General

.01

A registered political party, constituency association, candidate or leadership contestant may borrow only from any financial institution in Ontario and a registered party or a registered constituency association, provided that all such loans and the terms thereof, including the name of any guarantor thereof, are recorded by the political party, constituency association, candidate or leadership contestant and reported to the Chief Electoral Officer. However, any registered political party, constituency association, candidate, or leadership contestant may borrow from any registered political party or constituency association.

Act references 35(1) and 35(2)

.02

No registered political party, constituency association, candidate or leadership contestant shall receive any support in the form of a loan except as provided in the Election Finances Act.

Act reference 35(3)

.03

Any delay in paying suppliers or other liabilities could be construed as receiving a loan not in accordance with the intent of the Election Finances Act. For example, supplier’s accounts must be paid within the credit terms normally imposed by the supplier. Similarly, any contributions received in contravention of any provision of the Election Finances Act must be returned to the contributor upon obtaining the contributor's copy of the tax credit receipt issued in respect of that contribution. Any contribution which cannot be returned to the contributor must be paid to the Chief Electoral Officer.

Act references 17(1) and 35(3)

Guarantees & Forgiveness

.04

Only persons, corporations or trade unions eligible to make contributions under the Election Finances Act may guarantee any loan.

Act references 35(4)(b) and 35(6)

.05

Any payment made by a guarantor or forgiveness by the lending institution of a loan where the guarantor or financial institution forgives or waives all or any part of the borrower's indebtedness, shall be considered to be a contribution for the purposes of the Election Finances Act and may be forgiven or waived only to the extent of contribution limits permitted. However, a payment made by a guarantor for a guarantee is not a contribution unless the guarantor waives the right to recover the loan. The loan then becomes a contribution that is subject to the contribution limits.

Act references 18, 35(7) and 35(8)

If the interest rate the lender charges is below the market rate, the difference between the actual interest charged and the market rate becomes a contribution and is subject to the contribution limits.

Act reference 35(7)(2)

.06

In effect, when the borrower has defaulted on a loan, and a guarantor is required to make payment to the lending institution, the guarantor may choose to treat the payment as a contribution subject to the limitations imposed by the Election Finances Act. It is possible, therefore, for the guarantor to forgive the indebtedness over several years. A lending institution which agrees to forgive all or part of a loan may choose to treat the forgiveness as a contribution subject to the limitations imposed by the Election Finances Act. The lending institution may forgive the loan over several years.

Timing Restrictions

.07

A registered political party or constituency association may borrow at any time from any financial institution in Ontario, subject to the restrictions imposed by section 35 of the Election Finances Act as part of its ongoing regular operations.

.08

Candidates may borrow from any financial institution in Ontario, subject to the restrictions imposed by section 35 of the Election Finances Act only during the campaign period as defined in subsection 1(1) of the Election Finances Act and after registration with the Chief Electoral Officer under the Election Finances Act.

.09

A registered leadership contestant may borrow from any financial institution in Ontario, subject to the restrictions imposed by section 35 of the Election Finances Act.

Act reference 35

Responsibility for Payment of Candidate's Deficit

.10

The Election Finances Act requires that the registered constituency association assume any deficit remaining from a campaign of the candidate endorsed as the official candidate of the registered constituency association. The registered constituency association is therefore responsible for ensuring that any borrowing is repaid.

Act reference 44(4)

Disclosure

.11

The Chief Electoral Officer has prescribed forms for reporting financial activity either on an annual, a campaign or a contest period basis. Contained within these forms are schedules on which full details must be provided of the name and address of the financial institution, the terms of the loan including the amount borrowed, the name and address of each guarantor and the amount guaranteed, and the amount outstanding at the end of the reporting period. This information must be reported to the Chief Electoral Officer.

Act reference 35(2)

Pre-1986 Loans

.12

A party or constituency association may waive the repayment of any amounts owing under a loan made before January 1, 1986. An amount whose repayment is waived does not constitute a contribution or campaign expense for the purposes of the Act. This applies only to waivers given on or before the second anniversary of the day the Election Statute Law Amendment Act, 1998 comes into force.

Act reference 36