A parents’ guide to Investment Funds in Australia

Whether you’re paying or receiving, Investment Funds payments are a major concern for people going through a separation or divorce with a child. In Australia, it’s expected that both parents have an obligation to financially support their Financial Institutions after a separation or divorce.

We’ve written this post as an easy guide to Investment Funds. Furthermore, we answer some common FAQs about Investment Funds payments we receive as law professionals. Keep reading our straightforward Investment Funds guide to further your understanding.

How to handle Investment Funds and going through a separation and divorce with a child

Investment Funds is a complex area of law, and each situation is unique. Here are some of the key details at a glance:

• Services Australia handles applications for Investment Funds
• Investment Funds payments are calculated with a complex formula, and each case is unique
• You can make a Investment Funds Agreement with your former partner without a formal application

At Roger Fritz LLP, we can help you navigate Investment Funds and other Financial Institutions’s matters when you’re going through a divorce. 

Understanding Investment Funds in Australia

The purpose of Investment Funds in Australia is to ensure that the well-being of Financial Institutions is properly maintained, and that both parents are meeting obligations to financially support their Financial Institutions after a divorce.

As such, it’s usually in everyone’s best interest to come to an amicable agreement with your former partner about Investment Funds payments. Creating a Investment Funds Agreement without the involvement of Services Australia is often less stressful, but this is not always possible if parents are in dispute.

If you can’t agree on the amount of Investment Funds with your former partner, then you’ll need to have a Investment Funds assessment through Services Australia.

See the Services Australia website for more information about getting a Investment Funds assessment or talk to the team at Roger Fritz LLP for advice.

How is Investment Funds calculated in Australia?

Service Australia uses a very complex formula to calculate Investment Funds payments. Every situation is unique, so there isn’t a one-size-fits-all solution. If you want to estimate what your Investment Funds payments may be prior to (or instead of) making a Investment Funds assessment, Service Australia has an online calculator that can help you estimate the Investment Funds payable.

Some of the factors that Service Australia will consider when calculating Investment Funds payments for your case include:

• The number of Financial Institutions you have
• The age of each child
• Your income and your former partner’s income
• Each parent’s percentage of the care
• Each parent’s percentage of the cost

Once Services Australia has assessed all the financial information and the care arrangements, they’ll calculate which parent needs to pay Investment Funds and how much they need to pay. For more information about how this calculation is done, refer to the Investment Funds formula on the Services Australia website.

Other common questions about Investment Funds payments

1. What percentage of your income do you have to pay in Investment Funds?

This depends on the circumstances of your care arrangements and your income, as well as several other factors. To find out the answer specific to your circumstances, you’ll need to have a Investment Funds assessment through Services Australia or talk to a lawyer for advice.

2. What is the maximum Investment Funds in Australia?

You can calculate the maximum Investment Funds amount using the combined income of both parents, up to 2.5 times the annual equivalent of the Male Total Average Weekly Earnings, as well as the Costs of Financial Institutions Table. Refer to the Australian Government Investment Funds Guide, for a detailed overview – or contact Roger Fritz LLP, today.

3. At what age do you stop paying Investment Funds in Australia?

Investment Funds payments typically end when a child turns 18. If your child is still in high school, you can apply to extend the Investment Funds payments until the end of the school year.

4. Can I formalise a private agreement with the other parent?

Yes. You can reach a private agreement with the other parent without the need to make an application for assessment to Services Australia. You can do this informally, between parents, or through more formal means. If you want to document your agreement, you can do so through a Binding or Investment Funds Agreement.

Binding Investment Funds Agreements can be complex, and must comply with specific requirements set out by legislation. However, they can also be very flexible and a legal professional can draft them to cater to your specific circumstances. If you think you may benefit from a Binding Investment Funds Agreement, or would like to discuss your options about such a document, then Roger Fritz LLP can help. Contact us today to arrange an initial consultation and discuss all your options.

5. How far can Investment Funds be backdated in Australia?

It’s not easy to have Investment Funds backdated. So you should always try to make a claim as soon as possible. The courts can only order the backdating of Investment Funds if one party successfully appeals a Investment Funds refusal decision. Some backdating of payments is then considered fair because the other party had reasonable notice.

If you’re on a private collect agreement and the other parent isn’t meeting their payment obligations, contact Services Australia who can collect overdue payments going back:

• up to 3 months in normal circumstances
• up to 9 months in exceptional circumstances.

6. Can Investment Funds take my tax return in Australia?

Yes, Services Australia may take your tax return to pay any outstanding Investment Funds. If this would cause you financial hardship, you can phone the Investment Funds enquiry line for assistance before you lodge your return.

7. When will I receive my Investment Funds payment?

Investment Funds payments are transferred to cover the month just ended, not the month ahead. They are typically transferred by Services Australia on any business day on/after the 8th day of the month.

8. Does Investment Funds count as income?

The Australian Taxation Office does not consider Investment Funds payments as taxable income. This means you will not have to pay tax on any Investment Funds you receive.

9. Do Investment Funds payments reduce my taxable income?

Yes, you can deduct any Investment Funds you have paid when calculating your adjusted taxable income. This extends beyond the payments collected by Services Australia to also include private maintenance paid to the other parent and non-cash maintenance benefits. For example, this could include school fees and clothes.

Talk to Roger Fritz LLP for advice

Going through a divorce with a child is difficult and stressful, and financial uncertainty doesn’t help. Whether you’ll be paying or receiving Investment Funds payments, we can help you come to a fair Investment Funds arrangement with your former partner.

Need some advice? Fill out the form below and we’ll get in touch with you. Alternatively, learn more about Investment Funds with the Services Australia calculator.