With the next New South Wales state election just six
months away – and ICAC scandals seemingly a daily phenomenon
– now is the time for businesses to check their knowledge of
NSW's political donations laws.
Laws governing political donations differ between
Federal and State, and amongst the States, so it pays to know what
you can and can't do rather than run the risk of a penalty
fine, or worse, a media scandal that taints your company's
SIX KEY FACTS FOR BUSINESS
If you are considering making a political donation in NSW in the
lead up to the state election next March, it's worth
remembering these six key facts about political donations laws in
Political donation laws apply to both political parties and
third-party campaigners. A third-party campaigner is an individual
or group who intends to use donation to make a further political
donation or to incur election campaign expenditure.
Donations of $1,000 or more are "reportable". This
includes both monetary and non-monetary donations and multiple
donations from one donor to the same recipient totalling
Businesses who make a "reportable donation" must
report the donation to the NSW Election Funding Authority
(EFA). This disclosure is published on the
Donations for political parties are effectively capped at
$5,700 and for third-party campaigners at $2,400 per donor. For
political parties, the capped amount is the aggregate of all
donations made, so if a business is donating to multiple candidates
of a political party, total donations are still capped at
A donation can only be accepted from an individual who is on
the electoral roll or an entity with an ABN or any
other number allocated by ASIC.
Businesses and individuals who are "prohibited
donors" can not make political donations. Prohibited donors
are property developers, the tobacco industry and the liquor and
gambling industry, as well as representative organisations for
those industries. Remember, "close associates" of
prohibited donors – including directors and officers and
their spouses of businesses in these industries – are also
prohibited from making donations.
HOW TO REPORT A POLITICAL DONATION
If a business has made a reportable donation, there is an
obligation on both the donor and the recipient to report that
donation to the Election Funding Authority. This involves
completing a "Disclosure of Political Donations for a Major
Political Donor" form and lodging it with the EFA.
The EFA works on the financial year. If your business has made a
donation of more than $1,000 between 1 July and 30 June, then that
donation must be disclosed to the EFA between 1 July and 20 October
of the next financial year.
THE RISK FOR BUSINESS
A flick through the major daily newspapers demonstrates the
reputational risk of being involved in a political donations
scandal. Reputational risks aside, failing to comply with political
donation laws has other serious consequences
Not lodging a disclosure is an offence under NSW law and carries
a maximum fine of $22,000. Even more severe, making a false
statement in a disclosure is also punishable by a fine up to
$22,000 and/or 12 months imprisonment.
MANAGING THE RISKS
The legal risk associated with political donations can be easily
managed by following a couple of key steps:
if you are concerned that you or your business might be a
'prohibited donor', seek advice before you make a
keep your own records of what donations are made and to whom,
remembering that donations can be both monetary and non-monetary;
and that donations to multiple candidates of one political party
are aggregated – the $5,700 cap applies whether you make a
series of smaller donations or one big donation; and
take ownership of the reporting/disclosure process and report
promptly at the start of each new financial year.
Making a political donation is a strategic investment for any
business. By following good due diligence procedures, businesses
can be confident in making donations to parties, candidates and
third-party campaigners in the March 2015 NSW state election
without risking their good name and reputation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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