Loans to candidates and political parties would be limited under a bill introduced by the government Wednesday.
Tim Uppal, minister of state for democratic reform, says the current rules don't meet the standards Canadians expect.
Under his proposed law, total loans, loan guarantees and contributions by individuals would not be allowed to exceed the $1,100 annual contribution limit for individuals already established in the Federal Accountability Act.
Under the current law, there is no limit on the amount of money an individual can lend to political entities. That would change under the proposals introduced Wednesday.
The new legislation would also ban unions and corporations from making loans to political candidates or parties, although financial institutions and political parties could make them at a fair rate of interest.
NDP MP Pat Martin said he's pleased with the bill.
"In principle, we support plugging this loans loophole. We always have. We go back five years or so calling for this loophole to be plugged. We believe nobody should be able to buy an election just because they have deeper pockets or a fatter cheque book," Martin said.
"Unions and businesses can't donate a single dollar but they could loan you $100,000 and who's going to really police if it ever gets paid back? What's a loan that never gets repaid? It isn't a loan, it's a donation," Martin said.
The legislation tabled in the House of Commons Wednesday comes a week after Uppal introduced a bill to add seats to the House of Commons to improve representation for the fastest-growing provinces.
The government has promised a number of parliamentary reforms, including eliminating the per-vote-subsidy for political parties, limiting term lengths in the Senate and encouraging the provinces to hold elections for Senate seats.