Election Handbook for Third Parties, Their Financial Agents and Auditors

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1 Election Handbook for Third Parties, Their Financial Agents and Auditors EC (06/04) September 10, 2004

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3 Table of Contents Table of Contents 1. Introduction Registration of a Third Party Introduction Definitions...3 Third party... 3 Application form to register a third party (EC 20226)... 3 Registry of Third Parties... 4 Third party s name... 4 Election... 4 Election period Contents of the application The applicant Restrictions on names Transmitting the application Changes in registration details Verification of the application by the Chief Electoral Officer Registry of Third Parties The Financial Agent Appointment Change of financial agent Ineligibility of financial agent Role of financial agent The Auditor Appointment Change of auditor Ineligibility of auditor Responsibilities and obligations Auditor s fees Auditor s report Election Advertising Expenses Definitions...15 Election advertising Election advertising expenses Expenses Payment of expenses Commercial value Use of capital assets...17 iii

4 Table of Contents 5.5 Allocation of costs Cost of advertising Election Advertising Expense Limit Identification of Election Advertising Blackout Period Contributions Definitions Prohibited contributions Accepting contributions Disclosure of contributions Fundraising functions Books and Records Third Party Election Advertising Report Publication Enforcement Commissioner of Canada Elections Offences and punishment Penalties Summary Appendix...41 iv

5 Introduction 1. Introduction This handbook represents the Chief Electoral Officer s interpretation of the Canada Elections Act and is designed to help third parties and their financial agents comply with the provisions of the Act. The handbook does not take precedence over the legislation and therefore should be read in conjunction with the Act. References to the provisions of the Act appear in square brackets in this handbook; for example: [section number]. Third parties should ensure that they and their financial agents are thoroughly familiar with the Act. This handbook and related forms are available from the Elections Canada Web site. Any questions regarding how the Canada Elections Act applies to third parties should be directed to: Elections Canada 257 Slater Street Ottawa, Ontario K1A 0M6 Telephone: toll-free in Canada and the United States toll-free in Mexico (613) from anywhere in the world TTY for people who are deaf or hard of hearing: toll-free in Canada and the United States Fax: Web site: (613) or (toll-free) To report suspected violations of the Canada Elections Act, write to the Commissioner of Canada Elections, 257 Slater Street, Ottawa, Ontario, K1A 0M6. EC (06/04) June 21,

6 Introduction Your opinion counts If you have any comments or suggestions that would help us improve the explanations contained in this handbook, we would like to hear from you. Symbol used here Throughout this handbook, we refer to the documents that you can download from our Web site ( with a symbol. For example: The Third Party Election Advertising Report (EC 20228) referred to in the preceding paragraph is available on the main Elections Canada Web site. 2

7 Registration of a Third Party 2. Registration of a Third Party 2.1 Introduction This section of the handbook contains specific information about applying for registration as a third party under the Canada Elections Act. It provides information about the legal requirements and procedures for completing the application process; for making required appointments and for reporting changes to the application information; and for registering and meeting the statutory obligations of third parties. The mandatory financial and reporting requirements of registration are to be found in the following sections of this handbook. Failure to comply with these requirements and obligations on the part of third parties constitutes an offence subject to prosecution under the Canada Elections Act. More detailed information about these offences and penalties are discussed in the Enforcement section of the handbook. 2.2 Definitions Third party A third party is a person or a group, other than a candidate, registered party or electoral district association of a registered party. A group means an unincorporated trade union, trade association or other group of persons acting together by mutual consent for a common purpose. A person or group is considered to be a third party when incurring electoral advertising expenses during an election period to promote or oppose a registered party or the election of a candidate, including taking a position on an issue with which a registered party or a candidate is associated. [319, ] Application form to register a third party (EC 20226) A third party must register immediately after having incurred $500 or more in election advertising expenses; but not before the writ for a general election is issued. The third party must apply with the Chief Electoral Officer by completing and filing an Application to Register a Third Party form (EC 20226). Once registered, such a group is referred to as a registered third party. Third party registration is valid only for the election period during which the application is made, but the third 3

8 Registration of a Third Party party requirement for filing the financial reports to the Chief Electoral Officer within four months after election day remains in effect. [353(8)] An application form is included with this handbook (see Appendix). It is also available from the Elections Canada Web site: There is no charge to register a third party. Registry of Third Parties The Registry of Third Parties is an official registry of the information on all third parties maintained by the Chief Electoral Officer. It includes the following information provided by the third parties: in the application for registration as attachment to the application for registration (for example, the information on the third party s financial agent, auditor and required resolutions) when reporting changes to the above information [356] Third party s name The name of a third party is the name of the individual, if the third party is an individual. Where the third party is a corporation or a group, it is the name of the corporation or group that is used and by which the third party is recognized as an entity. The name of the third party must appear on all of the third party s election advertising together with an indication that the third party authorized the advertising. [352, 353(2)] Election Election means an election of a member to serve in the House of Commons. [2(1)] 4

9 Registration of a Third Party Election period Election period means the period beginning with the issue of the writ and ending on election day. [2(1)] 2.3 Contents of the application The Application to Register a Third Party (Form EC 20226) must include: the full name of the third party to appear on any election advertising the name, address, telephone number and signature of the individual, if the third party is an individual the name, address, and telephone number of the corporation and its officer who has signing authority, together with the officer s signature, if the third party is a corporation the name, address, and telephone number of the group and of the person responsible for the group, together with that person s signature, if the third party is a group the address of the third party s office where records are kept and to which communications may be addressed the name and address of the third party s sole auditor (if election advertising expenses are to total $5,000 or more) and his or her signed consent to act as auditor the name and address of the party s sole financial agent and his or her signed consent to act as financial agent, and resolutions passed by the governing body of the third party authorizing it to incur election advertising expenses, if the third party is a trade union, corporation or other entity with a governing body [353(2)] 5

10 Registration of a Third Party 2.4 The applicant The following persons may file and sign the third party s application for registration with the Chief Electoral Officer: the individual, if the third party is an individual the officer who has signing authority, if the third party is a corporation the person who is responsible for the group, if the third party is a group, or the financial agent of the third party [353, 354] 2.5 Restrictions on names Registration is not automatic. The Chief Electoral Officer must be of the opinion that the name of the third party to be used in the electoral advertising cannot be confused with that of another registered third party, registered (or eligible) political party, or candidate. The list of political party names (eligible, registered, suspended) from the Registry of Political Parties is provided to the applicant by Elections Canada together with the application form. It is also available on the Elections Canada Web site. [353(7)] 2.6 Transmitting the application Before transmitting the application to the Chief Electoral Officer, the third party should verify that: the full name of the party to appear on any election advertising is clearly shown on the application the declarations from the financial agent and the auditor accepting their appointments have been signed (if election advertising expenses are to total $5,000 or more) 6

11 Registration of a Third Party the application for registration is signed and dated all information requested has been properly entered An application for registration sent to Elections Canada by facsimile will be accepted. [353] 2.7 Changes in registration details If, after applying for registration, any information in the application changes, becomes no longer applicable or is incomplete, the third party must, without delay, send a report in writing to the Chief Electoral Officer. This report, signed by the person authorized or responsible for the third party, must provide the necessary details to bring the required information up to date. [353, 356] 2.8 Verification of the application by the Chief Electoral Officer The Chief Electoral Officer examines all applications for registration to determine whether the third party can be registered. Applications are examined in the order in which they are received at Elections Canada provided that they contain all of the information required by the Act. A third party will not be registered if the application does not conform to the requirements of the Act or if the name of the third party is likely to be confused with (in the opinion of the Chief Electoral Officer) the name of a previously registered third party, of an eligible or registered political party, or of a candidate. If a third party cannot be registered for any of the above reasons, the Chief Electoral Officer will inform the person who signed the application for registration, explaining why the third party cannot be registered. If it has incurred election advertising expenses of $500 or more, it must re-apply for registration or may be subject to prosecution. If it has not incurred more than $500 in election advertising expenses, it must refrain from incurring such expenses or must re-apply for registration, failing which, it may be subject to prosecution. [353(1), (6), 496] 7

12 Registration of a Third Party The Chief Electoral Officer will inform the person who signed the application for registration if the application is accepted, in which case the third party s information is added to the Registry of Third Parties. Third parties remain registered for only the duration of that election period, but they remain subject to the requirement to file a Third Party Election Advertising Report (EC 20228) within four months after election day. A third party that intends to incur election advertising expenses at the next election will have to apply again for registration at that time. [353, 359] 2.9 Registry of Third Parties The Chief Electoral Officer will maintain a Registry of Third Parties where all the details provided by the registered third parties in their application form will be recorded, including the information on the third party s financial agent and auditor (and governing body, if applicable). The registry will be maintained at least for the election period and for as long as the Chief Electoral Officer considers it appropriate. [356] 8

13 The Financial Agent 3. The Financial Agent 3.1 Appointment The third party must appoint an eligible individual as its financial agent. If this position is filled at the time of the application for registration, the third party must submit the name, address and telephone number of its financial agent together with his or her signed consent to accept the appointment. To be eligible for appointment, an individual must have the capacity to enter into contracts in his or her province or territory of residence. A financial agent is appointed according to a decision reached by the third party and, where the third party is a corporation or group, in accordance with its internal bylaw. The financial agent must accept the appointment in writing, by signing a declaration to that effect. [353, 354] 3.2 Change of financial agent If the position of financial agent becomes vacant for any reason, the third party must, without delay, appoint a new financial agent. The third party must report the change to the Chief Electoral Officer and include the name, address, signature, and telephone number of the new financial agent. A statement, in writing, signed by the new financial agent confirming that he or she has accepted the appointment, must accompany the reported change. The Chief Electoral Officer will enter these changes in the Registry of Third Parties. [353(4)] 3.3 Ineligibility of financial agent The following persons are not eligible to be a financial agent: a candidate or a candidate s official agent a person who is the chief agent, or a registered agent, of a registered political party 9

14 The Financial Agent an election officer or an employee of a returning officer, or a person who is not a Canadian citizen or permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act. [354(2)] 3.4 Role of financial agent The financial agent is responsible to receive every contribution made to the registered third party for election advertising purposes during an election period. In addition, the financial agent must authorize every election advertising expense incurred on behalf of the registered third party. [357(1)] The financial agent may authorize a person to accept contributions or incur expenses for election advertising purposes. However, that authorization does not limit the responsibility of the financial agent. [357(2)] The financial agent is also the person responsible for filing, with the Chief Electoral Officer, the Third Party Election Advertising Report (EC 20228) within four months after election day. The report must be submitted in the prescribed form, together with a declaration to the effect that the report is accurate, signed by the financial agent and, if different, by the person who signed the application for registration. [359(8)] 10

15 The Auditor 4. The Auditor 4.1 Appointment A third party must appoint an auditor without delay when it incurs election advertising expenses in the combined amount of $5,000 or more. The auditor must be an eligible person or partnership of persons who is a member in good standing of a corporation, association or institute of professional accountants. An auditor is normally a Chartered Accountant (C.A.), a Certified General Accountant (C.G.A.) or a Certified Management Accountant (C.M.A.). The auditor must accept the appointment in writing, by signing a declaration to that effect. Immediately following the appointment of an auditor, the third party must provide the Chief Electoral Officer with that person s name, address, telephone number, and occupation and his or her signed declaration accepting the appointment. [355(1), (2), (4)] 4.2 Change of auditor If the position of auditor becomes vacant for any reason, the third party must, without delay, appoint a new auditor. The third party must report the change to the Chief Electoral Officer and include the name, address, occupation, and telephone number of the new auditor. A statement in writing, signed by the new auditor, confirming that he or she has accepted the appointment, must accompany the reported change. The Chief Electoral Officer will enter these changes in the Registry of Third Parties. [355(5)] 4.3 Ineligibility of auditor The following persons are not eligible to be an auditor: the third party s financial agent the person who signed the third party s application for registration an election officer a candidate 11

16 The Auditor an official agent of a candidate a chief agent of a registered party or an eligible party a registered agent of a registered party [355(3)] 4.4 Responsibilities and obligations To fulfill the role of auditor, the individual selected by the third party must: provide to the Chief Electoral Officer a signed declaration accepting the nomination [355(4)] examine the books, records, invoices, bank statements, and negotiated cheques, and perform the tests and verifications necessary to permit the completion of the audit report [360] provide this report to the financial agent, including any statement considered necessary when: o the report does not present fairly the information contained in the accounting records on which it is based [360(3)(a)] o the third party has not supplied all of the required information and explanations [360(3)(b)] o upon examination, it appears that proper accounting records have not been kept by the third party [360(3)(c)] 4.5 Auditor s fees The third party is responsible for its auditor s fees. The Act does not provide for a subsidy to be paid out of public funds to help defray a portion of these fees. The auditor s fees are not an election advertising expense. [349] 12

17 The Auditor 4.6 Auditor s report The Third Party Election Advertising Report (EC 20228) of a third party that incurred $5,000 or more in election advertising expenses must be accompanied by an auditor s report. [360(1)] The auditor must report on the Third Party Election Advertising Report (EC 20228) and must make any examination that will enable the auditor to give an opinion as to whether the report presents fairly the information contained in the accounting records on which it is based. [360(2)] The auditor must include in the report any statement that the auditor considers necessary, when: the Third Party Election Advertising Report (EC 20228) does not present fairly the information contained in the accounting records on which it is based [360(3)(a)] the auditor has not received from the third party all of the required information and explanations [360(3)(b)] or based on the auditor s examination, it appears that proper accounting records have not been kept by the third party [360(3)(c)] The auditor must have access, at any reasonable time, to all of the documents of the third party and may require the third party to provide any information or explanation that, in the auditor s opinion, is necessary to enable the auditor to prepare the report. [360(4)] 13

18 The Auditor 14

19 Election Advertising Expenses 5. Election Advertising Expenses 5.1 Definitions Election advertising Election advertising is defined in the Act as: the transmission to the public by any means during an election period of an advertising message that promotes or opposes a registered political party or the election of a candidate, including one that takes a position on an issue with which a registered political party or candidate is associated. However, it does not include: the transmission to the public of an editorial, a debate, a speech, an interview, a column, a letter, a commentary, or news the distribution of a book, or the promotion of the sale of a book, for no less than its commercial value, if the book was planned to be made available to the public regardless of whether there was to be an election the transmission of a document directly by a person or a group to their members, employees or shareholders, as the case may be the transmission by an individual, on a non-commercial basis on the Internet, of that individual s personal political views [319] Election advertising expenses Election advertising expenses are defined as: expenses incurred in relation to the production of an election advertising message and the acquisition of the means of transmission to the public of an election advertising message. [349] Expenses Expenses means amounts paid, liabilities incurred, the commercial value of property and services, other than volunteer labour, that are donated or provided, 15

20 Election Advertising Expenses amounts that represent the difference between an amount paid or a liability incurred for property and services, other than volunteer labour, and the commercial value of the property and services when they are provided at less than their commercial value. [349] Identifying the time at which such expenses occur will determine whether a particular expense falls within the statutory definition of an election advertising expense. The test relates to the time the election advertising was transmitted to the public, regardless of the time at which the cost of production of the advertising was actually incurred. If an expense is incurred prior to or during an election and the election advertising is used during the election, it will be considered an election advertising expense. 5.2 Payment of expenses Since third party election advertising expenses are limited, every election advertising expense incurred on behalf of a third party must be authorized by its financial agent. A financial agent may authorize, in writing, other persons to incur election advertising expenses, but that authorization does not limit the responsibility of the financial agent. [350, 357] 5.3 Commercial value Goods and services must be recorded at their commercial value. The commercial value is the normal price paid by anyone for goods or services in an open and competitive market. Thus, when discounts not available to other third parties are granted, the full commercial value, including all appropriate taxes, must be disclosed and the amount of the discount must be recorded as a contribution for election advertising purposes. These discounts are those other than normal trade discounts. [2(1)] Goods or services provided without charge by someone who normally provides them, to the extent that the property or service is used specifically to promote or oppose a registered party, its leader, a candidate, or an issue with which they are associated during an election period must be recorded as an election advertising expense as well as a contribution for election advertising purposes at full commercial value. When a supplier normally provides the same type of goods or services on a commercial basis, the lowest amount charged to another customer for the same type 16

21 Election Advertising Expenses or quantity of goods or services, including all appropriate taxes, is the commercial value to be used. If the goods or services are provided free of charge by someone who is not in the business of providing them, to the extent that the property or service is used as election advertising to promote or oppose a registered party, its leader, a candidate, or an issue with which they are associated during an election period, the commercial value of the goods or services must be recorded as an election advertising expense and a contribution for election advertising purposes, if the value of the nonmonetary contribution exceeds $200. The commercial value of goods or services with a value of $200 or less provided free of charge by a person who does not normally supply such goods or services is deemed to be nil; therefore, no contribution or election advertising expense would result. 5.4 Use of capital assets Third parties may purchase certain capital assets to be used for election advertising purposes during an election; however, determining the amount to be recorded as an election advertising expense for the use of these assets often raises some questions. The third parties must assess the value of the use of a capital asset purchased for election advertising purposes at the current commercial value. The commercial value to be used is the cost of rental of a similar asset for the period of the election, and it is this cost that must be recorded as an election advertising expense. If the asset is provided free of charge or at a nominal charge, this, subject to the definition of commercial value, will also constitute a contribution for election advertising purposes. 5.5 Allocation of costs Where costs incurred are for more than one purpose and include election advertising purposes, an allocation of the costs involved will have to be made. The Third Party Election Advertising Report (EC 20228) requires the reporting of these allocated costs. The return requires that the method of calculation be detailed and, if reported election advertising expenses amount to $5,000 or more, that the external auditor of the third party provide an opinion as to the reasonableness of the allocation. For example, the method of allocation, with respect to salaries of staff members or costs of facilities, can be based on a breakdown by any basis that will result in a fair allocation of costs. An allocation can be made with respect to each component of 17

22 Election Advertising Expenses costs, whether they are for salary, equipment, supplies, material, printing facilities, or computer facilities. The Office of the Chief Electoral Officer will accept the basis of allocation used by the third party, provided that it is reasonable and provided that the third party s auditor agrees that the allocation is reasonable and in keeping with these guidelines. 5.6 Cost of advertising The cost of acquiring the means to transmit an advertising message to the public during an election to promote or oppose a registered political party, a candidate, or an issue with which the candidate or the registered party is associated is specifically referred to in the statutory definition as election advertising expenses. Therefore, the costs of acquiring broadcast time or space in a periodical, and any other forms of advertising, are election advertising expenses. 18

23 Election Advertising Expense Limit 6. Election Advertising Expense Limit The Act imposes a limit on the election advertising expenses a third party may incur. A third party shall not incur election advertising expenses of a total amount of more than $150,000 during an election period in relation to a general election. Not more than $3,000 of the total amount of $150,000 shall be incurred to promote or oppose the election of one or more candidates in a given electoral district, including by: naming them showing their likeness identifying them by their political affiliations, or taking a position on an issue with which they are particularly associated [350(1), (2)] In addition, the Act provides for the indexing of these limits by applying a factor that is calculated and published annually in the Canada Gazette by the Chief Electoral Officer. [350(5), 414] A third party may not circumvent, or attempt to circumvent, the election advertising expenses limit in any manner. This would include splitting itself into two or more third parties for this purpose or acting in collusion with another third party so that their combined election advertising expenses exceed the limit. [351] No third party and no registered party may collude with each other for the purpose of circumventing the maximum amount that a registered party is allowed for election expenses. [423(2)] 19

24 Election Advertising Expense Limit 20

25 Identification of Election Advertising 7. Identification of Election Advertising The Act requires that a third party identify itself in any election advertising it sponsors and indicate that it has authorized the advertising. Failure to do so is an offence. [352, 496(1)(b)] The following wording is suggested: Authorized by the Coalition for High Technology Investment or Authorized by the United Computer Workers Association, Local

26 Identification of Election Advertising 22

27 Blackout Period 8. Blackout Period The Canada Elections Act specifically prohibits election advertising on election day prior to the close of the polling stations in the electoral district. [323(1)] However, the transmission to the public of a notice of an event that the leader of a registered party intends to attend or an invitation to meet or hear the leader of a registered party is not considered to be election advertising. Such notices, however, should be of a reasonable size and should state only that a meeting or event will be held. [323(2)] The Act also prohibits the publication on election day, prior to the close of the polling stations in the electoral district, of the results of an election survey that had not been previously transmitted to the public. [328] In addition, the Act prohibits the transmission of the result or purported result of the vote in one electoral district to the public in another electoral district before the close of all polling stations in the other electoral district. [329] It is also prohibited to use a broadcast station outside Canada for the broadcasting during an election period, of any matter having reference to an election, with the intent to influence persons to vote or refrain from voting for a particular candidate. During an election period, it is also prohibited to broadcast outside Canada any advertising concerning that election. [321, 330] 23

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29 Contributions 9. Contributions 9.1 Definitions The Act defines contributions as a monetary contribution or a non-monetary contribution in the following terms: [2(1)] monetary contribution means an amount of money provided that is not repayable; [2(1)] non-monetary contribution means the commercial value of a service, other than volunteer labour, or property or the use of property or money to the extent that they are provided without charge or at less than their commercial value. [2(1)] 9.2 Prohibited contributions A third party cannot use a contribution for election advertising purposes if it does not know the name and address of the contributor or if it is unable to determine the class to which the contributor belongs; however, that contribution can still be used by the third party for non-advertising purposes. [357(3)] In addition, third parties cannot use contributions for election advertising purposes from the following sources: persons who are not Canadian citizens or permanent residents within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act corporations or associations that do not carry on business in Canada trade unions that do not hold bargaining rights for employees in Canada foreign political parties, or foreign governments or agents of a foreign government [358] 25

30 Contributions 9.3 Accepting contributions Since contributions for election advertising purposes may only be accepted from certain sources, the financial agent should receive these contributions on behalf of the third party. All contributions for election advertising purposes from acceptable sources given to a canvasser or agent must be turned over to the financial agent. No officer, agent, or worker of the third party may keep any part of that money to pay election advertising expenses. [357, 358, 359] Contributions of goods and services that are used during an election period to promote or oppose a registered party, a candidate, or an issue associated with either are election advertising expenses and must be made through the financial agent. This is particularly important because of the spending limit imposed on election advertising expenses of third parties. 9.4 Disclosure of contributions All contributions received by a third party for election advertising purposes during the period commencing six months prior to the issue of the writ for an election, and ending on election day, must be disclosed by class of contributor. The following are the classes of contributors: individuals businesses commercial organizations governments trade unions corporations without share capital other than trade unions, and unincorporated organizations or associations other than trade unions [359(6)] The financial agent must report the number of contributors and the total amount for each class of donor. For each contributor who made a single or an aggregate contribution exceeding $200 during the period beginning six months before the issue of the writ and ending on election day, the financial agent must also disclose in the return the name, address, and class of the contributor and the amount and date of each contribution donated for election advertising purposes. In addition, if the 26

31 Contributions contributor is a numbered company, the name of the chief executive officer or the name of the president of that company must also be disclosed in the return. [359(4)] If unable to identify the specific contributions received for election advertising purposes during the reporting period (starting six months before the issue of the writ for a general election and ending on election day), the financial agent must list the names and addresses of every contributor who donated a total of more than $200 to the third party during that period. [359(7)] 9.5 Fundraising functions The fundraising activities of a third party may take many forms, such as direct mass mailings, telephone solicitations, etc. If there is a fixed fee charged for an event which exceeds the proportionate cost for each participant, the net revenue (i.e., total revenue less total costs) is considered to be a contribution to the third party if used for election advertising purposes. [323(2)] Very often, however, a fundraising activity, such as a mass mailing, will also include advocacy of a registered political party, a candidate, or issues with which the registered party or candidate is associated, as well as a solicitation for membership or contributions. In such case, the inclusion of a request for funds will not be sufficient to exclude the cost of the activity from the definition of election advertising expenses. In instances where there is more than one purpose, i.e., to undertake election advertising promoting or opposing a registered political party, its candidates, or an issue associated with them, and to solicit funds, the third party must allocate a portion of the gross costs of the activity as an election advertising expense. The Office of the Chief Electoral Officer will accept the basis of allocation used by the third party provided that it is, in the Chief Electoral Officer s opinion, reasonable, and provided that the third party s auditor also agrees that the allocation is reasonable and in keeping with these guidelines. 27

32 Contributions 28

33 Books and Records 10. Books and Records The Canada Elections Act requires that financial agents submit a Third Party Election Advertising Report (EC 20228) within four months after election day, disclosing all election advertising expenses incurred on behalf of the third party and all contributions received for election advertising purposes by the third party as well as disclosing the time and place of broadcast or publication of advertisements. Since the financial agent is responsible for filing the Third Party Election Advertising Report (EC 20228) with the Chief Electoral Officer, the financial agent must be responsible for managing the third party s financial activities. This is important because contributions for election advertising purposes can only be accepted from certain sources and election advertising expenses are subject to spending limits. [357(3), 358, 359] The financial agent must therefore play an integral role in the organization of a third party, particularly in the maintenance of all books and records of contributions and expenses for election advertising purposes, as well as time and place of advertisements. [350] The Third Party Election Advertising Report (EC 20228) is available from Elections Canada s Web site or from its office at the address provided in the introduction to this handbook. Where an election advertising expense is more than $50, the financial agent should obtain and retain a bill, showing the nature of the purchase and the price charged. If goods or services are donated by a person or commercial organization normally selling such goods or services, then a no-charge invoice should be provided showing the normal selling price of the goods or services donated. Payments from petty cash funds held by the financial agent, or other persons authorized by the financial agent, should also be documented. If the goods or services are being donated for election advertising purposes by a person or organization which does not issue invoices, a pro forma invoice showing the date of the contribution, the name and address of the contributor, the nature of the goods or services contributed, and the commercial value of such goods or services should be prepared by the contributor or by the financial agent of the third party. In the case of a contribution by a numbered company, the financial agent must also obtain the name of the chief executive officer or president of that company. [359(4)(b.1)] 29

34 Books and Records The financial agent must provide the auditor, if one is required to be appointed, with access to: bank statements and cancelled cheques; a list of cheques issued but not yet cashed; copies of all bills, vouchers, and pro forma invoices; details of loans obtained; details of the proceeds of fundraising functions and other miscellaneous revenues. [360(4)] 30

35 Third Party Election Advertising Report 11. Third Party Election Advertising Report Within four months after election day, the financial agent of a third party that is required to be registered must transmit to the Chief Electoral Officer the Third Party Election Advertising Report (EC 20228). If the third party incurred election advertising expenses of $5,000 or more, the report must be accompanied by an auditor s report. [359, 360(1)] The report must contain a list of election advertising expenses in a given electoral district that promotes or opposes the election of one or more candidates, including by naming them showing their likenesses identifying them by their respective political affiliations, or taking a position on an issue with which they are particularly associated, together with the time and place of the broadcast or publication of the advertisements to which the expenses relate [350(2)] The report must also list all election advertising expenses, other than those referred to previously and the time and place of broadcast or publication of the advertisements to which the expenses relate. [359(2)] If a third party has not incurred election advertising expenses, that fact must be indicated in its Third Party Election Advertising Report (EC 20228). [359(3)] The Third Party Election Advertising Report (EC 20228) must also include, by class of contributor, the amount of contributions that were received for election advertising purposes in the period beginning six months prior to the issue of the writ and ending on election day. For each contributor who made contributions of a total amount of more than $200 for election advertising purposes during this period, their name, address, and class, together with the amount and date of each contribution, must be disclosed. The amount, other than contributions, that was paid out of the third party s own funds for election advertising expenses must also be reported. [359(4)] 31

36 Third Party Election Advertising Report If a third party is unable to identify specific contributions that were received for election advertising purposes in the defined period, it must list the name of every contributor who donated a total of more than $200 during that period. [359(7)] The Third Party Election Advertising Report (EC 20228) must include signed declarations to the effect that the report is accurate, signed by the financial agent and, if different, by the person who signed the application for registration of the third party. [359(8)] The financial agent must keep the original of every bill, voucher, or receipt for an election advertising expense in an amount of more than $50. Although they are not required at the time of filing, the Chief Electoral Officer can require that such documents be produced, at a later date, for audit purposes. [359(9)] The Chief Electoral Officer may make a correction in a Third Party Election Advertising Report, if the error does not materially affect the substance of the report. [361] 32

37 Publication 12. Publication The Chief Electoral Officer will publish, in a manner he deems appropriate, a summary of all third parties Third Party Election Advertising Report (EC 20228) within a year after the issue of the writ for an election. [362] 33

38 Publication 34

39 Enforcement 13. Enforcement 13.1 Commissioner of Canada Elections The Commissioner of Canada Elections ensures that the Canada Elections Act is complied with and enforced. Each case brought to the Commissioner s attention is assessed in light of the Act and the particular circumstances of the case. The decision to prosecute or to apply compliance measures must be taken by the Commissioner and may not be delegated or imposed. Any reliance on this publication would nevertheless be an important factor in the Commissioner s deliberation. With the exception of offences relating to peace and good order at elections, the prosecution of offences under the Canada Elections Act can only be undertaken with the prior written consent of the Commissioner. The Commissioner may institute a prosecution: following an inquiry; on his or her own initiative; or after the receipt of a written complaint alleging the commission of the offence, within six months after its commission. Prosecution may take place where the Commissioner believes, on reasonable grounds, that an offence under the Act has been committed and that the public interest justifies it. Prosecution of an offence under the Act must be instituted within eighteen months after the day on which the offence was committed. The Commissioner may also apply for an injunction to a competent court during an election period, or may enter into a compliance agreement with a contracting party to ensure compliance with the Act. Once compliance is achieved, a compliance agreement terminates any prosecution of the contracting party and prevents the Commissioner from instituting such a prosecution Offences and punishment All of the offences and penalties are found in Part 19 of the Canada Elections Act. The offences are either strict liability offences or offences requiring that the prosecution prove that the accused intended to commit the offence. Strict liability offences do not require the prosecution to prove an intention to commit the offence. A defence open to the accused is to demonstrate that he or she acted with due diligence. 35

40 Enforcement The offence provisions are listed in sections 480 to 499 of the Canada Elections Act. The offences are categorized according to the elements of the offence that the Commissioner must prove: offences prosecuted on summary conviction offences prosecuted on conviction or indictment 13.3 Penalties Penalties vary for convictions depending on the procedure selected to prosecute and the seriousness of the offence: on summary conviction, the person found liable may receive: a fine of not more than $1,000 to $2,000 imprisonment for a term of not more than three months to not more than one year or both on conviction on indictment, the person found liable may receive: a fine of not more than $5,000 imprisonment for a term of not more than five years or both On summary conviction, the person found liable of an offence under subsection 495(4) (election survey and broadcasting) or the registered party found liable of an offence referred to in section 507 (registered party s election finances, such as: registered party s chief agent failing to provide the financial transactions return) may receive: a fine of not more than $25,000 36

41 Enforcement The Act also enables the court to impose additional penalties, according to the nature of the offence and the circumstances surrounding its commission. A person may be liable, in addition to any other penalty, to: perform community service compensate any other person who has suffered damages as a result of the commission of the offence perform any obligation the non-performance of which gave rise to the offence, or take any other reasonable measure that the court considers appropriate to ensure compliance with this Act in the case of a third party that is guilty of an offence under paragraph 496(1)(a) or (2)(a) (exceeding or circumventing election advertising expense limits), a fine imposed of up to five times the amount by which the third party exceeded the election advertising expense limit Finally, the Act provides for additional penalties for persons convicted of illegal or corrupt practices: a person convicted of having committed an offence that is an illegal or corrupt practice cannot be elected to or sit in the House of Commons or hold any office in the nomination of the Crown or of the Governor in Council, during the next five or seven years, respectively, after the date of being convicted 37

42 Enforcement 38

43 Summary 14. Summary Any individual, corporation or group may support or oppose a registered political party or the election of a candidate, or an issue with which a party or candidate is associated. If that support or opposition takes the form of election advertising during an election period, the person or group will be considered, under the Act, to have incurred "election advertising expenses". All election advertising must identify the third party and mention that it has authorized the advertising. A third party must register immediately after having incurred election advertising expenses totalling $500 and may not register before the issue of the writ for a general election. The third party applies for registration by filing with the Chief Electoral Officer an Application to Register a Third Party form. Registration is not automatic. The Chief Electoral Officer must consider whether the name of the third party to be used could be confused with that of another registered third party, or registered (or eligible) political party or candidate. Once granted, registration is only valid for that election. The Chief Electoral Officer maintains a Registry of Third Parties where the details of each registered third party is received (and is available for anyone to consult). Third parties are subject to an election advertising limit during an election of $150,000 in total, but are also limited to $3,000 per electoral district which is included in the overall limit of $150,000. In addition, the Act provides for the indexing of these limits by applying a factor that is calculated and published annually in the Canada Gazette by the Chief Electoral Officer. Upon applying for registration, the third party must appoint a financial agent who will be responsible for the administration of the finances of the third party. This will include control of election advertising expenses, receipt of contributions to be used for election advertising purposes, reporting on these expenses and contributions, as well as complying with other requirements. Expenses and contributions are defined in the Act and are subject to various requirements (nature, categories, amounts, recording, etc.). The financial agent must file a Third Party Election Advertising Report (EC 20228) (on election advertising expenses, contributions, and time and place of broadcast or publication of advertisements) with the Chief Electoral Officer within four months following election day. If the election advertising expenses amount to $5,000 or more, the third party must also appoint an auditor (an accountant or accounting firm). The auditor will be responsible to review the books and records of the third party and to report whether the Third Party Election Advertising Report (EC 20228) fairly presents the information contained in the accounting records on which it is based. The auditor s report must be included with the Third Party Election Advertising Report (EC 20228).All obligations imposed by the Act on third parties or their officers or agents may give rise to an offence where such obligations are not respected. Penalties will vary in accordance with the nature of the offence and the circumstances surrounding its commission. Additional penalties may also apply; for example, where a third party 39

44 Summary exceeds the election advertising expense limits, it may be subject to a fine of up to five times the amount by which it exceeded the limit in question. 40

45 Appendix 15. Appendix Form Application to Register a Third Party (EC 20226) 41