Loophole Allows Third Parties to Keep their Backers Secret

Well-prepared third parties may be able to keep the names of their financial backers a secret thanks to a loophole in the Canada Elections Act.

The Elections Act regulates third party election advertising in two ways.

First, the Act places limits on how much third parties can spend on election advertising.

Second, the Act provides some transparency on how third parties are funded by requiring them to file a report if they spend more than $500 on election advertising. This report must include the names and addresses of those who contribute more than $200 for election advertising purposes.

This is where the loophole lies, as third parties do not have to include everyone who contributes more than $200 in their report.

Pursuant to section 359(4), third parties only have to report on contributions for election advertising purposes that were received in the period beginning six months before the issue of the writ and ending on polling day.

Therefore, if a contribution was made to a third party for election advertising purposes more than six months before the start of a campaign period, the name and address of the donor is not required to be disclosed.

Well-organized third parties could use this loophole to collect large donations from contributors who wish to influence the outcome of an election while remaining anonymous.

Will any third parties be able to take advantage of this loophole for this year’s federal election? It is possible, especially if they were soliciting donations for the upcoming election before March. With a fixed election date, there is some certainty as to when the election will be called which makes it quite simple to take advantage of this loophole.

This weakness in election finance transparency is a result of the federal election advertising rules not being updated to reflect the existence of fixed election dates. In order to close this loophole, third parties should be required to report the names and addresses of donors who contribute more than $200 for election advertising purposes regardless of when the contribution was received.

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