, permanent residents, businesses, or other organizations that operate in Canada |
| Political financing regime | Canada Elections Act |
| Reporting requirements | Annual financial reports, after an electoral event, quarterly financial returns |
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What You'll Learn
Public funding and tax credits
Canada has an extensive regime regulating political party and election finance. This regime is designed to promote fairness, accountability, and transparency in federal elections. It sets rules on how political entities can raise and spend money, requiring them to register with Elections Canada and report on their finances annually and after an election.
Public funding is a significant source of financial support for federal political parties, especially during elections. The per-vote subsidy, also known as the "government allowance" or "quarterly allowance," is one mechanism that provides direct public funding to parties. This subsidy is considered democratic as it takes into account the choices of all voters of eligible parties, with a total of 13,675,146 individual Canadians or 99% of all valid votes in the preceding election. The amount of the per-vote subsidy was $27.7 million in 2009.
Another form of public funding is the election expense reimbursement, which subsidizes a significant portion of a party's election expenses. This reimbursement can be up to 60% of election expenses for candidates who receive at least 10% of the valid votes in their electoral district and submit the required financial reports. The more a party spends during an election, the higher the reimbursement, with the total reimbursement amounting to $54 million in 2009.
In addition to these forms of direct public funding, private funding to federal political parties is also subsidized by public funds through tax credits. As of 2021, the maximum yearly contribution limit by an individual Canadian to a federal political party, its riding associations, leadership candidates, and independent candidates is $1650 each, with a total contribution cap of $3300. The total tax credit for all contributions is capped at $650, representing a subsidy of 42%. For example, in 2009, of the $46 million in political contributions received by federal party organizations and riding associations, between $28.5 million and $31 million was publicly funded through tax credits, while between $15 million and $17.5 million was net private funding.
While public funding and tax credits provide significant financial support to political parties, they have also sparked controversies. Some observers argue that taxpayers should not be forced to fund parties they do not personally support. Additionally, the interaction of fixed election dates with spending limits has raised concerns, as spending limits only come into effect once the election is called, allowing for secret, unlimited donations to be made before the official campaign period.
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Private funding from individuals
Only individuals who are Canadian citizens or permanent residents are eligible to make contributions to political entities, excluding third parties. This restriction means that companies, unions, and other groups or organizations are prohibited from contributing to regulated political entities. The focus on individual donors encourages a more direct connection between political parties and their supporters.
The amount that eligible contributors can donate is subject to limits. As of 2021, the maximum yearly contribution limit is $1,650 to a given federal political party, $1,650 to a party's riding associations, $1,650 to a party's leadership candidates, and $1,650 for each independent candidate. These limits are designed to prevent undue influence and maintain a level playing field among donors. The total tax credit for all contributions is capped at $650, representing a subsidy of 42%.
In addition to monetary contributions, individuals can also provide non-monetary support, such as volunteering their time and skills to assist with campaign activities. This form of private funding from individuals can be crucial for campaigns, especially those with limited financial resources.
While private funding from individuals is an essential aspect of political campaign financing in Canada, it is just one part of the overall funding landscape. Public funding, through mechanisms like the per-vote subsidy and electoral expense reimbursement, also plays a significant role in supporting political campaigns. The interaction between private and public funding influences the dynamics of the Canadian political process.
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Limits on contributions
Canada's federal election finance laws place limits on contributions to political parties and candidates. The Canada Elections Act regulates contribution and spending limits, allowing only individuals or natural persons (not corporations or trade unions) who are Canadian citizens or permanent residents to make contributions. This is in contrast to the period before 1974, when the financial activities of political parties were largely unregulated, and party leaders were directly involved in fundraising and distributing election funds.
As of 2021, the maximum yearly contribution limit is $1,650 to a given federal political party, $1,650 to a given party's riding associations, $1,650 to a given party's leadership candidates, and $1,650 for each independent candidate. The maximum total contribution is set at $3,300. The total tax credit for all contributions is capped at $650, representing a subsidy of 42%.
The Elections Modernization Act, enacted in 2018, requires political parties to report the identities of contributors who have given a total of over $200 to one riding association or the central organization. For donations of $200 or less, receipts must be kept by the individual riding associations, but Elections Canada has no way to track them. Completely anonymous contributions of $20 or less are permitted.
In addition to the above limits, there are also rules in place to promote transparency and prevent the undue influence of money. All political entities must track and report their financial transactions to Elections Canada, which publishes the financial returns of all political entities online. This financial reporting allows Canadians to see for themselves how money comes into the political system and how it is used.
There are also limits on third-party contributions, which are recognized as secondary political actors in elections. These limits are designed to prevent parties from working around spending limits by having advocacy groups advertise on their behalf.
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Financial reporting and transparency
Canada's political party financing regime has evolved significantly since the 1970s, with the country now boasting an extensive regulatory framework for political party and election finance. This evolution has been driven by a desire to balance the liberal democratic principles of freedom and equality, ensuring that individuals are free to use their resources to pursue their political objectives while also maintaining political equality among citizens.
The Canada Elections Act (CEA) is the primary legislation governing political financing in Canada, setting rules on how political entities can raise and spend money. The Act requires all political entities to register with Elections Canada and report on their finances annually and/or after an electoral event. This includes providing details of inflows, outflows, expenses, and other financial aspects. Candidates who run in an election must submit a financial return, even if they receive no contributions or incur no expenses.
To promote transparency, Elections Canada publishes the financial returns of all political entities online. The public can access information about contributions made to political entities (excluding third-party contributions) and view financial reports and returns. This transparency enables Canadians to understand how money flows into the political system and how it is utilised, empowering them to make informed decisions at the polls.
While the current system provides a high level of transparency, concerns have been raised about the limits imposed on third parties, such as advocacy groups. These limits may restrict the range of viewpoints expressed during elections and have sparked ongoing debates about the role of such groups in the political process.
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History of political financing regulation
The financial activities of Canadian political parties were largely unregulated until the Election Expenses Act was passed in 1974. Canada now has an extensive regime regulating federal political party financing during and outside election periods. This regime encourages greater transparency in political party activities and ensures a fair electoral arena that limits the advantages of those with more money.
From Confederation until about 1897, party funds were used to overcome weak partisanship. Party leaders were directly involved in fundraising and distributing election funds to ensure the loyalty of their followers. The Liberals and Conservatives relied on corporate donations, which led to periodic scandals such as the Pacific Scandal. As partisanship crystallized, party leaders tried to distance themselves from fundraising, leaving the role to fundraising specialists.
Canada's system of party and election finance regulation provides two forms of state funding to political parties and candidates. First, political parties and candidates are reimbursed for some of their election expenses. Political parties that received either two per cent of the national vote or five per cent of the vote in the districts in which they ran candidates get back 50 per cent of the money they spent. Candidates who received at least 10 per cent of the vote receive 15 per cent of the election expenses limit in their district. If the candidate spent at least 30 per cent of the limit during the election, the reimbursement increases to 60 per cent of what the candidate spent. Second, Canada provides generous tax credits for donations to political parties and candidates. The first $400 of donations receives a 75 per cent tax credit.
The financing of federal political entities in Canada is regulated under the Canada Elections Act, which sets rules on how political entities can raise and spend money. The Act also requires entities to register with Elections Canada and report on their finances annually and/or after an electoral event. This financial reporting is made public, allowing Canadians to see how money enters the political system and how it is used.
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Frequently asked questions
Political campaigns in Canada are funded by a combination of private and public funds. Private funding comes from individuals, who are subject to contribution limits, while public funding is disbursed through tax credits and expense reimbursements.
Only individuals who are Canadian citizens or permanent residents can contribute to political campaigns. As of 2021, the maximum yearly contribution limit is $1,650 to a given federal political party, $1,650 to a party's riding associations, $1,650 to a party's leadership candidates, and $1,650 for each independent candidate. The maximum total contribution is set at $3,300.
Public funding for political campaigns in Canada comes in the form of tax credits and expense reimbursements. The per-vote subsidy, also known as the "government allowance" or "quarterly allowance", is one form of public funding that reimburses political parties for a portion of their election expenses. The more a party spends during an election, the more public funds they receive back.
The Canada Elections Act sets rules on how political entities can raise and spend money, requiring them to register with Elections Canada and report on their finances annually and/or after an electoral event. This helps to promote transparency and fairness in the political process.
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