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Bringing a gift to the party: The (legal) etiquette of political donations

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Written by Kate Creighton-Selvay and Kendra Fouracre

With Commonwealth deadlines for reporting political donations approaching in November, NSW local government elections in December and rumours circulating that the Commonwealth elections will be held either in December 2021 or early next year – now is the time to consider developing (or refreshing) your political donations policy to ensure that any political donations your company (or employees) make are not just politically correct but are also legally correct.

Do I need a political donations policy?

In Australia, the Commonwealth and most States and Territories have implemented bespoke laws on political donations. As a result, if you make a political donation within Australia it is likely that it will be regulated. However, what laws apply, and whether they require you to disclose your donation, whether they will limit how much you may donate or even prohibit you from making political donations will depend on a range of factors including:

  • whether the donation is made in relation to federal politics or state/territory politics (and in some states, such as New South Wales, local government politics);
  • the identity of the donor (for example, foreign donors are generally prohibited from making political donations under Commonwealth, New South Wales and Victorian laws); and
  • the amount and circumstances of the donation (including to whom the donation is made, how the donation is made and the value of the donation).

Given the complexity of the area, and the risk that an incorrect step can result not only in media attention but may constitute a civil or criminal offence, having a political donations policy will help identify, and simplify, compliance with all electoral laws relevant to your company.

What is a political donation?

Although the precise definition differs depending on which law applies, political “donations” or “gifts” (the terms are used interchangeably) are broadly defined to capture any disposition (ie transfer) of property, money or services that is:

  • made without, or with inadequate, consideration (ie the transfer is made for free or for less than the commercial value of the service). Practically, this includes direct monetary donations and gifts-in-kind (such as free labour, free or discounted goods or services, interest free loans or the free or discounted use of premises or equipment) and payments to attend fundraising ventures or functions / networking events with a political element (eg, “Meet the Minister / candidate” events) where the benefits received are of a lower value than the payment made; and
  • made to a relevant political entity. Who this is depends on which law applies to a donation however – as a general rule – it includes political parties, candidates for elections, some (but not all) elected members of Parliament and some third parties (such as political campaigners and associated entities).

Can we make a political donation?

Although most Australian companies and individuals can make political donations (provided that the donations are disclosed to the relevant regulator) in accordance with  the applicable laws) some donations are prohibited. For example, some Australian political donation laws:

  • prohibit specific companies and individuals from making political donations (e.g. New South Wales laws prohibit property developers and tobacco, liquor and gambling entities from making political donations, and this prohibition extends to a company’s directors and their spouses;
  • prohibit the making of anonymous donations over certain amounts (e.g. Victorian laws prohibit donors from making anonymous donations over $1,050 during the 2021-2022 financial year*);
  • prohibit the making of political donations to the same political recipient above particular caps. The amount of these caps range considerable depending on the form of the donations (e.g. New South Wales laws prohibit cash donations over $100) and the identity of the political recipient (for example, donations to the same registered political party are capped at $4,210 under Victorian Law but a similar cap under New South Wales law places the cap $6,700 during the 2021-2022 financial year*).

These prohibitions are generally cumulative and include all forms of political donations, including gifts, services and attendance at political fundraisers.

Do we need to report political donations?

A political donation will be reportable if the total amount of all donations made to the same political entity (for example political party, elected member, candidate or political campaigner) in the relevant reporting period exceeds the relevant disclosure threshold amount.

The disclosure threshold amounts, and relevant reporting periods, vary considerably depending on the jurisdiction. For example:

  • under Commonwealth law, donations to a federal political party (or a state branch of a federal political party) must be reported to the Australian Electoral Commission (AEC) if the total of all political donations to that party during 1 July 2020 and 30 June 2021 is more than $14,300*. Reports must be lodged by 17 November 2021; and
  • under Victorian law, donations to a Victorian State level registered political party or elected member of Victorian State Parliament above $1,040* must be reported to the Victorian Electoral Commission within 21 days of making the donation.

As a general rule, if the disclosure threshold is met, small donations are not excluded from the political donations. The exception is Victoria, where donations under $52* generally don’t need to be disclosed.

What should a political donation policy include?

Political donation policies should address 4 key issues:

  • what a political donation is (as relevant to your company);
  • whether political donations can be made by your company or employees at both federal, and state/territory level (and whether different rules apply to individual employees);
  • what limitations (if any) apply to political donations that your company either makes, or may make, in the future; and
  • how your staff should internally report a political donation to ensure that any overarching applicable disclosure obligations (and caps) can be monitored and met by the company.

What if I already have a political donation policy?

We recommend you revisit your political donation on a regular basis – not only are reporting thresholds around Australia indexed annually but different rules can apply during an election period (and if you are making donations to federal candidates once the Federal Election has been called, there are additional requirements (including new timeframes for disclosures) that must be followed!)

Contact us for more information about which of Australia’s complex web of political donations laws will affect your company or employees, and how to approach managing compliance. We frequently advise local and international companies on their political engagement – including concerning prohibited donations, reporting obligations and political donation policies.

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