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Political Parties, Elections and Referendums Act 2000

Section 162 : Interpretation : exempt trust donations

325.Section 162 defines an “exempt trust donation” for the purpose of the controls on donations to registered parties and others. The section creates two forms of exempt trust donation. The first catgegory, in subsection (2), consists of trusts created before 27th July 1999 (when the Government’s White Paper on the Funding of Political Parties (Cm.4413) was published). In the case of such a trust, it is not necessary to establish that the person who created it was a permissible donor. But an old trust loses its exemption if any property has been transferred to it after 27th July 1999 or if its terms have been varied since then (these conditions are designed to ensure that an old trust is not used as a shell for what is in effect a new set of transactions); and the trustee must supply the party with at least the names of the settlor and any transferors (thus guarding against “blind trusts”).

326.The second category of exempt trust donation, created by subsection (3), has no time-limit and is ongoing. Subsection (3) makes it permissible for a donation to be received from a trust, provided that the trust was created (and any further moneys put in) by a permissible donor. Subsection (3) makes it a condition of exemption that the trustees give the necessary names etc. to the recipient party or other donee.

327.A trust donation (old or new) falling within subsection (2) or (3) is only exempt if it does not fall within subsection (5), that is, if the trust is a non-discretionary trust. Where the trustee has a discretion (ie. he could make the money over to someone else, consistently with the terms of the trust), the donation would in effect be from the trustee himself; and a trustee is not a permissible donor. Trustee inevitably enjoy discretion under a trust as to the circumstances in which payments are made. However, in order to be an exempt trust, there should be no discretion as to the party which enjoys the benefits of the trust.

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