Controlled Money -vs- Investment Money

Overview

Law App supports both controlled money and investment money accounts. From an accounting software perspective, these are handled identically — the system records receipts, movements, and balances in the same way for both.

This is because the underlying recording requirements are fundamentally the same across all Australian jurisdictions. Both are trust money invested on behalf of the client so the client receives the interest earned. The concepts of controlled money and investment money exist in every state and territory, though the governing legislation differs.

Key point: The difference between controlled money and investment money is not a system distinction — it is a practice-level decision made by your firm. Law App handles the accounting identically for both.

What’s the Difference?

While the recording requirements are the same, the two types differ in how and why the money is directed. The distinction is about the direction of the funds and who initiates the decision.

Client-directed

Controlled Money

Controlled money arises when the client provides a written direction for their funds to be deposited into a separate account rather than the general trust account.

The client initiates this. The money goes directly into a controlled money account in the name of the law practice as trustee for the client.

Firm-initiated

Investment Money

Investment money is typically a decision made by the firm — for example, when trust money has been held in the general trust account for an extended period.

The firm moves the funds into an investment account to ensure the client’s money earns interest, rather than leaving it sitting idle.

Money Flow – Controlled Money

Client directs → Controlled money receipt → Controlled money account → Distributed

Money Flow – Investment Money

Firm decides → General trust account → Withdrawn & invested → Returned to trust

Fiscal responsibility: If your firm is holding trust money for an extended period, consider whether it should be invested on the client’s behalf. Money sitting in the general trust account does not earn interest for the client — interest on those pooled funds is paid to the relevant statutory fund in your state (see table below).

Legislation by State & Territory

The principles are the same Australia-wide, but the governing legislation and the name of the statutory interest fund differ by jurisdiction. Refer to your state or territory’s requirements below.

Jurisdiction	Governing Legislation	Interest on General Trust Paid To	Regulator / Law Society
QLD	Legal Profession Act 2007 (Qld)	LPITAF (Legal Practitioner Interest on Trust Accounts Fund)	QLS
NSW	Legal Profession Uniform Law (NSW)	Public Purpose Fund (PPF) via Statutory Deposit	Law Society of NSW
VIC	Legal Profession Uniform Law (Vic)	Public Purpose Fund (PPF) via Statutory Deposit Account	VLSB+C
WA	Legal Profession Uniform Law (WA)	Solicitors’ Guarantee Fund	Legal Practice Board WA
SA	Legal Practitioners Act 1981 (SA)	Guarantee Fund (Law Society of SA)	Law Society of SA
TAS	Legal Profession Act 2007 (Tas)	Solicitors’ Guarantee Fund	Law Society of Tasmania
ACT	Legal Profession Act 2006 (ACT) & Legal Profession Regulation 2007	Statutory Interest Account (SIA)	ACT Law Society
NT	Legal Profession Act 2006 (NT)	Fidelity Fund	Law Society NT

Same concepts, different Acts: In every jurisdiction, controlled money requires a written direction from the client, and investment money is trust money invested on the client’s behalf to earn interest. Law App handles both the same way regardless of which state you practise in.

How This Works in Law App

Law App records controlled money and investment money using the same accounting processes
Receipts, movements, and balances are handled identically in the system
The choice between controlled money and investment money is managed by your firm, not the software
Your firm determines the direction of funds based on whether the client has given a written direction (controlled) or the firm is investing on the client’s behalf (investment)

Reference

This information is consistent with trust accounting requirements across Australian jurisdictions. The core principles are drawn from the Legal Profession Act 2007 (Qld), the Legal Profession Uniform Law (NSW/Vic/WA), and equivalent legislation in other states and territories. For jurisdiction-specific guidance, contact your local law society or regulatory body using the links in the table above.