The accusation comes after Foreign Affairs Minister John Baird said Canada would suspend $20 million in funding to the Commonwealth while the chair of the secretariat is occupied by Sri Lanka for two years.
Canada, a leading funder of the 53-member Commonwealth, would normally contribute $10 million per year to the secretariat over the next two years, but Baird said that money will be directed elsewhere.
Sri Lanka's Foreign Ministry accused Canada of taking the step based on "electoral compulsions, thereby holding the membership of the wider Commonwealth to ransom."
Baird said Canada's voluntary contribution will instead go towards other programs that promote Commonwealth values.
Canada is home to perhaps the largest diaspora community of Tamils in the world.
Prime Minister Stephen Harper boycotted the Commonwealth summit last year in Sri Lanka because of concerns about the government's human rights record.
The Harper government has won praise from international human rights watchdogs for pushing for an independent investigation of the events surrounding the end of Sri Lanka's 27-year civil war in 2009
Sri Lanka's military crushed the Tamil Tigers. Both sides are accused of committing serious human rights violations.
According to a United Nations report, some 40,000 Tamil civilians may have been killed in the final months of the fighting alone.
The U.N. human rights body last month authorized an international investigation into alleged crimes by the two sides.
"Canada remains deeply concerned about the absence of accountability for alleged serious violations of human rights and international humanitarian standards in Sri Lanka," Baird has said in a statement.
--With files from The Canadian Press