"The allegations are that the thresholds of $30,000 have been exceeded by one individual and the election filings that we've received in our office from the political parties indicate that those contributions were receipted for individuals associated with this one person," said Elections Alberta spokesman Drew Westwater.
"We've determined that there's enough issues and concerns around the source of the donations that have been made to the party that we will launch an investigation and look into the facts of the matter to see if the allegations are true or not."
Documents from Elections Alberta released last week show that Katz, members of his family, his executives and his company donated at least $300,000 to the Tories during last spring's election. Each individual received a receipt for $25,000 or $30,000.
However, a report in the Globe and Mail last week alleges that the donation was $430,000, given to the party in a single cheque.
Last week, the leaders of the Wildrose and Alberta NDP parties filed complaints about the donations to Chief Electoral Officer Brian Fjeldheim.
NDP wants transparent investigation
Wildrose Leader Danielle Smith said she was pleased to hear that Fjeldheim is taking a look at the allegations.
"It causes people to question the integrity of the decision-making process," she said. "We have to restore the integrity of the decision-making process."
NDP MLA David Eggen was also happy to hear about the investigation.
"Let's have a transparent investigation where we get to see all the results and I hope that we get some recommendations on how to fix this hole in our electoral system," Eggen said.
Under current legislation, the chief electoral officer is not allowed to release the findings of his investigations. The government plans to change those laws this fall.
Penalities for exceeding donation limits include prosecution, penalties or administrative fines, Westwater said. The chief electoral officer may also order that the donations be returned.