In brief

The federal election is slated for 21 May 2022 and it is important to be aware of your obligations when it comes to political donations to ensure you are compliant with any disclosure requirements under the Commonwealth Electoral Act 19189 (Cth) (“Electoral Act“). 

Not only do offences under the Electoral Act carry fines but non-compliance with political donations laws can lead to significant reputational risk in an area that frequently makes headlines.

This federal election is also the first since reforms in December 2021 tightened the laws relating to political donations in relation to foreign donors.

Key takeaways

If your company is making political donations this election season then you should ensure you are compliant with any disclosure obligations as a donor under the Electoral Act.

If your company does make political donations then it is important to ensure that your internal policies and procedures effectively track donations and trigger responsibility for any disclosures to be made to the AEC. Ideally, policies and procedures should:

• Prohibit officers, employees and agents from making political donations on behalf of the company without adequate approval
• Establish a record keeping framework to track any political donations together with capturing the information required to make any required disclosures or satisfy any statutory record keeping requirements
• Attribute responsibility for ensuring compliance with any disclosure requirements to the AEC
• Ensure that any decisions around political donations are carefully considered in the context of the other policies (e.g., anti-bribery and anti-corruption policies, codes of conduct and gifts and hospitality policies)

In more detail

If your company is making political donations, or employees and agents are making donations on your behalf, you need to be aware that:

• Donors may be required to lodge either annual disclosure returns and/or election disclosure returns with the Australian Electoral Commission (AEC) if they donate above the disclosure threshold
• The current disclosure threshold that applies from 1 July 2021 to 30 June 2022 is AUD 14,500 (this generally increases each year)
• Donations can include any disposition of property without consideration in money or money’s worth or with inadequate consideration. It can also include the provision of a service for no or inadequate consideration. This can include any of the following:
  1. free or discounted use of premises, equipment or facilities
  2. free or discounted advertising or production services
  3. providing interest-free or discounted loans
  4. free or discounted goods or services (for example, travel, electrical goods, artwork or sports memorabilia) for use in raffles or other fundraising activities
• Election Disclosure Returns: Donors who make donations over the AUD 14,500 threshold to candidates in an election are required to lodge an election disclosure return with the AEC before the end of 15 weeks after the polling day for the election. A person is taken to commence being a candidate in an election (or by-election) 6 months before the day the person announced they would be a candidate or the day they nominated as a candidate (whichever is earlier).  A person ceases to be a candidate 30 days after polling day.
• Annual Disclosure Returns: Donors who make donations over the disclosure threshold to a registered political party (or associated entity), a significant third party (being those entities which incur electoral expenditure exceeding AUD 250,000), a member of the House of Representatives or a Senator will need to lodge an annual disclosure return with the AEC by 17 November 2022.
• Penalties: Donors who do not comply with their disclosure obligations under the Electoral Act may be subject to the following penalties:
  1. Failure to provide either an election disclosure or annual disclosure return carries a maximum penalty of either 60 penalty units (currently AUD 13,320) or three time the amount of the value of the gifts not disclosed (whichever is higher)
  2. Failure to keep adequate records for a period of five years after the financial year subject to the disclosure carries a maximum fine of 200 penalty units (currently AUD 44,000)
  3. Providing misleading information to AEC may also trigger criminal liability under the Criminal Code Act 1995 (Cth) which can be punishable by 12 months imprisonment

In addition to these disclosure obligations, the Electoral Act also sets out strict prohibitions on political donations made by foreign donors.  The definition of foreign donor includes a person or entity who does not have a connection with Australia, such as a person who is not an Australian citizen or an entity that does not have a significant business presence in Australia.

The 2022 federal election also serves as a timely reminder to confirm ongoing compliance with the various political donation laws in each Australian State and Territory. Each jurisdiction has different monetary thresholds and restrictions so ensure that you are aware of the current requirements in each jurisdiction in which you operate.  Similarly to the Federal provisions these requirements can also relate to non-monetary benefits.