The financing of federal political entities in Canada (including federal parties, riding associations, candidates, nomination contestants, leadership contestants, and registered third parties) is regulated under the Canada Elections Act. A combination of public and private funds finances the activities of these entities during and outside of elections.
Overview
Canada's federal political parties receive the most significant portion of public funding at election times that is based on what they have spent through electoral expense reimbursements.
Between elections, until 2015, Canada's federal political parties have as their two primary sources of funding:
Political contributions from individuals subsidized through tax credits – allocated according to monetary contributions. Per-vote subsidies – allocated according to the votes of Canadians.
These sources of funding determine, along with loans and secondary revenue sources, how much money the federal political parties have available to spend.
In 2015 the Per-vote subsidy was eliminated.
+ Table – Primary sources of public and private funding of the federal political parties in 2009Subsidized political contributions Per-vote subsidy TotalParty levelRiding level $33.3 million $12.7 million $27.7 million $73.7 million $46 million 62.4% 37.6% 100% (Source: Elections Canada)
Public funding
Public funding of Canada's federal political parties is allocated in two ways:
Per-vote subsidies (2004 to 2015) - allocated according to the votes of Canadians. Electoral expense reimbursements - reimbursements allocated according to party spending during election periods.
The per-vote subsidy (amounting to $27.7 million in 2009), also referred to as the "government allowance", the "quarterly allowance", or the "direct public subsidy", was argued by some political commentators to be the most democratic of the three funding mechanisms: The choices of 100% of voters of eligible parties (13,675,146 individual Canadians or 99% of all valid votes in the preceding election) are taken into account, all on an equal-basis.PM targets party subsidies
The electoral expense reimbursement, which accounts for the largest part of the public financing following an election ($54 million in 2009), reimburses 50%-60% of a party's expenses on elections - the more a party spends during an election, the more public funds they get back.
+ Table – Public financing of the top five federal political parties in 2009 Political party Electoral expense reimbursements Per-vote subsidy Total public funding Conservative Party $21.4 $10.4 $15.57 $47.37 42.0% Liberal Party $15.1 $7.2 $9.21 $31.51 28.0% New Democratic Party $12.4 $5.0 $3.37 $20.77 18.4% Bloc Québécois $4.8 $2.7 $0.95 $8.45 7.5% Green Party $1.7 $1.9 $0.97 $4.57 4.1% Total (top five parties) $55.4 $27.2 $30.07 $112.7 Percentage of the overall public funding 49% 24% 27% (Tax credits approximate. Electoral expenses reimbursements include estimated riding/candidate level reimbursements. Sources: Elections Canada, Globe and Mail)
Previous to 2015
Of the three ways in which federal parties are allocated public funding, the per-vote subsidy is largely argued as the most democratic as it rewards each vote absolutely equally. However, there are reasons to believe that it creates perverse incentives, such as running for votes where candidates cannot win, thus defeating (at least under first past the post voting) the party's own policy objectives, and muddying its potential alliances with every other party once legislatures sit. Election financing is a complex issue that has been studied in depth academically
100% of the voters of eligible parties (99% of all voters in the preceding election) have a say, with their input treated on an equal basis (1 voter, 1 vote).
The subsidy entered into effect on January 1, 2004, at $1.75 per vote (indexed to the Consumer Price Index) as part of a set of amendments made by the Jean Chrétien government to the Canada Elections Act which for the first time set limits on political contributions by individuals and organizations (corporations, unions, non-profit groups). The per-vote subsidy was introduced to replace the reliance of political parties and candidates on corporate, union, and wealthy donors in order to reduce the political influence of such donors.
After the 2006 court challenge to remove the 2%/5% threshold, the subsidy was reduced to $1.53 by the Harper government on April 1, 2012, and was reduced on each subsequent April 1, until its elimination in 2015.
Public subsidy of contributions
Political contributions are publicly subsidized via a personal income tax credit that credits 75% of the first $400 contributed, 50% of the amount between $400 and $750, and 33.33% of the amount over $750, up to a maximum tax credit of $650 (reached when contributions by an individual total $1,275 in one calendar year.) As of 2017, the maximum political contribution is $1,550 and increases by $25 each year thereafter. this can be given to the national organization of each party, the tax credit is $650, representing a subsidy of 42%.
+ Table - Individual political contributions made to federal political parties in 2009Political party Party level Riding level Total Contributions received Number of contributors Percentage of contributors Contributions received Number of contributors Percentage of contributors Contributions receivedConservative Party $17,702,201.05 101,385 55.75% $5,646,513.18 41,227 43% $23,348,714.23Liberal Party $9,060,916.11 37,876 20.83% $4,760,216.56 30,426 31% $13,821,132.67New Democratic Party $4,008,521.11 23,704 13.03% $1,046,588.50 11,484 12% $5,055,109.61Green Party $1,123,094.64 9,115 5.01% $331,588.29 5,551 6% $1,454,682.93Bloc Québécois $621,126.24 6,052 3.33% $805,538.64 7,297 8% $1,426,664.88Christian Heritage Party $284,420.20 953 0.52% $102,147.66 751 1% $386,567.86Animal Alliance Environment $292,950.20 1,816 1.00% $0.00 0 0% $292,950.20Communist Party $88,184.44 628 0.35% $0.00 0 0% $88,184.44Marxist-Leninist Party $39,130.00 85 0.05% $0.00 0 0% $39,130.00Rhinoceros Party $13,950.00 19 0.01% $0.00 0 0% $13,950.00People's Political Power Party $13,288.00 20 0.01% $0.00 0 0% $13,288.00Canadian Action Party $10,635.00 63 0.03% $0.00 0 0% $10,635.00Libertarian Party of Canada $6,587.44 40 0.02% $0.00 0 0% $6,587.44Western Block Party $5,260.00 56 0.03% $0.00 0 0% $5,260.00Progressive Canadian Party $5,018.00 40 0.02% $2,774.00 24 0% $7,792.00Marijuana Party $2,610.00 6 0.00% $700.00 2 0% $3,310.00 Total $33,277,892.43 181,858 100% $12,696,066.83 96,762 100% $45,973,959.26 (Source: Elections Canada, Statement of Contributions Received, Part 2a)
(Note: The actual numbers of unique individual contributors are likely to be less than the totals shown as multiple anonymous contributions of under $20 by the same person are counted as separate contributors, and contributions made by the same person to both the riding level and at the party level, to different ridings, and/or to different parties are also all counted as separate contributors.)
Electoral expense reimbursement
When an election takes place, perhaps the most significant source of public funding for the federal political parties is the election expenses reimbursement which subsidizes 50% of the national campaign expenses of any party that obtains at least 2 per cent support, or at least 5 per cent in the ridings (electoral districts) in which they presented candidates. In addition to this, the parties' riding organizations are also reimbursed 60% of all expenses incurred by their candidates in each riding where they obtained at least 10% of the votes, plus 100% of allowable "personal expenses". The reimbursements are also referred to as "government rebates", "government transfers", or "election rebates".
Under this subsidy, the more a party spends, the more they are subsidized. The subsidy therefore magnifies the public funds allocated by tax credits on political contributions and by the per-vote subsidies. It also means that loans to political parties and their candidates can play a significant role in determining how much public money is received by the parties.
During the 2008 election, the Conservatives spent the most, and, as a result, received the largest reimbursements under this public subsidy in 2009.
+ Table - National and riding electoral expense reimbursements received by the top five federal political parties in 2009 Political party National expense reimbursements received Riding expense reimbursements received Total expense reimbursements Share of the reimbursements to top five parties Conservative Party $9.7 $11.7 $21.4 39% Liberal Party $7.3 $7.8 $15.1 27% New Democratic Party $8.4 $4.1 $12.4 23% Bloc Québécois $2.4 $2.4 $4.8 9% Green Party $1.1 $0.6 $1.7 3% Total (top five parties) $28.90 $26.60 $55.5(Riding expense reimbursements estimated. Source: Globe and Mail)
Distribution of public funding amongst parties
Private funding
Private funding of the federal political parties occurs through political contributions made by individuals, but these contributions are vastly subsidized by public funds disbursed through tax credits.
As of 2021, the maximum yearly contribution limit is $1650 to a given federal political party, $1650 to a given party's riding associations, $1650 to a given party's leadership candidates, and $1650 for each independent candidate. The maximum total contribution is set at $3300. The total tax credit for all contributions is capped at $650, representing a subsidy of 42%.
Of the $46 million in political contributions received in 2009 by federal party organizations and riding associations, between $28.5 million and $31 million of the contributions was publicly funded - through tax credits amounting to between 62% and 67.5% - while between $15 million and $17.5 million was net private funding.
+ Table – Public and private financing of the top five federal political parties in 2009 Political party Total net private funding received ($Mil) Total public funding received ($Mil)Total funding received ($Mil)% private % public Votes received in 2008 Public funding per vote received (in $'s)Share of the vote (in 2008) Share of the public funding of top five parties Conservative Party $7.78 $47.37 $55.15 14.11% 85.89% 5,208,796 $9.09 per vote 37.65% 42.04% Liberal Party $4.61 $31.51 $36.12 12.76% 87.24% 3,633,185 $8.67 per vote 26.26% 27.97% New Democratic Party $1.69 $20.77 $22.46 7.52% 92.48% 2,515,561 $8.26 per vote 18.18% 18.43% Bloc Québécois $0.48 $8.45 $8.93 5.38% 94.62% 1,379,991 $6.12 per vote 9.98% 8% Green Party $0.48 $4.57 $5.05 9.50% 90.50% 937,613 $4.87 per vote 6.78% 4.06% Total (top five parties) $15.04 $112.67 $127.71 11.78% 88.22% 13,675,146 $8.24 per vote (Public funding includes electoral expenses reimbursements. Tax credits estimated. Sources: Elections Canada, Globe and Mail)
Cost of fundraising
In order to solicit political monetary contributions, fundraising is a major focus for many parties that involves hiring fundraising experts, and employing sophisticated database systems, email lists, newsletters, and telemarketing.
The Conservative Party, for example, is reported to make phone calls or send letters to about 200,000 people a month, and conducts surveys to collect and feed information on the views of individuals into its database referred to as CIMS, an acronym for "Constituent Information Management System". The information stored in the database is then used to customize mailings and phone calls for each targeted donor to appeal to them specifically on issues that they are known to react more strongly to.
Other associated overhead for fundraising include legal consultation, processing, accounting, auditing, and reporting costs.