OTTAWA - Elections Canada says it is reviewing the implications of a court ruling that effectively raises the campaign spending limits for the major federal political parties.
The New Year's Eve judgment by the Ontario Superior Court of Justice sided with the Conservative party -- and agreed the party must be allowed to repay taxpayers $591,000 in GST rebates from the 2004 and 2006 federal elections.
The Conservatives voluntarily called themselves out more than a year ago on what they described as a case of "rebate double-dipping." Justice Herman Wilton-Siegel concurred.
"I conclude that general election expenses must be presented net of any GST rebate to the extent required by (generally accepted accounting principles)," he wrote in his judgment.
Wilton-Siegel ruled that Parliament never intended to treat the GST rebate for non-profit organizations -- including political parties -- as a "subsidy." Rather, he wrote, the rebate is "simply a mechanism for administering the stipulated rate of tax" for such groups.
The practical impact, the judge noted, will be to increase the amount parties can spend in future elections.
"It is not disputed that the applicant's interpretation of the act benefits political parties . . . by increasing the spending limits otherwise applicable to each of them by an amount equal to the GST rebates received by them respectively."
Elections Canada, which had argued that accepting the Conservative repayment would lead to an uneven playing field between larger and smaller political parties, responded cautiously Monday.
"We're going to take the time necessary to review the decision," John Enright, spokesman for Elections Canada, said in an interview.
He declined to speculate on whether the ruling may compel the cash-strapped Liberals to refund similar amounts from their 2004 and 2006 election filings. The court judgment was silent on this.
While the case related to the 2004 and 2006 campaigns, wrote Wilton-Siegel, "it must be approached as a matter of interpretation on the basis that the issue applies on a going-forward basis to future elections."
Liberal party spokesman Daniel Lauzon said the party is considering what could be owed for past elections as well as how it will conduct itself in future campaigns.
"We've taken note of the court's decision and we're exploring how that will affect the Liberal party, going forward," said Lauzon. "We're still in the exploratory phase right now."
Conservative party lawyer Arthur Hamilton said the court judgment applies "100 per cent" to other political parties.
"We're all trying to come to grips with just how significant this is," Hamilton said in an interview.
"Presumably this is something that the political parties -- now that the decision has been made -- will have to revisit their election filings and repay those amounts."
The issue boils down to political parties receiving rebates from Elections Canada for 50 per cent of all campaign expenses, then receiving an additional 50 per cent rebate from the Canada Revenue Agency for GST payments that had been part of that initial campaign total.
Only political parties that apply for non-profit organization status can get the GST rebates. To achieve that status, the organization must get at least 40 per cent of its funding from the government.
The NDP has said it never applied for the GST rebates, but both the Conservative and Liberal parties did.
The Conservative party sent an internal memo to supporters on Dec. 31, heralding the court ruling and claiming "you aren't likely to read about this in the mainstream media." The party, however, did not notify the media of the judgment.
On Monday, four days later, Conservative spokesman Fred Delorey was reprising word-for-word the same talking points in response to media inquiries. "This may be the first time in history that a political party went to court to try to give money back to Elections Canada."
But it took several hours and repeated inquiries Monday for Delorey to confirm the party is repaying $591,000, notwithstanding a reference in the judgment to a figure of just over $701,000.
