The Conservative Party of Canada has repaid taxpayers $230,198 for the "in-and-out" election financing dispute and dropped its appeal at the Supreme Court of Canada.

The party, currently fending off allegations of wrongdoing in the 2011 election over misleading telephone calls to voters, notified the Supreme Court last Friday that it wouldn't proceed with its case against Elections Canada.

The case stemmed from the 2006 election when an Elections Canada auditor raised questions after finding more than 65 nearly identical invoices filed by Conservative candidates for "local" advertising expenses.

Elections Canada looked into the expenses and said the Conservatives violated campaign financing rules by moving $1.3 million in and out of 67 ridings to pay for national ads. The manoeuvres allowed the party to exceed the campaign spending limits and allowed candidates to claim rebates on expenses that weren't incurred, the agency said.

Candidates can be reimbursed by Elections Canada for 60 per cent of their expenses and the national parties can make claims for 50 per cent of their expenses. Elections Canada refused to issue the more than $800,000 in total rebates to the Conservative Party and the party then sued to get the money.

They won the case in a lower court ruling, but in early 2011, the federal Court of Appeal unanimously overturned that ruling, saying Elections Canada had every right to deny the expenses.

The Conservatives brought the case to the Supreme Court, which granted the party leave to appeal in October.

Hearing was set for May

A tentative date for a hearing had been set for May 14, but now, the Conservatives have abandoned the appeal.

"This has been a long-standing administrative dispute with Elections Canada over whether certain campaign expenses should be counted as local or national," Fred DeLorey, Conservative party spokesman, said in a statement to CBC News.

"We are agreeing to disagree and will be dropping our appeal to the Supreme Court. We are amending our return under protest to reflect this."

Elections Canada confirmed that the Conservatives filed an amended election expense return and changed how they claimed national and local expenses. The chief electoral officer is now satisfied with those returns, a spokeswoman said.

"The chief electoral officer has reviewed and accepted the amended return, and is satisfied that it is in compliance with the Canada Elections Act," Elections Canada spokeswoman Diane Benson said.

"All monies owed by the candidates who participated in the media buy- and office-share programs have been repaid to the public treasury by the Conservative Party of Canada," she said. Office space that was claimed by local candidates in Quebec City and Montreal was deemed by Elections Canada to be used by the national party.

DeLorey said the the party "acted under the law as it was understood at that time" and that it later adjusted its practices for the 2008 and 2011 elections.

This civil case was separate from the four charges laid by Elections Canada against the Conservative Party of Canada, the Conservative Fund Canada, Senator Doug Finley (the party's campaign director in 2006), Senator Irving Gerstein, Michael Donison, and Susan Kehoe. They were accused of submitting "false or misleading" election expense documents.

The charges under the Canada Elections Act were regulatory, not criminal.

That case was settled in November when a deal was reached that saw charges dropped against the four senior officials, but guilty pleas were made by the organizations for which they made the decisions. The party was fined $52,000.

That settlement prompted questions about what would happen with the Conservatives' civil case against Elections Canada. With the appeal now dropped, the Court of  Appeal ruling stands.