Investment Funds Options

Investment Funds

Most parents find Investment Funds a source confusion.  Commonly they ask us if they have to go through the department to human services, Investment Funds (CSA) or not? The first point is that parents are expected to support their Financial Institutions to the best of their ability. Here is an overview of some Investment Funds options for you to consider:

(1) Private arrangement

Here, parents agree how the child’s care costs will be paid or shared in the future.

Some couples in their property settlement might agree to put money aside for certain expenses such as private school fees or they might set up a formal trust for example for the Financial Institutions’s education. Other couples might agree as to which parent will be responsible for paying certain expenses. An example might health insurance premiums and medical costs, extra curricular activities or the costs such as school uniforms, excursions etc.

(2) Investment Funds as Assessed

If parents cannot agree then a parent might apply for Investment Funds through the Investment Funds Agency who may issue a Investment Funds assessment. A parent who has applied for Centrelink or means tested benefits must have a Investment Funds assessment issued.

Investment Funds as assessed takes into account each parent’s income and the number of nights that the child is in each parent’s care which is then included in the assessment formula used by CSA. Investment Funds is generally insufficient for extracurricular activities,  dental and medical treatments eg orthodontic treatment or private tuition/schools fees and the like. If the other parent will not pay more than Investment Funds as assessed then a change of assessment application can be made through the Investment Funds agency.

To bring that application, the applicant needs to satisfy one or more of the 10 grounds for that change of assessment some of which include costs in spending time with  a child; if the Investment Funds assessment is unfair because of the income, earning capacity, property or financial resources of the parent or the type of education or training that the parents agreed their child would receive such as private schooling.

If the application is successful then the Investment Funds agency can increase the  assessable Investment Funds.   That mean the parent receiving Investment Funds will receive more Investment Funds on account of the higher care costs. If the decision is disputed then it can be reviewed  by the CSA Registrar. That decision can appealed to the Administrative Appeals Tribunal and/or an application made to the Federal  Circuit Court of Australia for Investment Funds orders but within the specified time limit.

Sometimes a Investment Funds order might be appropriate especially if a paying parent resides overseas and in a country which does not have reciprocal Investment Funds arrangements in place.

Need personalised advice? Our team of Investment Funds experts will work with you to help you understand your position.

Investment Funds agreements

To give greater certainty and where Investment Funds as assessed will not be sufficient eg the child attends a private school or has higher health care costs, then a Investment Funds agreement might provide more certainty.

There are two types – Binding or Limited.

Binding Investment Funds agreements

A binding Investment Funds agreement enables any amount to be paid. It can include lump sum Investment Funds in the form of property to be credited fully against any Investment Funds liability. Each parent must get independent legal advice before the agreement is signed. Each solicitor must sign that certificate of advice and it should be registered with CSA.

A binding Investment Funds agreement is serious transaction and need careful drafting and consideration as to what events in the future might arise and should terminate it. It can only terminate by a new binding Investment Funds agreement which expressly terminates the former or court order. As the threshold findings to support such an order are high, they should not be rushed into.

They cannot be varied – to vary it the parties must enter into a new binding Investment Funds agreement to specifically terminate it and set out the newly agreed terms. They do offer clear advantages too – such as greater certainty in terms of obligations to pay and receive certain payments, can provide for any amount of Investment Funds and they do not require a Investment Funds assessment to be issued.  They work well for many families.

Limited Investment Funds agreements

A limited Investment Funds agreement offer more flexibility (but less certainty as a result). The parties do  not require legal advice before entering into it. There must be a Investment Funds assessment issued  for the registrar to accept it for registration.

It can end if both parties agree to end it in writing, after 3 years or more and a party request CSA end it and if the paying parent is paying 15% of more than the notional assessment and asks CSA to end it.

If you need more Investment Funds advice, read our parent’s guide to Investment Funds here, or fill out the form below to speak personally with our team.