The rules around anonymous donations to local election campaigns are to be toughened up in the wake of the John Banks campaign cash scandal.
The maximum anonymous donation is to be lifted from $1000 to $1500, but disclosure rules will become stricter.
Local government minster David Carter has announced proposed changes which also revise the description of anonymous and introduce penalties for non-compliance.
Currently, politicians must declare the source of donations over $1000 if they know who the donor is.
It will bring the regulations in line with the laws that govern elections to Parliament.
Carter said the changes reflect ''growing public concern about transparency and accountability in relation to candidate donations, and in particular anonymous donations.''
Under the new rules, any anonymous cash over $1500 must be paid to the electoral officer.
Campaign workers who receive an anonymous donation of more than $1500 must also reveal the identity of the donor to the candidate, if known.
Banks was investigated by police this year over anonymous donations to his failed bid to be mayor of Auckland super-city.
Detectives found he solicited money for the campaign from internet tycoon Kim Dotcom, but were unable to establish whether he knew two gifts of $25,000 came from the German millionaire. The return was completed by campaign volunteers.
Banks also marked a $15,000 donation as anonymous. It was believed to have come from SkyCity casinos.
Police said the SkyCity donation, written out as a cheque to Team Banksie 2010, was handed to Banks in a sealed envelope.
It was subsequently recorded in the electoral return by the Treasurer for Banks' team as anonymous.
It was discovered he also solicited radio advertisements declared as anonymous. But charges could not be brought because of a time bar in the Local Electoral Act.
In July, Prime Minister John Key said: ''The law literally is an ass in this particular case.'' But the Government would only make changes if it could find the time.
Carter said the new amendments will be combined with the Local Electoral Amendment Bill currently before Parliament.
The Local Electoral Amendment Bill will be introduced early next month so the changes will be in force for the local authority elections in October next year.
Labour Leader David Shearer accused Key of hypocrisy over the rule change.
Shearer said National had previously rejected a Member's Bill promoted by Labour to align the local election donations regime with parliamentary elections.
However, Banks welcomed the changes.
"No candidate for public office should have to go through what I have been through.
"These changes are well overdue," the ACT leader said.
* Limiting to $1500 the size of an anonymous donation a candidate can retain
* Requiring any candidate receiving an anonymous donation of more than $1500 to pay any excess to the electoral officer
* Requiring the electoral officer to pay the amount over $1500 to the local authority that is administering the election
* Expanding the existing definition of "anonymous" to include situations where the candidate could not 'reasonably know' the identity of the donor
* Raising the amount of a donation that the candidate must report in their electoral return from $1000 to $1500
* Requiring a third party who receives a donation on behalf of a candidate to disclose the identity of the donor (if known) to the candidate
* New requirements to improve the current disclosure and reporting obligations
* New provisions relating to penalties for non-compliance with the new requirements.
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