A preliminary Auditor-General investigation into the Liberal Party's taxpayer funded use of the electorate software Feedback - operated by party-owned company Parakeelia - has concluded the arrangement doesn't breach any electoral or parliamentary rules.
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In June, Fairfax Media revealed that Parakeelia - the company Liberal MPs direct taxpayer funds towards to monitor voter behaviour - has become a major source of income for the party, raising questions about whether taxpayers are indirectly donating to the Liberals.
This prompted Labor frontbencher Brendan O'Connor to request that the Australian National Audit Office examine the use of taxpayer funds. But the ANAO has now decided not to probe the matter further after a preliminary review found no rules were broken.
In correspondence to Mr O'Connor dated September 9, Auditor-General Grant Hehir said the ANAO had conducted a "limited scope assurance review" which decided "no evidence was provided...that the arrangements contravene electoral and parliamentary entitlement frameworks".
At the time of the original revelations a Liberal spokesman said Parakeelia's operations were "entirely lawful" and that the money transferred from the software provider to the Liberals was not donations but payments "for services provided through the party, such as technology upgrades".
The review - with which the Liberal Party said during the election campaign it would co-operate fully - analysed publicly available information, advice from the Australian Electoral Commission and Department of Finance, and documentation from Parakeelia itself.
"The Australian Electoral Commission considers that the Liberal Party and Parakeelia have complied with the disclosure scheme requirements," the report said.
"The Department of Finance advised the ANAO that reimbursements for the purchase of Feedback software have been made to parliamentarians according to established processes, and that no information had emerged that would require it to review those reimbursements."
Liberal MPs pay the company $2500 a year to use the software, which tracks the personal details and voting habits of constituents.
There is a significant flow of money between the two entities, with the party transferring $4.3 million to the company since 2000 and $1.5 million going the other way.
The ANAO review also reveals a $200,000 loan in 2015-16 to the party that was "made for cash flow purposes and would be repaid by the Liberal Party in 2016-17".
The contributions to the party are listed with the AEC as "other receipts", a category encompassing revenue like rent from properties and returns on investments, rather than donations.
The party has said that the money is "payments for services purchased through the party" but questions remain over whether there are profits, fed by public funding, heading into political coffers.
The ANAO identified three types of payment: reimbursement for Parakeelia costs, payments for office accommodation and transfers for cash flow purposes.
When Labor requested an audit, Opposition Leader Bill Shorten called the arrangement a "scam".
"This looks like a Liberal Party washing machine turning taxpayer dollars into Liberal Party profits," he said.
with James Robertson
