A Liberal Party-owned company that bills taxpayers for computer services, Parakeelia, has made its biggest-ever cash transfer to the political organisation, sending it more than $900,000 last financial year.

Parakeelia, which is wholly owned by the Liberals, paid the party more than $715,000 in 2015-16, according to electoral commission disclosures published on Wednesday.

The company also gave the party a $200,000 loan for "cash flow".

Including that loan, an amount equal to nearly 80 per cent of Parakeelia's annual revenue was paid to the Liberals. It has paid the party more than $2 million over five years, money the party discloses as "other receipts" and explains as payments for services.

Liberal Party director Tony Nutt. Alex Ellinghausen

But much of the company's revenue comes from taxpayer funds, which has led to it being described as a "scam" and "washing machine" by the opposition.

Nearly all federal Liberal MPs and state MPs pay Parakeelia amounts of up to $2500 a year in taxpayer-funded computer allowances to use of its proprietary Feedback software, used to monitor constituents.

The party has repeatedly refused to say whether Parakeelia generates a profit from taxpayer allowances, saying only that it has not "operated as a profit centre".

A limited-scope review by the National Audit Office last year found the company was not in breach of electoral and parliamentary rules.

But University of Queensland Law Professor Graeme Orr said Parakeelia presented problems "deeper than strict legalities".

"You have a question of a business built on taxpayer funds returning money to a political party: that's problematic in a way we haven't seen before," he said.

Professor Orr said the Parakeelia structure risked "indirectly funding partisan politics", an issue he said would be avoided if the party chose its IT provider via a tender.

Parakeelia has generated more than $10 million in revenue over 15 years.

Independent computer experts have described the software as "antiquated" and put the cost of developing its desktop version at about $350,000 with a recently provided online version costing the same again.

Liberal Party federal director Tony Nutt told Fairfax Media that Parakeelia had been cleared by the federal auditor and that it paid the party money in exchange for services bought by the party, in addition to the loan which was also ticked off by the auditor.

The flow of taxpayer money from Parakeelia to the Liberal party has raised persistent questions about whether the company generates profits from taxpayers.

Parliamentary staff, being paid taxpayer-funded salaries, provided support and training services for Parakeelia and the company rented Liberal headquarters for the 2013 election.

In addition to transfers for software upgrades, the auditor found that Parakeelia also sent the Liberal Party money for accommodation costs and "cash flow" transfers, which were later reimbursed.

About one-third of Parakeelia's income comes from federal MPs, the balance comes from state parliamentarians and occasional contracts with MPs in New Zealand.

A $2500 yearly cap on MPs' software entitlements was recently lifted by the Federal Parliament, raising the possibility that more money can be spent on the software.

Labor operates a similar database for monitoring constituents.

Its Campaign Central software is provided by an independent company, Magenta Linas.

Labor MPs pay money directly to the party to use the software under licence. Labor has said it runs the software at a loss and payments from MPs do not cover costs.

Magenta Linas paid the WA branch of the ALP amounts totalling $250,000 from 2001 to 2004.

Labor said that was to reimburse the party for providing a staff member as training and the practice has ceased.

A number of state and federal Liberal MPs have said access to the Parakeelia software was immediately rescinded after they resigned from the Liberal Party.

MP Dennis Jensen, who ran unsuccessfully as an independent after losing Liberal endorsement, described the software as "illegitimate".

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