The Liberal Party has been stripped of $587,000 after the NSW Electoral Commission declared a number of donations were unlawful.
In March, the NSWEC froze $4.4 million in funding to the NSW division of the party due to its failure to disclose past donations, primarily made via the Free Enterprise Foundation in 2010-11.
The commission said in a statement on Thursday it had now determined some of the donations - which emerged out of the NSW Independent Commission Against Corruption's Operation Spicer - to be unlawful and deducted $586,992 from the amount of public funding payable to the party.
Investigations by the NSWEC found some of the donations came from property developers, who have been banned from donating under NSW law since December 2009.
Other donations were anonymously made or exceeded the cap.
"Based on information generated during ICAC's Operation Spicer and further evidence obtained through NSWEC investigations, it has been determined that the NSW Liberal party accepted a number of unlawful donations during the 2010-11 disclosure period," the NSWEC said in a statement on Thursday.
However some of the allegations could not be proven or would have faced Limitation Act hurdles.
On Monday the Liberal party submitted an amended declaration which included disclosure of a number of donations which had not previously been reported.
It was accepted by the NSWEC and published on its website.
This led to $3.8 million of the frozen money being released while the remainder was deducted from the election campaigns fund payment payable to the party.
In addition, $112,000 in donations to the NSW Liberal party made via the Free Enterprise Foundation which were used exclusively for federal election campaign purposes were not subject to any action by the NSWEC.
Shadow attorney-general Mark Dreyfus said the NSWEC's finding vindicates calls for donations reforms.
"This absolutely stinks, and calls for a full explanation from the NSW Liberal Party and its former Treasurer Arthur Sinodinos," he said.
