What is Transit Money?
Transit money refers to funds received by a law practice with instructions to pay or deliver them to a third party (not the client). These funds are not treated as trust money and are not held in the general trust account, though they must still be properly documented.
Legal Requirements – QLD & NSW
Queensland
Under Queensland Law Society (QLS) guidance and the Legal Profession Act 2007 (Qld):
- A law practice that receives transit money must pay or deliver it as soon as practicable, or within any specified period.
- The practice must keep “brief particulars sufficient to identify the relevant transaction and the purpose for which the money was received.”
- Transit money received in cash must be deposited into the trust account (or controlled money account) before payment.
(Reference: QLS Trust Accounting Guide v12, April 2024)
New South Wales
Under the Legal Profession Uniform Law (NSW) — Section 140:
- A law practice receiving transit money must pay or deliver it as required by instructions, within the specified period or as soon as practicable.
- The practice must record and retain “brief particulars sufficient to identify the relevant transaction and any purpose for which the money was received.”
- These records must be retained for 7 years after the matter concludes.
(References: Legal Profession Uniform Law (NSW) s.140; Legal Accounting Handbook, Law Society of NSW)
Do You Still Need to Record Transit Money?
Yes — the requirement still applies. However, you don’t need to record transit money in your trust ledger unless your internal policy requires it.
Acceptable forms of record‑keeping include:
- A file note in the matter file (digital or hard copy)
- Copies of payment instructions (emails, letters)
- Proof of payment (bank confirmation, cheque stubs)
Using Law App to Record Transit Money
Law App includes a built‑in file note section that can be used to record transit money. This feature:
- Is linked to the relevant matter
- Is automatically time‑stamped
- Maintains a clear history of notes and entries
Using the file note tool satisfies record‑keeping obligations in both Queensland and NSW, without needing a dedicated transit register within the trust accounting system.
What You Need to Record
- Amount received
- Who it was received from
- Who it is to be paid to
- Purpose of the payment
- Confirmation the money was delivered according to instructions
Additional Policy Note
If your firm prefers to maintain a Transit Register (e.g., using Excel or a dedicated log), this is still acceptable and may be beneficial for internal control purposes. Cheques are increasingly rare — especially for transfers through law firms — and most jurisdictions are moving towards full electronic settlement.
Law App has therefore opted not to invest in a built‑in transit register at this time. However, you’re welcome to continue using a manual register if required under your firm’s policy, particularly until cheques are formally phased out. While no exact date has been legislated, several jurisdictions plan to discontinue cheque use by around 2030.
