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Client Update: Property developers prohibited from making political donations

10 December 2009

In brief: It will be an offence for a property developer to make a political donation if the person knows that the act is unlawful, following amendments to the Election Funding and Disclosures Act 1981 (NSW). It will also be unlawful for a person to accept a political donation from a property developer, as Partner Jim Parker (view CV) and Lawyer Brooke Newell review the Bill.

The New South Wales Parliament passed the Election Funding and Disclosures Amendment (Property Developers Prohibition) Bill 2009 (NSW) (the Bill) to amend the Election Funding and Disclosures Act 1981 (NSW) (the Act) on 3 December 2009. The Bill is likely to receive assent and come into force this week.

Who is caught by the Bill?

A 'property developer' includes:

  • a corporation engaged in a business that regularly involves the making of relevant planning applications by or on behalf of a corporation in connection with the residential or commercial development of land, with the ultimate purpose of the sale or lease of the land for profit; and
  • a person who is a close associate of such a corporation, including related body corporates of the corporation, directors and officers of the corporation and their spouses, and shareholders with voting power of more than 20 per cent in the corporation and their spouses.

A retailer that regularly makes planning applications for the purpose of its stores will not be caught by the amended Act, unless a substantial part of its premises are developed for the purpose of being sold or leased. A spouse of a director of a corporation that regularly makes planning applications for development that is for the purpose of being sold or leased, however, will be captured.

If a corporation or person is in doubt, they may apply to the Election Funding Authority of NSW for a determination that they are not a property developer for the purposes of the Act. The determination will remain in force for 12 months.

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A political donation

A 'political donation' is broadly defined. It includes, for example, a 'gift' made to, or for the benefit of, a political party, elected member or candidate and a gift includes a contribution or entry fee to participate in a fundraising venture or function by a political party.

The Bill provides, however, that a subscription paid to a political party by an individual for membership or affiliation, will not be a political donation unless it is a 'reportable political donation', being a political donation of more than $1000 (made within a period of two years).

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Implications

Corporations must not only review their policies on making political donations, but also make their directors and 'officers' aware of the implications of any political donations they make in their personal capacity.

An 'officer' of a corporation is broadly defined and, for example, includes a secretary or person who makes decisions that affect the business.

For further information, please contact:

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