Issue

This Guidance Note responds to confusion on the part of some endorsed candidates, Senate group members, parties and donors as to who should report gifts or donations to endorsed candidates and group members, and electoral expenditure incurred by them.

Summary

The following rules apply:

1. Campaign committees - Gifts received and expenditure incurred by the campaign committee of an endorsed candidate or Senate group are transactions of the party for reporting purposes.
2. Senate groups endorsed by one party - Gifts received and expenditure incurred by a Senate group whose members are all endorsed by the one party are transactions of the party for reporting purposes.
3. Endorsed candidates or jointly endorsed Senate groups - Gifts received on behalf of the party, or received and used to incur expenditure with the authority of the party, are revenue of the party for reporting purposes.  Expenditure incurred with the authority of the party is reported by the party.
4. Private gifts received by a candidate (e.g. family presents) and private expenditure is not reported. 
5. All other gifts received by an endorsed candidate or jointly endorsed Senate group are gifts to the candidate or group for reporting purposes. 
6. Electoral expenditure incurred by a candidate or group (other a group endorsed by one party) is reported by the candidate or group.
7. Donors– subject to the disclosure threshold, donors to candidates report their donations in an election return and donors to parties report their donations in an annual return.

Gifts or donations

Section 314AB of the Commonwealth Electoral Act 1918 requires political parties and branches to report their revenue, expenditure and debt transactions in an annual return to the AEC each financial year.  The return covers transactions by the party, and transactions on behalf of the party. 

Subject to the disclosure threshold, section 304 requires candidates and Senate groups to report gifts they receive during an election disclosure period to the AEC.  The section makes clear that gifts received by a Senate group whose members are all endorsed by the one party are gifts to the party or branch for reporting purposes.

Section 287A of the Act makes clear that a campaign committee is part of a party or branch for reporting purposes.  Branches, sub-branches, divisions and party units are also part of the party for disclosure purposes.

The effect is that parties and branches must report amounts they receive directly, and amounts received on their behalf by, for example, their divisions, party units, campaign committees and endorsed Senate groups.

Candidates and groups must report the gifts they receive directly.

Discussion

Endorsed candidates and Senate groups (other than those groups whose members are all endorsed by the one party) report the gifts they receive during an election period in their candidate or Senate group return to the AEC:

• They do not report gifts received by campaign committees as these are treated by the Act as being received by the party.  The campaign committee should report these to the party.
• They do not report gifts received on behalf of the party as these are treated as being received by the party.  The candidate or group should report these to the party.
• They do not report private gifts not used for electoral purposes.   

An endorsed candidate may receive gifts for or on behalf of the party that they pass to their campaign committee or party, or that they spend on behalf of the party.  The party reports these.  An endorsed candidate may also receive gifts that they apply to their own campaign expenditure (e.g. local advertising or travel costs) without reference to the party.  The candidate reports these unless they are demonstrably on behalf of the party.  

Groups whose members are all endorsed by the one party do not lodge Senate group returns.  The party should report any gifts received by the group.  Gifts received by a member of the group are a gift received by an endorsed candidate as discussed in the paragraph above.

The value of a gift-in-kind (e.g. a donation of advertising or office space) is to be valued and reported in accordance with the above rules.
As a general rule, a gift or donation paid to a party’s account (including a campaign committee account) is likely to be revenue of the party.  A gift or donation paid to a candidate’s account it is likely to be revenue of the candidate. 

Expenditure

Section 314AB requires parties to report their total expenditure in their annual return.  Section 309 requires candidates and Senate groups (other than groups endorsed by a single party) to report their electoral expenditure.  Electoral expenditure is expenditure on election advertising, electoral matter or election polling and research.

Section 308 of the Act clarifies (for the purposes of candidate and group electoral expenditure) that expenditure incurred by, or with the authority of, the party (or a branch or division of the party) is expenditure of the party or branch.  The candidate or group does not report this as electoral expenditure. 

Gifts received by an endorsed candidate or jointly endorsed group and applied to expenditure incurred by or with the authority of the party or branch are revenue of the party or branch and should be reported as such.

Gifts received by a candidate or jointly endorsed group and applied to expenditure incurred other than with the authority of the party or branch are reported by the candidate or group. 

No disclosure threshold applies to the reporting of electoral expenditure.  A candidate or group does not report expenditure (e.g. motor vehicle expenses) that is not electoral expenditure as defined.

As a general rule, expenditure from a party’s account (including a campaign committee account) is likely to be expenditure of the party.  Expenditure from a candidate’s account it is likely to be expenditure of the candidate. 

Comment

Parties and their endorsed candidates should establish procedures to ensure that gifts are properly reported.  These should have regard to any requirements of the constitution, rules, by-laws or minutes of the party (e.g. rules deeming payments and expenditure of candidates to be transactions of the party).

The procedures and standard of reporting should have regard to the reality that returns may be subject to detailed media and political scrutiny, and the AEC program of compliance review inspections may result in amended returns being required.

Donors also have obligations to report gifts in excess of the disclosure threshold made to candidates in election period returns and to parties in annual returns.  To ensure reporting consistency, donors should be advised whether a gift is being treated as being to the candidate or to the party.

By sections 307 and 313 of the Act, candidates (including members of a Senate group) and Senate groups (other than those endorsed by a single party) must lodge a ‘nil’ return if they have no reportable transactions.

Footnotes

Senate group members are candidates for reporting purposes.  Their candidate disclosure obligations are separate and distinct to those of the group.

The disclosure threshold is indexed to the consumer price index.  For 2006-07 the threshold is $10,300 and for 1007-08 it is $10,500.