Recent amendments to the Canada Elections Act (the “Elections Act”) came into force and effect on June 13, 2019. This article summarizes these significant changes and how they impact non-profit organizations and registered charities.
Readers will recall that 2018 brought many changes to charities’ ability to carry out non-partisan political activities in furtherance of their charitable purposes. We reported on the Canada Without Poverty v. AG Canada decision, as well as the amendments to the Income Tax Act (“ITA”) and new Canada Revenue Agency (“CRA”) guidance. The end result was the government confirmed charities could pursue public policy dialogue and development activities that further their charitable purposes without restriction provided the advocacy is non-partisan. Despite the changes that 2018 brought, charities still cannot support or involve themselves in any partisan political advocacy. If charities do, then they are violating their obligations under the ITA and run the risk of having their charitable status revoked.
The ITA is not the only law that regulates partisan activity. This is a federal election year, and the Elections Act governs all organizations (including non-profits and charities) and what they can say and do (as well as how they can say and do it) in the pre-election period and during the election campaign. Most of these regulations relate to transparency and accountability around what an organization supports during an election.
It should be noted that these regulations do not generally prohibit activity the way the ITA prohibits partisan activity for charities. Rather, the Elections Act is a regulatory scheme that prescribes registering and reporting of activities that an organization or group of organizations pursues at the time of an election.
The rules in the Elections Act require an organization to register as a “third party” with Elections Canada if it is undertaking a “regulated activity” under the Elections Act and incurs expenses totalling $500 or more for regulated activity that takes place during a pre-election period or election period. If it does not register, then it would run the risk of being offside of Canada’s election laws.
The Elections Act defines a “third party” as a person or group that wants to participate in or influence elections but is not a political party, electoral district association, nomination contestant or candidate. “Group” in this context means, among other things, a group of persons acting together by mutual consent for a common purpose. This is a very broad definition, and any attempt by any person or group to avoid classification as a third party is unlikely to be successful. As a result, if a person or group of persons wants to avoid having to register under the Elections Act and report their activities, such person or group should avoid participating in any “regulated activities” as contemplated in the Elections Act.
The Elections Act defines four specific and discrete “regulated activities”. They are: “partisan activities”, “election surveys”, “partisan advertising” and “election advertising”. They are defined as follows:
- Partisan activities are activities carried out by a third party that promote or oppose a political party, nomination contestant, potential candidate, candidate or party leader, other than by taking a position on an issue with which the party or person is associated. Notably, activities to fundraise for the third party are excluded from partisan activities.
- Election surveys are surveys designed and conducted (or caused to be conducted) during the pre-election or election periods by third parties to determine whether or not to organize and undertake other regulated activities.
- Partisan advertising is defined as the transmission of an advertising message during the pre-election period that “promotes or opposes a register party or an eligible party or the election of a potential candidate, nomination contestant or leader of a registered party or eligible party.” Partisan advertising is only regulated during the pre-election period. Notably, it does not include taking a position on an issue with which a registered party or candidate is associated.
- Election advertising is defined as the transmission of an advertising message to the public during the election period that “promotes or opposes a registered party or the election of a candidate.” Election advertising includes taking a position on an issue with which a registered party or candidate is associated.
Two questions are common when considering these rules. The first is what costs are included when calculating whether the limit is met, and the second is what is an “advertising message”.
The threshold for registering as a third party for Elections Canada is “incurring expenses in the aggregate of $500 or more” for regulated activities that take place during the pre-election and election periods. Regulated expenses include: amounts paid, liabilities incurred, the commercial value of donated property and services (other than volunteer labour), and the difference between an amount paid or liability incurred and the commercial value of the property or services (if they are provided at less than their commercial value). The Elections Act defines “monetary” or “non-monetary” contributions to aid in this assessment. There is specific guidance on what is a placement cost to boost the content of a partisan or election advertising message.
There is no one definition of advertising message in the legislation. That said, there is clarification about partisan and election advertising that happens online. Such “transmissions” are considered advertising only if they comply with the definition in the Elections Act and have, or normally have, a placement cost that sponsors or boosts the content. If the placement cost – or other advertising related expenses – meets or surpasses the $500 threshold during the pre-election period (for partisan advertising) or during the election period (for election advertising), then the Elections Act requires the third party to register with Elections Canada.
Election or partisan advertising does not include:
- messages sent or posted for free on social media platforms like Twitter or Facebook;
- messages sent by email or through other messaging services (including text messages and phone calls sent through a cellular or mobile network);
- videos posted for free on social media platforms like YouTube or Instagram; or
- content posted on a third party’s website.
Provided the appropriate registration and reporting is done, a non-profit that is not a charity can undertake any of the regulated activities. Registered charities, on the other hand, have to be mindful that they cannot be partisan. Thus, if they want to be involved in promoting their purposes by advertising or surveys on issues during the pre-election or election period, they should only consider undertaking election surveys and non-partisan election advertising. Non-profits or charities undertaking regulated activities should carefully monitor their related expenses and especially their placement costs during the election period because they may need to register with Elections Canada.
If your entity is required to register as a third party and report on the activities, the regulations are detailed. A registered entity will be required to render and submit multiple interim reports related to the disclosure of election expenditures at fixed dates during the pre-election and election periods. There are also unique and tailored considerations for charities and non-profits about the timing of registration with Elections Canada that are fact-specific. These assessments are beyond the scope of our comments in this issue.
Elections Canada published guidance, Political Financing Handbook for Third Parties, Financial Agents and Auditors, to assist third parties in complying with the Elections Act on June 13, 2019, which can be accessed here.
The members of our Social Impact group are available to assist you in understanding the Election Canada rules as they become relevant in the pre-election and election periods during this election season.
 We are currently in the pre-election period (which started on June 30, 2019 and will end the day before the general election is called). The election period starts the day the general election is called and ends on the election day.
 That said, there are specific prohibitions related to foreign parties’ involvement in election campaigns.
 Regarding content posted on a third party’s website, the ongoing expenses for creating and maintaining a website are not considered placement costs.