February 19, 1991
Assessing and Inquiries Directorate Rulings Directorate W.A. Mizuik, Chief Glen Thornley Office Examination Section (613) 957-2101
Attention: Jean-Marc Lalonde
910315
Surplus Municipal Election Contributions
This is in reply to you memorandum of January 31. 1991, with enclosed letter from 19(1) concerning campaign surpluses returned to municipal candidates in Ontario.
19(1) wishes to know if the campaign surpluses are taxable as personal income of the candidates. He also asks, as a secondary issue, whether or not a candidate with surplus contributions would be entitled to a charitable donation receipt if such surplus funds were given to a registered charity.
In recent correspondence about the same issue we have pointed out that the Income Tax Act does not specifically regulate the income or expenditures of candidates in municipal elections. This is a provincial responsibility and is done in Ontario through the Municipal Elections Act. We have been informed that under that Act the contributions or campaign surpluses become the personal property of the candidate.
In our view, contributions to candidates in municipal elections are considered to be gifts. As such they are not income to the candidate from employment, business or property sources and there is not at present any statutory authority to require candidates to include surplus funds in their income. We do not agree with 19(1) argument that the surplus contributions could be included in income by virtue of section 5 of the Act because it refers to income "from an office or employment" and does not say, "in respect of obtaining an office or employment". As the candidates do not have an office or employment but are trying to obtain the same, the contributions received before or after the election are or were presumably obtained to defray the expenses of obtaining an office and not as a consequence of having the office.
With respect to the question of charitable donations, providing the requirements of section 118.1 of the Act and section 3500 of the Income Tax Regulations are met, charitable donations made with surplus contributions should be treated in the same manner as other donations.
for Director Business and General Division Rulings Directorate Legislative and Intergovernmental Affairs Branch
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