QLD: Can a body corporate invest sinking funds in a high interest cash ETF instead of term deposits?

Question: Our body corporate uses term deposits timed around key expenses, but managing them is a distraction. Could a high interest cash ETF be a better option?

Our body corporate maintains several term deposits, timed to mature around key expenses each year. Each time one matures, we review the available rates and estimate how much we can afford to lock away for different periods. This distracts from our main business of managing the building. I have recently seen personal financial management advice suggesting term deposits are old-fashioned and inflexible, and that modern practice is to use high interest cash ETFs such as the Betashares AAA fund.

These funds appear to offer similar returns to term deposits, low risk, and less admin. Are they suitable for bodies corporate? Are they used by many bodies corporate?

Answer: Body corporate investments are not limited to term deposits under Queensland legislation, but consent requirements mean legal advice is likely needed before using alternatives like cash ETFs.

In QLD, strata fund investments must follow section 218D(1) below. I have only ever seen term deposits in community titles scheme (CTS) financial statements. My reading of this section is that a CTS is not limited only to term deposits. But there may be other rules about prudent and low-risk investments that might mean you need legal advice to do exactly what you want. I have never come across this before. The section also does not go into detail about the parties’ ‘consent’ aspect. Due to any increased risk, does it require a unanimous general meeting approval or the same term deposit approval?

218D
Investment of amount held in prescribed trust account

1. A recognised entity that holds an amount paid under section 218B(1) in a prescribed trust account may invest the amount if:
   1. either of the following applies:
      1. the contract or instrument authorises the investment;
      2. the parties to the contract or instrument give the entity their consent to the investment by signed written notice; and
   2. the investment is carried out in accordance with the law governing the operation of the prescribed trust account.
2. An amount invested as mentioned in subsection (1) is taken to be an amount in the prescribed trust account.
3. Any proceeds of an investment of an amount as mentioned in subsection (1) must be paid into the prescribed trust account, unless the proceeds are further invested as mentioned in subsection (1).

Maximum penalty for subsection (3): 200 penalty units or 1 year’s imprisonment.

This post appears in the July 2026 edition of The QLD Strata Magazine.

Matthew Faulkner
Matthew Faulkner Accountancy PTY LTD
E: matt@mattfaulkner.accountants
P: 0438 116 374