The Fair Elections Act received Royal Assent on June 19, 2014.[1] It amended the Canada Elections Act[2] in several ways. Will-drafting solicitors should be aware that these amendments have closed a previous exception to the strict limits imposed on contributions to federal political parties, candidates and riding associations.
The historical regime
Before these recent amendments, s. 405(1) of the Canada Elections Act limited individual contributions to registered political parties, riding associates, nomination contestants, candidates, and leadership contestants. In 2014, the limit was $1,200 to each party per year; $1,200 to each party’s candidates or riding associations per year; $1,200 to each independent candidate per campaign; and $1,200 to leadership candidates per contest. The limit formerly increased annually, tied to inflation of the Consumer Price Index.[3] A major exception to these limits was provided at s. 405(2): “Subsection (1) does not apply to contributions that are made by way of an unconditional, non-discretionary testamentary disposition.”
From 2004 to 2014, the New Democratic Party of Canada (NDP) appears to have been by far the most successful federal political party at fundraising through testamentary contributions, reporting a total of $2,890,855.71 through 71 different testamentary contributions. The next-most successful party was the Conservative Party of Canada which reported a total of $71,098.17 through 25 different testamentary contributions. The largest bequest from a single estate was over $2,000,000 from the estate of Peter Kirk Sinclair.[4] This formed the subject of a will challenge that was settled after it was dismissed at first instance; although the terms of the settlement are confidential, the NDP has reported receiving over $1,700,000 from the estate to date.[5]
Amendments brought by the Fair Elections Act
As amended, s. 367 of the Canada Elections Act now provides:
367. (1) Subject to subsection 373(4),[6] no individual[7] shall make contributions that exceed
(a) $1,500 in total in any calendar year to a particular registered party;
(b) $1,500 in total in any calendar year to the registered associations, nomination contestants and candidates of a particular registered party;
(c) $1,500 in total to a candidate for a particular election who is not the candidate of a registered party; and
(d) $1,500 in total in any calendar year to the leadership contestants in a particular leadership contest.
(2) A contribution may be made by way of a testamentary disposition if the contribution is made only in one calendar year and does not cause the contributor to exceed the relevant limit under subsection (1), taking into account any contributions that the contributor made before their death.
(3) A testamentary disposition that provides for a contribution that would cause the contributor to exceed the relevant limit under subsection (1) shall be read as if the contribution is for the highest amount that would not cause the contributor to exceed that limit, and a testamentary disposition that provides for a contribution to be made in more than one calendar year after the year in which this subsection comes into force shall be read as if the contribution is to be made only in the first of those calendar years.
The $1,500 contribution limit will increase by $25 per year from January 1, 2016 onward.[8]
A testator who wishes to make a gift to a political party is therefore limited to a single bequest of $1,500 to that party, plus an additional $25 per calendar year the testator lives beyond 2015, and the same amount to its riding associations or candidates. The limit is further reduced by any inter vivos contributions that may already have been made to the party or its candidates in the same calendar year. (It appears that this restriction may be circumvented by specifying in the Will that the political contribution is to be made in the calendar year after the date of death.)
A contribution in excess of the amounts described above must be returned to the donor within 30 days, or paid to the Chief Electoral Officer.[9] If a contribution is returned to an estate, it would appear to fall into residue unless a contrary intention appears in the will.[10]
It is not clear whether a bequest in a will executed before the enactment of the Fair Elections Act would be subject to the new limits. The presumption against retroactive application of a statute may apply to protect bequests to political parties and candidates in wills executed prior to June 19, 2014.[11]
Ontario election financing law
By contrast, the Ontario Election Finances Act appears to have more permissive provisions.[12] Individuals, non-charitable corporations, and trade unions are the only entities authorized to make political contributions.[13] However, section 16(4) provides:
16. (4) An estate may make contributions to parties and constituency associations, and for the purposes of those contributions, a person and his or her estate are deemed to be one person.
Although s. 16(4) imposes a contribution cap on a person and his or her estate for a single year, there is no explicit prohibition on an estate making contributions spread across multiple years such as that found at s. 367(2) of the Canada Elections Act. It may, therefore, be possible to create a testamentary trust to make annual contributions from a testator’s estate to registered Ontario political parties and riding associations, as long as the annual contributions do not exceed the statutory limits each year.
Conclusion
Will-drafting solicitors whose clients wish to leave a bequest to a federal political party should be aware of the changes brought by the Fair Elections Act. If a client’s existing will makes a bequest to a federal political party in excess of the new limits, consideration should be given to revising the will. However, it is not yet known whether the courts will apply the Fair Elections Act amendments to limit contributions in wills that pre-date those amendments. Drafting lawyers will also want to consider the possibility that political parties may merge (as the Canadian Alliance and Progressive Conservative parties did in 2003), and that riding boundaries and names often change in accordance with redistributions every 10 years. Bequests to political parties or riding associations should be drafted carefully to anticipate these possibilities.
About the Author
Matthew Furrow, Goddard Gamage Stephens LLP
[6] Which provides for cases where candidates are seeking the nomination of a party or seeking to run as independents but have not yet been nominated.
[7] Only an individual may make a contribution. Neither a corporation, nor an inter vivos trust, nor other structure can be created to circumvent the contribution limit: Canada Elections Act, supra, s. 363(1).
[8] Fair Elections Act, supra, s. 87(2), adds this provision as s. 367(1.1) to the Canada Elections Act, although s. 367(1.1) does not currently appear in the Act as published on the federal Justice Laws Website.
[9] Canada Elections Act, supra, s. 372.
[10] Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 23.
[11] See e.g. Bernesky v. Smith, 2003 SKQB 96, where the Court held that a law revoking a will after two years of spousal cohabitation did not operate retroactively. The Court observed, inter alia: “Some people affected by such an interpretation would be unable to make new wills because they now lack testamentary capacity” (para. 30). The judgment was affirmed, 2004 SKCA 98, although the Court of Appeal explicitly declined to approve or disapprove of the lower court’s reasoning on retroactivity; it was followed in Trottier v. Trottier, 2015 SKQB 228. See also Re Thibault Estate, 2009 NSSC 4.
[12] R.S.O. 1990, c. E.7.