The current Elections Act was amended considerably in the wake of the sponsorship scandal, which tarnished the governing Liberals in the mid-2000s.
Today, the financing of political parties comes from two sources: individual contributions and public funding.
Two series of amendments have tightened rules for private funding. The first, which stemmed from Bill C-24, came into force in 2004 under Jean Chrétien’s Liberal government. Other provisions were adopted by Stephen Harper’s Conservative government and came into effect in 2007 and 2008.
Under these laws, Canada prohibits contributions from corporations, unions and other associations, unlike most provinces and territories in Canada. Individual contributions are also subject to a limit, which is regularly adjusted for inflation.
Although funding from corporations and unions was stopped, direct public funding of political parties was increased.
In 2012, individuals could donate within these limits:
- Up to $1,200 in total a year to a particular registered party
- Up to $1,200 in total a year to the registered associations, nomination contestants and candidates of a particular registered party
- Up to $1,200 in total to each independent candidate in an election
- Up to $1,200 in total to the contestants in a particular leadership contest
Foreign donations are prohibited, but anonymous donations are permitted provided they are $20 or under.
The Federal Accountability Act prohibits anyone from accepting a gift or other advantage after becoming a candidate in an election. Under the Act, “gift” encompasses sums of money as well as goods and services provided without charge or at less than their commercial value.
Political parties receive an annual allowance. It is based on the number of votes obtained in the previous election and is spread over four quarters. The allowance is regularly adjusted for inflation. In 2011, the indexed allowance amounted to $2 per vote obtained. To be eligible, a party must have obtained at least 2% of valid votes cast nationally, or at least 5% of valid votes cast in the ridings where it ran a candidate.
Candidates and political parties also have part of their election expenses reimbursed provided they obtained a certain percentage of votes. The percentages set for the parties are the same as those for allowances.
A tax credit is also provided for contributions made to a candidate or political party (considered indirect public funding).
Election expenses of candidates and parties are subject to separate limits based on the number of electors registered.
Any donation of $200 or more must be divulged.
Finally, candidates, riding associations and political parties must all file financial reports.