DATE:  June 10, 2004

SUBJECT: Contributions to a Registered Party, a Registered Association or to a Candidate at a Federal Election

This circular cancels and replaces Information Circular 75-2R6, dated July 18, 2002.

This version is only available electronically.

1. The Income Tax Act provides for the deduction from tax of a portion of the total eligible amount of monetary contributions to a registered party, a provincial division of a registered party, a registered association, or a candidate, as those terms are defined in the Canada Elections Act. The maximum tax credit is $650.

2. This circular is for the use of agents authorized under the Canada Elections Act to accept monetary contributions and contributors. The circular is divided into two parts.

Contents

• Part 1 – Information for Authorized Agents
  • Monetary contributions
  • Receipts
  • Books and records
• Part II – Information for Contributors
  • How to calculate a claim
  • How to claim

Part 1 – Information for Authorized Agents

3. A registered agent is defined in the Canada Elections Act as a person whose name is recorded in the registry of parties maintained by the Chief Electoral Officer, and includes the chief agent of a registered party.

4. An electoral district agent is defined in the Canada Elections Act as a person whose name is recorded in the registry of electoral district associations maintained by the Chief Electoral Officer, and includes the financial agent of a registered association.

5. An official agent is defined in the Canada Elections Act as the agent appointed by a candidate and charged with the paying of all legal expenses of the candidate for the managing or conducting of an election. As part of the nomination process, the candidate has to declare in writing to the returning officer the official agent’s name, address, and occupation.

Monetary contributions

6. A monetary contribution is defined in the Income Tax Act as a contribution to a registered party, a provincial division of a registered party, a registered association or to a candidate. A monetary contribution can be in the form of either cash or a negotiable instrument issued by the taxpayer. Receipts for income tax purposes must not be issued for services rendered or contributions in kind.

7. Receipts for income tax purposes must not be issued for more than the eligible amount of the monetary contribution, and can only be issued to the contributor.

Receipts

8. Only the candidate’s official agent can issue receipts for income tax purposes for monetary contributions to a candidate at an election. Similarly, only registered agents and electoral district agents can issue receipts for income tax purposes for monetary contributions to a registered party or to a registered association. Registered agents can issue such receipts, as long as their names are recorded in the registry maintained by the Chief Electoral Officer. Electoral district agents can issue such receipts, as long as their names are recorded in the registry maintained by the Chief Electoral Officer and the leader of the registered party has, in writing, notified the financial agent of the registered association that its agents are authorized to issue those receipts. Official agents can only issue such receipts for monetary contributions received in a certain period. This is the period that starts with the day on which the candidate’s nomination has been confirmed by the returning officer, and ends on the day that is 30 days after polling day. Contributions received after polling day must have been in transit on polling day.

9. Receipt forms for registered agents and electoral district agents have to be distributed by the registered party or by the registered association. The forms have to be in a format that is acceptable to the Canada Revenue Agency (CRA). Receipts to be used by a candidate’s official agent must be distributed by the returning officer at the time the candidate’s nomination paper is filed. The receipts have to be in a format acceptable to the CRA. Registered agents, electoral district agents and official agents have to fully complete receipt forms to avoid the disallowance of contributors’ tax credits by the CRA.

10. Every official receipt issued by a registered agent of a registered party has to state that it is an official receipt for income tax purposes and, in a manner that cannot readily be altered, must clearly show:

11. Every official receipt issued by an electoral district agent of a registered association has to state that it is an official receipt for income tax purposes and, in a manner that cannot readily be altered, must clearly show:

12. Every official receipt issued by an official agent of an officially nominated candidate has to state that it is an official receipt for income tax purposes and, in a manner that cannot readily be altered, must clearly show:

In the case of receipts issued by official agents, the information required by paragraph (f) may be shown by use of a code on an official receipt form issued by the Chief Electoral Officer, provided that the Minister is advised of the meaning of the code used.

13. All receipts issued by official agents must be official receipts supplied by the returning officer, and they must be used in the manner prescribed by the Chief Electoral Officer. Official agents are directly responsible for accounting for all official receipts supplied to the agents by the returning officer. Unused receipts must be returned to the returning officer, along with the copy prescribed by the Chief Electoral Officer of all receipts issued, within 30 days of polling day.

14. The number of copies of each receipt issued by registered agents of political parties and by electoral district agents of registered associations will depend on the receipt reporting system adopted by the party or association, but there must be at least two copies:

• the original, to be given to the contributor for tax credit claim; and
• copy 1, to be retained by the agent.

Parties and associations may want to add a copy 2 for internal reporting purposes.

15. Official agents must issue receipts as contributions are received, within the time limits stated in paragraph 8. All other authorized agents can issue one official receipt after the year-end to cover all contributions made by an individual in the year. In such instances, the receipt must clearly show the year during which the contributions were received. However, receipts issued to corporations must show the dates of payments.

16. The CRA will accept facsimile signatures on official receipts issued by the chief agent of registered parties, by the financial agent of registered associations, or official agents if a large volume of receipts has to be issued at the central offices of the party.

17. Registered agents, electoral district agents, and official agents should report immediately to the CRA any loss, theft, or other misplacement of official receipts, including the serial numbers of the missing receipts. The address for this is:

Charities Directorate
Canada Revenue Agency
Ottawa ON  K1A 0L5

18. As part of a fund-raising campaign, activities may be sponsored or held by a candidate, a registered party, or a registered association. In such a case, the patrons may be notified that the amount they have to pay covers not only the cost of the function but also a contribution to a candidate, a registered party, or a registered association. If so, the eligible amount of the montetary contribution is the patron’s total payment reduced by the fair market value of what the ticket entitles the patron to obtain.

Registered agents, electoral district agents or official agents that want to issue receipts for income tax purposes for such contributions should be able to support the basis used to determine the eligible amount of the monetary contribution made by patrons.

19. A monetary contribution does not include a contribution that a taxpayer who is an agent authorized under the Canada Elections Act to accept monetary contributions makes in that capacity. An official receipt does not have to be issued in such cases. If a receipt is issued, the agent has to clearly mark “not valid for income tax purposes”. Do not report such amounts on Forms T2092, Contributions to a Registered Party or to a Registered Association – Information Return or T2093, Contributions to a Candidate at an Election – Information Return (see paragraphs 25, 26, and 27).

20. Registered agents and electoral district agents can issue replacement receipts to contributors who have lost or misplaced their originals. In such cases, the replacement receipt must clearly show that it replaces the original receipt, and, in addition to its own serial number, must show the serial number of the original receipt. This can be done by marking on the face of the replacement receipt “Duplicate replacing receipt number       .” The amount shown on the replacement receipt should not be included in the dollar totals on the return, as stated in paragraph 26.

Registered agents and electoral district agents can also issue receipts to replace spoiled receipts, as long as the registered agent or electoral district agent keeps or recovers the original and all copies of the spoiled receipts (see paragraph 22).

21. Official agents can only issue replacement receipts while they have the receipts. Also, agents can only issue replacements for spoiled receipts, the original of which the agents have kept or recovered (see paragraph 22). All other replacement receipts for contributions to a candidate will be issued by the Chief Electoral Officer. When a contributor asks for such a replacement receipt from an official agent, the agent has to contact:

Office of the Chief Electoral Officer
Ottawa ON  K1A 0M6
Attention: Director, Election Financing

A contributor may make a contribution during the period described in paragraph 8 but through an oversight or otherwise no official receipt for income tax purposes is issued by the official agent during the period. If so, the agent can get an official receipt for income tax purposes by contacting the Chief Electoral Officer at the above address.

22. When a replacement receipt is issued for a spoiled receipt, the original and all copies of the spoiled receipt are to be marked “Cancelled – see receipt number _____  .” Any receipts written in error and neither issued nor replaced should be marked “Cancelled – not replaced.” As the case may be, the original of the cancelled receipt should be kept by the registered agent, the electoral district agent or the official agent.

Books and records

23. Every agent authorized under the Canada Elections Act to accept monetary contributions referred to in that act has to keep records and books of accounts that are sufficient to allow verification of the contributions received by the agent and expenditures made by the agent (including a duplicate of each receipt, containing prescribed information, issued for income tax purposes for monetary contributions received by the agent). Such records and books of account have to be kept until the day that is two years after the end of the last calendar year to which the records and books of account relate.

24. Every official agent of a candidate must deposit amounts contributed, as soon as possible, in an account standing to the credit of the agent. The account has to be with a Canadian financial institution as defined in section 2 of the Bank Act, or in an authorized foreign bank as defined in that section. The foreign bank cannot be subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act.

25. Form T2093, Contributions to a Candidate at an Election – Information Return, must be completed by each official agent of a candidate unless the appointment of such an agent has been terminated, by death or otherwise, and the agent has been replaced. The return has to be completed in detail and signed by the official agent or the predecessor official agent. The return will cover the period from the earlier of the date of appointment of the official agent, or the date of appointment of the predecessor official agent, to the date that is 30 days after the date that is designated as polling day. It must be filed with the Minister of National Revenue no later than four months after the polling date. These returns will be provided by returning officers. These returns will be provided by the Chief Electoral Officer.

26. Form T2092, Contributions to a Registered Party or to a Registered Association – Information Return, must be completed by each registered agent, electoral district agent, terminated registered agent, or terminated electoral district agent of a registered party or registered association. In the event of death of a registered agent, the chief agent has to complete Form T2092 for the registered agent. In the event of death of an electoral district agent, the financial agent has to complete Form T2092 for the electoral district agent. The return must be completed in detail. The return will be for the period from the date after the end of the period last reported (if a previous return has been filed by a registered agent or electoral district agent) or the date of appointment of the registered agent or electoral district agent to the earlier of December 31 of the year, or the date of termination or death of the registered agent or electoral district agent. The return has to be filed with the CRA by :

• For a registered party, June 30 of the next year.
• For a registered association, May 31 of the next year.

27. On both returns, two separate amounts have to be reported: (1) the total amount of monetary contributions received during the period covered by this return; and (2) the total eligible amount of monetary contributions for which official receipts have been issued. In most cases, these two amounts will be the same. However, if contributions have been received for which no receipt was issued (e.g. minor amounts from small social functions or loose collections), the first amount will be more than the second, and a reconciliation is required. This reconciliation should also give details of all eligible amounts for which official receipts were issued but the contribution cheque was returned because of insufficient funds. In these instances, the name and address of the contributor should be given, as well as the receipt number, the amount of the cheque, and the amount for which the receipt was issued.

Part II – Information for Contributors

How to calculate a claim

28. Contributions to registered parties, registered associations and candidates are deductible under the Income Tax Act from tax otherwise payable according to the following schedule:

All claims must be supported by an official receipt.

How to claim

29. Corporations can claim contributions to registered associations or candidates on a T2 return as a deduction from tax otherwise payable under Part 1. The amount of the deduction will appear on the line entitled “Federal political contribution tax credit,” and the total contributions paid will appear on the line entitled “Federal Political Contributions” on the T2-FTC Schedule 1 of the T2 return.

30. For individuals, the tax calculation schedule for the T1 return allows a claim for the political contribution deduction for contributions to registered parties, registered associations or candidates.

31. Political contributions result in a deduction from tax rather than a deduction from income, within the limitations stated in paragraph 28. The tax credit is a deduction from “tax otherwise payable under this Part” under the Income Tax Act.

32. The Income Tax Act does not provide for the carry-forward of political contribution claims from one year to the next. This is because political contributions are a deduction from tax otherwise payable, not a deduction in calculating taxable income. A political contribution can only be used as a tax deduction for the year in which the contribution was made, and only to the extent of tax otherwise payable.

33. Contributors to a registered party or to a registered association can, when necessary, get duplicate copies of official receipts from the issuer of the original.

34. Contributors to a candidate at an election can get a duplicate from the official agent only when the original is returned to the agent because it was completed in error or damaged. Also, getting a duplicate can only be done when the agent has unused official receipts. Unused receipts are returned to the Office of the Chief Electoral Officer soon after each election. In all other cases, such as when receipts are lost, duplicates can be obtained by writing to:

Office of the Chief Electoral Officer
Ottawa ON  K1A 0M6
Attention: Director, Election Financing

When writing, give the name of the electoral district, the name of the candidate, date of contribution, date of original receipt, and amount. This information will help the Chief Electoral Officer to confirm your contribution and issue a proper duplicate.

Information on the Canada Elections Act is available on the Elections Canada Web site at: http://www.elections.ca/