4.1 Introduction

Amendments to the Electoral Act on 1 January 2011 made a number of changes to the obligations and requirements on candidates regarding election expenses and donations.

Candidates no longer need to appoint a financial agent for the purposes of candidate expenses and donations.

ELECTION EXPENSES

4.2 Expenditure limit

An electorate candidate’s election expenses during the regulated period must not exceed $25,000 (including GST). It is a serious offence to spend more than this.

The regulated period for the 2011 General Election will start on Friday 26 August 2011 and will end on the close of 25 November 2011 (the day before polling day).

If you are representing a registered party, you should stay in touch with your party secretary on advertising. This is because there can be boundary problems between advertising by candidates and advertising by the party, with consequential effects on the expenditure limits and expenditure returns of the candidate and the party.

The election expense regime does not apply to people who are list candidates only. Any spending by those candidates promoting the party is an election expense of the party and must be authorised by the party secretary.

4.3 Election expenses

A candidate’s election expenses are the costs of advertising in any medium that:

• may reasonably be regarded as either encouraging voters to vote for the candidate, or discouraging voters from voting for another candidate, or both (whether or not the name of the candidate(s) are mentioned),
• is published, or continues to be published, during the regulated period, and
• is promoted by the candidate or any person (including a registered promoter) authorised by the candidate.

[See section 205 of the Electoral Act].

Candidate election expenses include:

• the cost incurred in the preparation, design, composition, printing, postage and publication of the advertisement,
• the reasonable market value of any materials used for the advertisement, including materials provided to the candidate for free or below reasonable market value,
• the apportioned costs for advertisements that promote two or more candidates, or a party and a candidate (see 4.4 below for further information on apportionment).
• the entire advertising expenses of an advertisement that is both a candidate advertisement and a referendum advertisement (see Part 5 for further information on referendum advertising and expenses).

[See section 3E of the Electoral Act].

A candidate’s deposit or the costs of food, hall hire, surveys or opinion polls, free labour, or replacing materials destroyed through no fault of the candidate are not election expenses. The cost of any framework that supports a hoarding (other than a commercial framework) is no longer an advertising expense.

Surveys and opinion polls

The exclusion for surveys or opinion polls is not unlimited. If a survey goes beyond merely eliciting voters’ views and can reasonably be regarded as encouraging voters to vote for a constituency candidate or a political party then it will not be a survey or opinion poll for the purposes of the Act. It will be an election advertisement and the costs associated with the survey are election expenses. The Electoral Commission is happy to review a proposed script or survey and provide a view on whether or not it is an election advertisement, candidate advertisement and/or party advertisement.

If it is a candidate advertisement undertaken by phone canvassers who provide their labour free of charge, the costs are exempt. Any other costs incurred (for example, line rental and costs of any calls) would be an expense. The costs of paying any canvassing company to undertake the canvassing would be an election expense.

Signage on vehicles

The costs of candidate advertisement signage on campaign cars and other forms of mobile candidate advertising are election expenses. However, advertising expenses do not include the running costs of any vehicle used to display an election advertisement if the use of the vehicle for that purpose is not the subject of a contract, arrangement or understanding for payment.

Election expenses in relation to candidate advertisements published on a website include the costs that you incur preparing, designing and publishing the advertisement including hosting fees. They do not include the costs of setting up and maintaining the hardware and software infrastructure of the website.

Items distributed for public display

If you distribute items such as t-shirts, bumper stickers and flags before 26 August 2011 (the start of the regulated period), you should assume that they will continue to be displayed during the regulated period and include the cost of these items as an election expense. [See section 205D of the Electoral Act]. (See section 4.5 for details on how the expense is apportioned).

However, care should be exercised with such items because you could be exposing your supporters to the risk of prosecution if they display the items on election day (see section 6.2).

Re-used materials

Expenses cannot be apportioned between elections. If materials such as banners are purchased and then re-used in subsequent elections, at each subsequent election you must account for the reasonable market value of the materials as an election expense. We advise candidates to err on the side of caution when determining ‘reasonable market value’. We suggest that a party either use the price that was originally paid for the item, or if this is not known, what the item would cost to purchase now based on two quotes.

Staff time

The cost of labour provided to you free of charge is not an election expense. The cost of paid campaign staff, for example a campaign manager, is also not an election expense unless the staff member is directly involved in the preparation, design, composition, printing, postage or publication of election advertising. An example where paid staff might be an expense is where the staff member is directly involved in preparing copy or artwork.

4.4 Election expenses paid for before or after the regulated period

Expenses paid for or incurred either before the regulated period or after 26 November 2011 (polling day) must be included in the return to the extent to which they relate to election advertisements published within the regulated period.

Where a candidate advertisement is published before and during the regulated period, the candidate is responsible for apportioning the advertising expenses so that only a fair proportion of the expense is attributed to the regulated period.

4.5 Apportioning election expenses

It will be necessary for a candidate to apportion election expenses if the total expenses of an election advertisement relate partly to the promotion of the candidate concerned and partly for another purpose. Examples where apportionment is required are:

• an advertisement promotes both the candidate and the party,
• an advertisement promotes two or more candidates,
• an advertisement promoting the candidate runs before and during the regulated period.

Apportionment is a factual exercise determined by the circumstances of each case. The Electoral Commission is happy to discuss any apportionment questions.

Candidates sharing advertising costs with a party seeking the party vote should discuss apportionment arrangements with the party secretary.

See Appendix D for a summary of how the costs of election advertisements are to be accounted for, and Appendix E for an example to illustrate the principles to be applied.

4.6 Election expenses for advertisements promoted by third party

Expenses cannot be apportioned with third party promoters. If you authorise someone else to publish advertising encouraging people to vote for you, the cost of the advertising will form part of your candidate election expenses. The same costs will also be an election expense of the third party.

You will need to obtain information from the third party about costs incurred.

The advertising and expenditure rules that apply to third parties are set out in the booklet Third Party Handbook – 2011 General Election and Referendum.

4.7 Expenses for joint election and referendum advertisements

Expenses cannot be apportioned between joint election and referendum advertisements.

If a candidate promotes an advertisement that encourages people to vote for the candidate and supports a particular option in the referendum, the entire cost of that advertisement must be accounted for twice by the candidate: first as an election expense and second as a referendum expense.

If the candidate authorises a third party to publish the same advertisement the entire cost of the advertisement will form part of the candidate’s election expenses. The same costs will also need to be included as part of the third party’s election expenses and referendum expenses (see Part 5 for further information on referendum advertising).

See Appendix D for a summary of how the costs of election advertisements are to be accounted for.

4.8 Paying election expenses

Invoices for election expenses must be sent to a candidate within 20 working days of the official result being declared. The Electoral Commission expects that the deadline will fall on 27 January 2012, unless there are recounts.

The candidate must pay any bill within 40 working days of the declaration. It is an offence not to do this. Sections 205H and 205I of the Electoral Act set out a procedure to follow if a bill is disputed. The Electoral Commission expects that the deadline will fall on 27 February 2012, unless there are recounts.

DONATIONS

4.9 Candidate donations

A candidate donation is a donation of money, goods or services that is made for use in the candidate’s campaign. [See section 207 of the Electoral Act].

Candidate donations, and contributions to donations, of more than $1,500 (inc GST) are required to be declared in the candidate return of expenses and donations. A series of donations made by one person that adds up to more than $1,500 must also be declared.

A candidate donation includes:

• where a candidate is provided with goods or services free of charge that have a reasonable market value greater than $300,
• where a candidate is provided with discounted goods or services and the reasonable market value of the goods or services is greater than $300, the difference between the contract or agreed price and the reasonable market value of those goods and services is a donation,
• where a candidate sells over-valued goods or services the difference between the price paid and the reasonable market value is a donation, for example a fundraising auction or dinner,
• where credit is provided to a candidate on more favourable terms than those prevailing at the same time for similar credit, the value of the favourable terms is a donation.

The following are not a candidate donation:

• volunteer labour,
• goods or services provided free of charge to a candidate, or to any person on the candidate’s behalf that have a reasonable market value of $300 or less, or
• money provided by the candidate for his or her own campaign.

If a person or organisation gives or pays for goods or services that would otherwise be candidate election expenses, or a candidate’s party gives or pays for expense items, the reasonable market value of those items, whatever their value, should be recorded as an election expense. If the reasonable market value of the items exceeds $300 it should also be recorded as a donation.

4.10 Donations made up of contributions

A donation can be made up in part by funds contributed by more than one person (contributors), for example where there is a collection or whip-round for a candidate’s campaign. [See section 207 of the Electoral Act].

The total proceeds of a collection or whip-round are treated as a donation under the Electoral Act. The person who collects the money will normally be the donor. The individuals who contribute to the collection are contributors for the purposes of the Act.

If a candidate donation, other than an anonymous donation, is made up of contributions, the transmitter or donor must tell the candidate:

• the name and address of the donor,
• whether the donation is made up of contributions,
• the total amount of individual contributions of $1,500 or less, and
• in the case of individual contributions greater than $1,500, the name, address, and contribution of each contributor and whether any of them are ‘overseas persons’ (see paragraph 4.14 below).

If the candidate knows, or has reasonable grounds to believe, that the donor has failed to supply information about contributions, the whole donation must be returned to the donor.

4.11 Raffles, cake stalls, and other fundraisers

Providing a candidate with free cakes or other goods or services to use for fundraising is not making a donation for the purposes of the Electoral Act if the value of the items given is worth $300 or less. Purchasers of raffle tickets and cakes from a cake stall are not ‘donors’ as they are not making a donation to anyone. The total proceeds of a raffle or a cake stall for a candidate’s campaign are treated as a donation. The person who runs the raffle or cake stall will normally be the donor.

If the total funds from the raffle or cake stall are over $1,500, then the candidate’s return must include the name and address of the person who ran the fundraiser and subsequently donated the proceeds, along with the total amount given and the date that the donation was received by the candidate.

Whether the individuals who purchase a ticket or buy a cake are ‘contributors’ depends on whether they bought their ticket in the knowledge or expectation that some or all of the money paid would be included in a donation to the candidate. This will be a question of fact. It would need to be very clear to purchasers that it is a candidate fundraiser for the purchasers of tickets to be ‘contributors’.

If the purchasers of raffle tickets are ‘contributors’, the organiser must tell the candidate at the time of making the donation that the donation is funded from contributions. The donor must also disclose whether the donation is made up of contributions of more than $1,500. If an individual pays more than $1,500 for raffle tickets, their name and address would have to be disclosed in the candidate’s donation return, along with the amount of their contribution.

If a ticket is sold to a fundraising event, such as a dinner, or an item is auctioned at a fundraising auction, the difference between the price paid for the ticket and the reasonable market value of the ticket is a donation. Determining the reasonable market value for unique items may be difficult: for example, if you have speakers at the dinner or auction a one-off item. However candidates should not rely on the price paid at a fundraising auction as evidence of reasonable market value.

In the absence of an objective basis to value the donation component that the candidate can defend, the Electoral Commission’s advice would be to err on the side of caution and treat the entire difference between the ticket price or auction price and the reasonable market value of assessable goods or services such as food and beverages, as a donation.

4.12 Transmitted donations

A donation can be made either directly by the donor to the candidate or indirectly by a transmitter who transmits a donation to the candidate on someone else’s behalf, for example via a lawyer’s trust fund. Any person who receives a candidate donation on the candidate’s behalf must transmit it to the candidate within 10 working days.

When transmitting a donation, the transmitter must tell the candidate:

• that the donation is being transmitted on behalf of a donor,
• the name and address of the donor,
• whether the donation is made up of contributions,
• the total amount of contributions of $1,500 or less, and
• in the case of contributions greater than $1,500: the name, address, and contribution of each contributor and whether any of the contributors are ‘overseas persons’ (see paragraph 4.14 below).

Where a transmitter does not disclose the name and address of the donor, the donation must be treated as an anonymous donation (see paragraph 4.13 below).

4.13 Anonymous donations

Candidates are not allowed to retain anonymous donations exceeding $1,500. An anonymous donation is a donation made in such a way that the candidate who receives the donation does not know the identity of the donor and could not, in the circumstances, reasonably be expected to know the identity of the donor. [See section 207 of the Electoral Act].

If a candidate receives an anonymous donation greater than $1,500, he or she may retain $1,500 of that donation. The balance of the donation must, within 20 working days of receipt, be paid to the Electoral Commission for payment into a Crown bank account.

4.14 Overseas donations

Candidates are not allowed to retain donations or contributions of more than $1,500 made by an overseas person. [See section 207K of the Electoral Act].

An overseas person is:

• an individual who resides outside New Zealand and is not a New Zealand Citizen or registered elector,
• a body corporate incorporated outside New Zealand, or
• an unincorporated body that has its head office or principal place of business outside New Zealand.

If a candidate receives a donation from an overseas person exceeding $1,500, he or she can retain $1,500 of that donation. The balance of the donation must, within 20 working days of receipt, either be returned to the overseas person who made the donation, or if this is not possible, be paid to the Electoral Commission for payment into a Crown bank account.

If a candidate receives any donation from a donor who is not an overseas person that includes a contribution from an overseas person greater than $1,500, the candidate must return the whole donation to the donor. If that is not possible, the candidate must forward the whole donation to the Electoral Commission for payment into a Crown bank account.

4.15 Keeping records of expenses and donations

Candidates must take all reasonable steps to keep records of all candidate donations received (even donations of less than $1,500) and all candidate election expenses. Candidates must keep invoices and receipts for all election expenses of $50 or more for 3 years after polling day.

4.16 Return of election expenses and donations

After a general election all electorate candidates are required to file a return of candidate expenses and donations with the Electoral Commission. [See sections 205K and 209 of the Electoral Act].

If there are no election expenses or donations to report on, the candidate must file a nil return.

The returns are open to public inspection and will be published on the Electoral Commission’s website.

Candidates representing registered parties are recommended to consult closely with their party secretary about their expense returns. This is because boundary problems may arise between the candidate’s expense return and the party’s expense return.

Election expenses

The return must:

• be made on form M30-Cand Exp, and
• be filed within 70 working days of polling day (26 March 2012)

The return form (M30-Cand Exp) is available through the Electoral Commission, through your party secretary, or at www.elections.org.nz

The form requires the candidate to provide details of all candidate election expenses incurred, including expenses incurred by any person authorised by the candidate.

The advertising expenses of unregistered promoters and registered promoters that the candidate has authorised need to be included in the form.

Donations

Part 1 of the return form concerns candidate donations.

To complete the requirements of this part of the return, the candidate will need to be able to provide details about all donations or contributions of more than $1,500. This includes more than one donation made by, or on behalf of, the same person for use in the same campaign that when aggregated adds up to more than $1,500.

Candidates will need to have systems in place to track aggregated totals by donors for the purposes of the return.

Donations exceeding $1,500

For donations of more than $1,500, other than anonymous donations or overseas donations, the candidate will need to provide the following details:

• the name and address of the donor,
• the amount of the donation or, in the case of aggregated donations, the total amount of the donations,
• the date that the donation was received or, in the case of aggregated donations, the date each donation was received, and
• whether the donation is made up of contributions of more than $1,500, and if so:
  • the name and address of each contributor,
  • the amount of each contribution made by the contributor, and
  • the date on which each related donation funded from the contributions was made.

Anonymous donations

For anonymous donations exceeding $1,500, the candidate will need to provide:

• the date the donation was received,
• the amount received, and
• the amount paid to the Electoral Commission and the date that such payment was made.

Donations from overseas persons

For donations by overseas persons exceeding $1,500, the details required are:

• the name and address of the overseas person,
• the amount of the donation or, in the case of aggregated donations, the total amount of the donations,
• the date that the donation was received or, in the case of aggregated donations, the date each donation was received, and
• the amount paid back to the overseas person or paid to the Electoral Commission and the date that such payment was made.

Contributions from overseas persons

For contributions exceeding $1,500 by overseas persons to any candidate donation, the candidate will need to provide:

• the name and address of the overseas person,
• the amount of the contribution,
• the date on which the related donation funded from the contribution was made, and
• the amount paid back to the donor or paid to the Electoral Commission, and the date that such payment was made.

A table summarising what needs to be disclosed for candidate donations is attached as Appendix F.

Candidates who fail to meet these requirements are committing offences and may be referred to the New Zealand Police.

4.17 List candidates only

A candidate who is on the list and does not contest an electorate is not required to file a return.

Election expenses incurred and donations received must be returned by the party.

4.18 Return of nomination deposits

If you receive 5% or more of the votes cast for all candidates in the electorate you are entitled to a refund of the $300 deposit paid when you were nominated. A deposit cannot be refunded until you have filed your Return of Election Expenses and Donations. If you were nominated by a party on its bulk nomination schedule, the deposit cannot be refunded until all candidates on the schedule have filed their returns.