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Finance rules

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Third party advertising campaign

This guide refers to activities related to third party advertising as the “advertising campaign”.

Record keeping

Every third party advertiser is responsible for keeping financial records related to their advertising campaign. The Municipal Elections Act, 1996 does not require that third party advertisers use any specific accounting system. A third party advertiser may want to consult with an auditor or an accountant to make sure that they are using a bookkeeping and accounting system that will suit their needs.

The third party advertiser should also look through the financial statement (Form 8) that they will be required to file to make sure that they are keeping records of all the information that must be included on the statement.

Every third party advertiser is required to keep all of their advertising campaign financial records until November 15, 2026 when the next council or school board takes office.

A third party advertiser must keep the following advertising campaign records:

  • the receipts issued for every contribution including when the contribution was accepted and the date the receipt was issued (receipts must also be issued to the third party advertiser for any contributions made to their own advertising campaign)
  • the value of every contribution, whether it is money, goods or services, and the contributor’s name and address
  • all expenses, including the receipts for each expense
  • any claim for payment of an expense that the third party advertiser disputes or refuses to pay
  • the funds raised and expenses incurred from each separate fundraising event or activity
  • the terms of any loan received from a bank or other recognized lending institution

Advertising campaign period

A registered third party advertiser can only accept contributions or incur campaign expenses during their advertising campaign period.

The advertising campaign begins on the day the clerk certifies the registration of an individual, corporation or trade union to be a third party advertiser. Third party advertisers can register beginning on May 1, 2022 until the close of business on Friday October 21, 2022.

As the advertising is meant to influence voters, there is little point in continuing to advertise after voting day. However, the advertising campaign period runs until January 3, 2023. This extra time can be used to accept contributions if the advertising campaign has not paid for all of its expenses.

If a third party advertiser is certain that they will not have any more financial activity after voting day, they can end their advertising campaign at any time between voting day and January 3, 2023.

Bank account

Every third party advertiser must open a bank account exclusively for the advertising campaign.

An individual cannot use an existing personal bank account for advertising campaign finances, even if they are planning a very small advertising campaign. A corporation or trade union may not use an existing account.

All contributions – including contributions that the third party advertiser makes to itself – must be deposited into the third party advertising campaign bank account. All expenses must be paid for from the campaign account.

Contributions and advertising campaign income

Contributions

Contributions are any money, goods or services that are given to a third party advertiser for use in the advertising campaign, including money and goods that the third party advertiser contributes to their own campaign.

If a third party advertiser sells tickets to a fundraising event, the cost of the ticket is considered a contribution.

If a third party advertiser obtains a loan from a bank or other recognized lending institution and guarantees the loan, and the advertising campaign is unable to repay the full amount, any unpaid balance is considered to be a contribution by the guarantor. If the third party advertiser is an individual, either they or their spouse may guarantee a loan.

Things that are not contributions

The value of volunteer labour (for example, if a team of volunteers helps to put up signs) is not considered to be a contribution.

A cash donation of $25 or less received at a fundraising event is not considered to be a contribution, and the third party advertiser may accept such donations without keeping track of who gave them. The total amount of money received from these donations must be reported on the financial statement.

If the third party advertiser obtains a campaign loan from a bank or a recognized lending institution, the amount of the loan is not considered to be a contribution.

Who can contribute

A third party advertiser can accept contributions from:

  • any person who is a resident of Ontario
  • corporations carrying on business in Ontario
  • trade unions that hold bargaining rights for employees in Ontario

If the registered third party advertiser is an individual, and their spouse is not normally resident in Ontario, the spouse can still make contributions to the third party’s advertising campaign. They may not make contributions to any other registered third party advertiser, or to any candidates.

Groups such as clubs, associations or ratepayer’s groups are not eligible to make contributions. The members of these groups may make individual contributions from their personal funds, as long as they are residents of Ontario.

Who cannot contribute

The following are not allowed to make contributions to third party advertising campaigns:

  • a federal political party, constituency association, or a registered candidate in a federal election
  • a provincial political party, constituency association, or a registered candidate or leadership contestant
  • a federal or provincial government, a municipality or a school board.

When can contributions be received

A third party advertiser can only accept contributions once they have registered as a third party advertiser, and cannot accept contributions after the advertising campaign period has finished.

Any contributions received outside the advertising campaign period must be returned to the contributor. If the contribution cannot be returned to the contributor, it must be turned over to the clerk.

Contribution limits

There is no limit on how much a registered third party advertiser (and, if the third party advertiser is an individual, their spouse) can contribute to their own advertising campaign.

There is a $1,200 limit that applies to all other contributions. This amount includes the value of any goods or services donated to the third party advertiser. If an individual, corporation or trade union makes more than one contribution (for example, contributes money, contributes goods, and purchases a ticket to a fundraising event), the total value of all the contributions cannot exceed $1,200.

The maximum total amount that a contributor can give to third party advertisers registered in the same municipality is $5,000.

A contribution must come directly from the contributor – pooling contributions from others and giving them to a third party advertiser is not allowed. If a contribution is made from a joint account, it must be clear which person is making the contribution.

Only a contribution that is $25 or less can be made in cash. All contributions above $25 must be made by cheque, money order, or by a method that clearly shows where the funds came from (such as certain debit, credit or electronic transfer transactions).

Third party advertisers are required to inform every contributor of the contribution limits. Contributors should keep track of their donations to ensure they don’t end up giving more than is permitted.

Contribution receipts

Third party advertisers must issue a receipt for every contribution they receive. The receipt should show who made the contribution, the date, and the value. If the contribution was in goods or services, the third party advertiser must determine the value of the goods or services and issue a receipt for the full value.

If a third party advertiser receives a contribution from a joint account, the contribution can only come from one person. The third party advertiser must determine who is making the contribution and issue the receipt to that person.

Third party advertisers are required to list the names and addresses of every contributor who gives more than $100 total to the advertising campaign in their financial statement. The financial statement is a public document.

A third party advertiser should keep a record of the names and addresses of every contributor, regardless of the value of their contribution, because the same contributor may make multiple contributions that end up totalling more than $100.

Contribution receipts are not tax receipts. Contributions to third party advertising campaigns cannot be credited against provincial or federal income taxes.

An easy way for third party advertisers to inform contributors of the contribution limits is to include the contribution limits on the receipt that is given for each contribution.

Review of contributions

The contributions that are reported on third party advertisers’ financial statements will be reviewed by the municipal clerk to see if any contributors have given too much.

If the contributions reported on the financial statements show that a contributor gave more than $1,200 to an individual third party advertiser, or if they show that a contributor gave more than $5,000 to third party advertisers registered in the same municipality, the clerk will report this to the compliance audit committee. The compliance audit committee will hold a meeting and determine whether the municipality will begin court proceedings against the contributor.

Returning ineligible contributions

Third party advertisers are required to return any contribution that was made or accepted in contravention of the Municipal Elections Act, 1996 as soon as they learn that it was an ineligible contribution. If the contribution cannot be returned, it must be turned over to the clerk.

Contributions should be returned or paid to the clerk if the contribution is:

  • made outside the campaign period
  • from an anonymous source (except for donations of $25 or less at a fundraising event)
  • from an ineligible source (someone who doesn’t live in Ontario, a business that is not a corporation, etc..)
  • greater than the $1,200 individual limit or the $5,000 total limit
  • a cash contribution greater than $25
  • from funds that do not belong to the contributor who gave them

Unused contributions

If the advertising campaign ends with a surplus, the third party advertiser can withdraw the value of contributions that they made to their own campaign. If the third party advertiser is an individual, they can also withdraw the value of contributions made by their spouse. If there is still a surplus once these contributions have been withdrawn, it must be turned over to the clerk.

A third party advertiser cannot refund any other unused contributions.

Fundraising

Fundraising functions are events or activities held for the primary purpose of raising money for a third party’s advertising campaign.

If a third party advertiser has created brochures or other advertising materials that include a sentence asking people to make a contribution or providing information about how to contribute, this would not be a fundraising brochure since its primary purpose is to persuade voters to vote a certain way, not to raise money.

Fundraisers can only be held during the advertising campaign period. Third party advertisers must record the gross income, including ticket revenue and other revenue, and the expenses related to each event and activity on their campaign financial statement.

If tickets are sold to the event, the ticket price is considered to be a contribution to the advertising campaign and a receipt must be issued to each person who purchases tickets. If the ticket price is higher than $25, tickets cannot be paid for in cash.

Advertising campaign income

If funds are raised by selling goods or services for more than fair market value, the difference between the fair market value and the amount paid is considered to be a contribution. If the good or service is sold for $25 or less, the amount paid is considered advertising campaign income that is not a contribution.

Advertising campaign expenses

Expenses

Advertising campaign expenses are the costs that are incurred during the campaign. These include costs directly related to producing, distributing or publishing advertisements, as well as indirect costs such as hiring someone to keep track of contributions and issue receipts.

Goods and services that are contributed to the advertising campaign are also expenses. They should be treated as if the contributor gave the third party advertiser money and the third party advertiser went out and purchased the goods and services at fair market value – both the contribution and the expense must be recorded.

Expenses must be paid from the advertising campaign bank account. If a credit card is used to pay for purchases, the third party advertiser should keep clear records showing that the expense on the credit card was reimbursed from the campaign account.

Any taxes such as HST paid on purchases should be included in the amount of the expense.

Third party advertisers can only incur expenses during their advertising campaign period, except for expenses related to the preparation of an auditor’s report. If a third party advertiser is required to include an auditor’s report with their financial statement, they may incur these expenses after the advertising campaign period has ended. These expenses must also be reported on the financial statement.

Spending limits

The general spending limit for a third party advertiser’s advertising campaign is calculated based on the number of electors who are eligible to vote in the municipality where the third party advertiser is registered. The formula to calculate the limit is $5,000 plus $0.05 per eligible elector, to a maximum of $25,000.

Examples:

A third party advertiser registered in a municipality with 50,000 electors would have a spending limit of $7,500.

A third party advertiser registered in a municipality with 500,000 electors would have a spending limit of $25,000. $5000 plus $0.05 per elector is $30,000, so the maximum $25,000 applies.

When a third party advertiser registers in a municipality, the clerk will give them an estimate of their general spending limit. This estimate will be based on the number of electors in the last election.

On or before September 25, 2022 the clerk must give a final general spending limit that is based on the number of electors on the voters’ list for the current election.

If the initial spending limit estimate is different than the final spending limit received in September, the higher of the two becomes the official spending limit. The clerk will also provide the spending limit for expenses related to parties and other expressions of appreciation.

Types of expenses

While most expenses will be subject to the general spending limit the following expenses are not:

  • expenses related to holding a fundraising event or activity
  • expenses related to a compliance audit
  • expenses incurred by a registered third party advertiser who is an individual with a disability, and the expenses are directly related to the disability and would not have been incurred if not for the election
  • audit and accounting fees

Any materials, events or activities must have fundraising as the primary purpose in order to be exempt from the spending limit. An incidental mention of contributions is not enough to qualify as fundraising.

When the general spending limit applies

The spending limit covers expenses that are incurred between the beginning of the advertising campaign (the day the third party advertiser is registered) and voting day. Expenses incurred between the day after voting day and the end of the advertising campaign period are not subject to the spending limit.

If a third party advertiser incurs an expense before voting day, but doesn’t get around to paying for it until after voting day, it would still be subject to the spending limit.

Spending limit for parties and expressions of appreciation

There is a separate spending limit for expenses related to holding parties and other expressions of appreciation after the close of voting. This spending limit is calculated as 10% of the amount of the general spending limit.

Example:

A third party advertiser’s general spending limit is $20,000. The spending limit for throwing a party on voting night and making expressions of appreciation such as giving gifts to the members of the advertising campaign team would be $2,000. These expenses do not count toward the $20,000 general spending limit.

Expenses related to parties and expressions of appreciation after voting are subject to the specific spending limit regardless of whether they are incurred before or after voting day.

Leftover advertising campaign inventory

If a third party advertiser registered as a third party advertiser in the last election and wants to reuse leftover goods such as signs or office supplies, the third party advertiser must establish the current market value of the goods — what it would cost to purchase them today. Record the current market value as an expense.

If the third party advertiser has inventory left at the end of their advertising campaign it becomes their personal property. If the third party advertiser wants to store materials such as signs for use in another election, any costs related to storage are personal costs, not advertising campaign expenses.

Note to accountants: The value of all goods must be recorded as an expense regardless of whether the advertising campaign ends with used or unused goods in inventory. Do not deduct the value of unused goods from the campaign expenses, as this will result in the campaign having a surplus on paper that the candidate does not actually have.

Surplus and deficit

If the advertising campaign has a surplus after the third party advertiser has refunded contributions made by the third party advertiser (and, if the third party advertiser is an individual, their spouse), the remaining surplus must be paid over to the clerk when the financial statement is filed. The surplus will be held in trust, and the third party advertiser can use it if they incur expenses related to a compliance audit. If the surplus is not needed for these expenses, it becomes the property of the municipality.

If the advertising campaign expenses are greater than the campaign income, the campaign will be in deficit.

Advertising campaign financial statement

Every registered third party advertiser must file a complete and accurate financial statement on time.

The filing deadline is 2 p.m. on March 31, 2023.

Third party advertisers must use Form 8 (Do not use Form 4, as that is the financial statement for candidates).

If a bookkeeper or accountant completes the financial statement, the third party advertiser is still responsible for ensuring that it is complete, accurate and filed on time.

Financial statements do not require original signatures. Contact the clerk for information about whether a financial statement can be filed electronically.

If an individual, corporation or trade union registered in more than one municipality, they must file a separate financial statement with each municipal clerk.

If a third party advertiser did not receive any contributions or incur any expenses, they are only required to fill out the first page of the financial statement and sign it.

If a third party advertiser received contributions or incurred any expenses, they must complete the relevant parts of the financial statement.

If the advertising campaign contributions or campaign expenses are greater than $10,000, the financial statement must be audited and the auditor’s report included when the financial statement is submitted to the clerk.

Filing early

A third party advertiser can file their financial statement after they have ended their advertising campaign. If a third party advertiser files a statement early and then discovers that there is an error in it, they can submit a corrected statement at any time before the filing deadline on March 31, 2023. The original statement is deemed to be withdrawn when the corrected statement is filed. A third party advertiser cannot withdraw a financial statement without submitting a corrected one.

Applying for an extension

If a third party advertiser will be unable to file the financial statement by the deadline, they may apply for an extension to the Superior Court of Justice before March 31, 2023.

Grace period for filing

If a third party advertiser has not filed a financial statement by the deadline, they may file the financial statement within 30 days after the deadline if they pay the municipality a $500 late filing fee. This 30-day grace period ends at 2 p.m. on Monday, May 1, 2023.

Penalty for filing late

If a third party advertiser has not filed a financial statement by the end of the 30-day grace period and did not apply to the court for an extension prior to the March 31st deadline, the individual, corporation or trade union will not be eligible to register as a third party advertiser in the municipality until after the 2026 election.

If a third party advertiser did not file a financial statement by the end of the 30-day grace period, they may still file it for the purposes of having their finances on the record. The clerk will accept the financial statement and make it available to the public. The penalty will still apply.

Extended advertising campaigns

If the advertising campaign has a deficit, the third party advertiser can extend their campaign in order to do some additional fundraising.

A third party advertiser can extend their campaign by notifying the clerk using the Notice of Extension of Campaign Period (Form 6) on or before January 3, 2023. The end date for the extended period will be the earliest of:

  • the day the third party advertiser notifies the clerk in writing that they will be ending their advertising campaign and not accepting any more contributions
  • June 30, 2023

If a third party advertiser extends their advertising campaign they must file two financial statements:

  • a financial statement reflecting the advertising campaign until January 3, 2023 (due March 31, 2023)
  • a supplementary financial statement that includes the information from the primary statement and adds financial information from the extended advertising campaign.

The supplementary financial statement must be filed with the clerk by 2 p.m. on Friday, September 29, 2023. There is also a 30-day grace period for this deadline in which the statement can be filed late provided the $500 fee is paid.

Auditor’s report

A third party advertiser must have an auditor review the financial statement and provide a report if any of the following are true:

  • the advertising campaign expenses exceed $10,000
  • the contributions received exceed a total of $10,000
  • both the expenses and contributions exceed $10,000 each

The auditor’s report must be prepared by an auditor licensed under the Public Accounting Act, 2004. Before a third party advertiser hires someone to prepare the report, they should ensure that the person is properly qualified.

A third party advertiser can incur expenses relating to the auditor’s report after January 3, 2023. These expenses do not count toward the spending limit. These expenses should be included on the financial statement that will be filed.

Updated: April 04, 2022
Published: April 01, 2022