This article was written by Kate Creighton-Selvay, Kendra Fouracre and Stephen Mason.
Well, the 2019 federal election is now just a distant memory (happy or unhappy, as the case may be). Now for the housekeeping….
Reporting deadlines are approaching for the disclosure of federal political donations. Do you have a clear idea of what spending is reportable?
A media spotlight on whether large businesses have been declaring political donations has heightened corporates' focus on this issue in recent months. Here are the 10 most common questions we get asked.
1. What laws do I need to comply with?
If your donation relates to federal politics (eg a federally registered political party or federally registered State branches of those parties) - you'll need to comply with Commonwealth electoral laws.
If your donation relates to State or Territory politics – you'll need to comply with the relevant State and Territory. Each State and Territory has a different approach to political donations (including disclosing thresholds, caps on total donations and reporting timeframes). In some States, political donation laws also apply to local government elections.
2. When are the reporting deadlines?
If you made federal political donations during the 2018/2019 financial year exceeding $13,800 it is likely you will have to report them to the Australian Electoral Commission under Commonwealth electoral laws by:
- 2 September 2019 (for donations to candidates or Senate groups during the disclosure period for the 2019 federal election); or
- 17 November 2019 (for all other donations including to federally registered political parties, State branches of a registered political party and to political campaigners).
If you don't report in time, civil penalties may be applied.
If you made State or Territory political donations during the 2018/2019 financial year you are also likely to have to report them to the appropriate State or Territory electoral commission (each of which has different rules).
3. What is a political donation?
Under Commonwealth electoral laws, a political "donation" or "gift" (they mean the same thing) is any transfer of property for free, or for less than the commercial value of the property. It includes "direct" monetary donations and "gifts-in-kind", such as free services or the free hire of a function room or office space.
A political donation or gift can be made directly to the political recipient (a registered political party, a State branch of federal political party, a political campaigner or a candidate) or indirectly, through a third party (where the donation is made with the intention of benefiting a particular federally registered political party, a State branch of federally registered party or a political campaigner).
Similar definitions apply in the other jurisdictions.
4. Is attendance at a political fundraiser/political networking event a political donation?
Generally, political fundraisers are likely to be political donations as the ticket price for attending a political fundraiser or networking event (with a political element) often includes a substantial contribution to the political party or candidate. For example, at least under Commonwealth electoral law, if the ticket price is more than the commercial value you get out of going to the event, you should treat at least the difference as a political donation or gift.
Political fundraising functions are explicitly counted as political donations in NSW.
5. Is providing gifts-in-kind or services a political donation?
Political donations are not limited to direct monetary donations. Examples of contributions that may also amount to a political donation include free or discounted services, such as accounting services; the free use of premises, or the salary of an employee who is working for a political party during normal working hours; and free/discounted goods or services for use in a raffle or fundraising.
6. Are donations to political campaigners a political donation?
Under Commonwealth electoral law, donations to political campaigners generally need to be disclosed. A political campaigner is a person or organisation that incurs electoral expenditure above a specified threshold and is registered with the AEC.
Similar disclosure obligations apply in other jurisdictions to political donations made to third party campaigners. In both NSW and Victoria, additional limitations apply to the number of third party campaigners to whom a donor may make political donations.
7. What do I need to report?
A political donation will be reportable if the total amount of all donations made to the same political recipient (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 vary considerably between jurisdictions. For example, if the total of all political donations you made to:
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a federally registered political party between 1 July 2018 and 30 June 2019 is more than $13,800, you'll have to report to the Australian Electoral Commission;
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a NSW State level registered political party between 1 July 2018 and 30 June 2019 is more than $1,000, you'll have to report to the NSW Electoral Commission.
In addition, some jurisdictions (for example NSW and Victoria) have caps on the maximum amount of political donations you can make to the same recipient.
As a general rule, if the disclosure threshold is met, small donations are not excluded from the political donations. The exception to this is Victoria, where you generally don't need to declare donations under $50.
8. What happens if I don't report or don't keep records?
It is generally an offence not to report reportable political donations. For example, under Commonwealth electoral laws, a failure to report donations that exceed $13,800 can attract a penalty equal to three times the amount of the value of the political donations not disclosed. Other offences may also apply depending on jurisdiction, including if you do not keep adequate records of political donations.
9. What about foreign donors?
It is illegal for foreign donors (which includes companies that do not have a significant business presence in Australia) to make political donations over $1000 under Commonwealth electoral law. Restrictions also apply on when political donations under $1,000 from a foreign donor can be accepted. Similar restrictions apply in Victoria.
In addition, anyone who, on behalf of a foreign government or a foreign government related entity, carries out activities to influence federal government decision-making or the federal political process (including an election) must be registered under the Foreign Influence Transparency Scheme Act 2018. Activities include lobbying, publishing communications and making donations.
10. Do I have to revisit my political donation policies each year?
We recommend you do as, for each financial year, indexation is applied to the reporting thresholds. For example, under Commonwealth electoral laws the FY18/19 threshold was $13,800. For FY19/20, this has increased to $14,000.
What next?
The law surrounding political donations differs depending on your circumstances, and to whom you are making the political donation.
Kate, Stephen and Kendra would be pleased to hear from you if you found these insights useful, or you'd like to discuss your approach to political donation disclosure, including your organisation's policies for record keeping and reporting.
