A New South Wales MP has told ICAC he paid his tax bill with a cheque from a developer given in exchange for an overvalued painting.

Member for Charlestown Andrew Cornwell was the Government whip until Wednesday when he stood aside from the Parliamentary Liberal Party and moved to the crossbench.

He has been joined on the cross benches by Member for Newcastle Tim Owen, who also announced he would not re-contest the next election, after details of his campaign funding emerged.

Mr Cornwell admitted to the Independent Commission Against Corruption that he received a personal benefit from the transaction which involved Hunter Valley property developer Hilton Grugeon.

The inquiry was told that Mr Cornwell and his wife originally gave Mr Grugeon a gift of a painting that had been a present from her parents.

Mr Cornwell said the developer then called him, saying the painting by the artist Rex Newell was a generous gift and asking if he could buy it.

When asked by counsel assisting the inquiry Geoffrey Watson SC if the arrangement for the developer to pay his wife $10,120 for the painting was "bizarre", Mr Cornwell replied, "completely".

Mr Watson said one auction house had since revealed that the highest price paid for a Rex Newell painting was $1,540.

Mr Watson then asked Mr Cornwell if the cheque was a means of bribing him.

"Yes, that's right," Mr Cornwell replied.

"That's why I told my wife not to bank it."

Mr Cornwell's wife Samantha Brookes told the hearing she just thought it was a nice gesture that Mr Grugeon wanted to pay for the painting.

Ms Brookes said she thought it was only worth a few hundred dollars and recalled being surprised at leaning Mr Grugeon wanted to pay more than $10,000 for it.

When asked if any alarm bells rang, Ms Brookes said she had been too busy to think much about it.

"It was frenetic, we were ramping up our final weeks of doorknocking.... my entire focus was getting Andrew out and about," she said.

"I regret that I didn't step back and put this transaction into any perspective"

The money was banked and then split up to deposit in other accounts, after Mr Cornwell's parents - both lawyers - told him it was legal.

"I clearly paid my PAYG tax with that money," he added.

He said he never asked himself whether taking developer money was appropriate.

"In the heat of the election campaign, I focussed on what was lawful," he said.

MP refused some developers' 'hare brained ideas'

Mr Cornwell also told the commission he had refused some other "hare-brained ideas" from Newcastle developers for campaign funding.

One involved the use of trust account in Sydney, the other an unsolicited offer for a "non-returnable" deposit on a house he was buying.

"It was the most hare-brained idea I had ever heard," he said.

Earlier on Thursday, Mr Cornwell had told the commission that he made a mistake when accepting $10,000 in an envelope from property developer and Lord Mayor of Newcastle Jeff McCloy.

Mr Cornwell told ICAC that he froze when Mr McCloy handed him an envelope full of cash in the lead up to the the 2012 election.

Mr Watson asked Mr Cornwell why he did nor refuse the illegal donation from a developer or take it to the police.

"It was a huge mistake," he said.

"I just froze; it was just a big mistake."

ICAC has heard there was evidence of serious irregularities in the way that the Liberal Party ran and funded the last state election campaigns for Newcastle and Charlestown.

Mr Watson has told the inquiry there was already enough evidence for the inquiry to establish that at least the Newcastle campaign was funded from illegal sources.

Mr Cornwell has completed his evidence but could be recalled to answer more questions about the funding of the Liberal' party's successful campaign to win Hunter Valley seats.

Radio Broadcaster 'knew Liberal Party did not pay his bill'

A commercial radio broadcaster has told the hearing he was aware his work on the 2011 state election campaign was not being paid for by the Liberal Party.

2GB presenter Luke Grant said he charged more than $20,000 for the media and communications work he did for Mr Owen.

Mr Grant has told the hearing that the former police minister Mike Gallacher suggested he could work with Mr Owen.

He said he did work including writing speeches and media releases for Mr Owen for some time before he was paid, but was not worried about the lack of a formal contract.

"I'm dealing with the potential incoming police minister, a solicitor, and a pretty fine individual as a candidate," he said, referring to Mr Gallacher, his campaign manager Hugh Thomson and Mr Owen.

"I didn't think I had anything to be concerned about."

He said he became aware in late February that year that he would be paid by companies associated with developers Hilton Grugeon and Mr McCloy.

The inquiry heard that Mr Owen's campaign manager, Hugh Thomson, asked him to draw up draft invoices charging the companies for marketing consultancy work that he had never performed.

When asked if he had ever asked anyone on Mr Owen's campaign why, Mr Grant answered: "No. Because I was aware that I would be paid by donors".