Updated transparency requirements under the Commonwealth Electoral Act

   March 2022   |  News   |  Jon Cheung, Murray Baird and Samuel Chu

With a federal election looming, the ACNC has recently confirmed that a charity may advocate on political matters consistent with its charitable purpose, provided it does not advocate for a particular party of candidate. In short, issue-based advocacy is fine, but partisan advocacy is not.

However, if your not-for-profit organisation engages in ‘electoral expenditure’, your organisation has until 14 March 2022 to comply with new transparency requirements under the Commonwealth Electoral Act 1918 (Cth) (CEA) if it meets the definition of a ‘significant third party’ under the CEA.

Significant third parties must comply with new requirements

The new transparency requirements applicable to ‘significant third parties’ were introduced in December 2021 by the Electoral Legislation Amendment (Political Campaigners) Act 2021 (Cth) (Political Campaigners Act). The Political Campaigners Act has amended the CEA to widen the scope of the CEA’s registration and disclosure regime, which may capture more organisations. Significant third parties will be required to:

• register with the Australian Electoral Commission (AEC) as a significant third party; and
• comply with more stringent annual return and foreign donations requirements than the requirements that are applicable to organisations that are ‘third parties’ under the CEA.

Am I a significant third party?

Your organisation will be a significant third party for a financial year, and will be affected by these new requirements, if:

• the amount of ‘electoral expenditure’ it incurs during that or any one of the previous 3 financial years is $250,000 or more;
• the amount of ‘electoral expenditure’ it incurs meets or exceeds the ‘disclosure threshold’ (currently $14,500 for FY22) for that financial year, and the amount of ‘electoral expenditure’ during the previous financial year is at least one-third of the revenue of the organisation in a financial year; or
  it operates for the dominant purpose of fundraising amounts that (when aggregated) meet or exceed the ‘disclosure threshold’, and that are for the purpose of ‘electoral expenditure’.

Note that references to a previous financial year can include a year prior to the Political Campaigners Act becoming law. That is, a retrospective effect which is generally regarded as an undesirable feature in legislation.

What is ‘electoral expenditure’?

As a result of the Political Campaigners Act’s amendments to the CEA, the term ‘electoral expenditure’ is referred to in two senses in the CEA (subject to exceptions).

For the purpose of discerning whether an organisation is a significant third party, ‘electoral expenditure’ is expenditure incurred for the dominant purpose of creating or communicating ‘electoral matter’. ‘Electoral matter’ is defined in the CEA to mean any matter communicated or intended to be communicated for the dominant purpose of influencing the way electors vote in a federal election.

However, for the purposes of a significant third party (but not a third party) reporting electoral expenditure, another factor is added to the definition: ‘any expenditure incurred in relation to a Federal election’. There is no guidance as to what might be regarded as ‘in relation to an election’.

Implications for your organisation

If your organisation meets the definition of ‘significant third party’ at the time the Political Campaigners Act’s changes to the CEA came into effect, your organisation has until 14 March 2022 to comply with these new requirements.

Given that this year’s Australian federal election is due to be held by May 2022, not for-profit organisations may wish to consider whether these new requirements apply in relation to any of its electoral or political activity – particularly, whether your organisation is:

• engaging in electoral expenditure or communicating electoral matter; or
• a significant third party.

Please contact Jon Cheung or Murray Baird if you have any queries about the implications of these new requirements for your organisation.