Allowable assets

Allowable assets

‘Allowable assets’ are assets whose value Victoria Legal Aid (VLA) will exclude from the calculation of the total assets of the person applying for a grant of legal assistance (and any financially associated person (FAP)). They are the value of:

  • household furniture and personal belongings which are reasonably necessary
  • clothing
  • equity in tools of trade, unless they are exceptionally valuable
  • equity in a motor vehicle to a maximum of $20,000
  • equity in a second motor vehicle if:
    • both vehicles belong to a household of two or more people
    • the owners of the two vehicles are people to whom the means test applies
      and
    • the combined equity in the two vehicles is not more than $20,000.
  • equity in the principal home of the person applying for the grant of legal assistance (or of any FAP), to a maximum of $500,000 in most cases, but:
    • VLA may seek an equitable charge over the principal home as a condition of the grant of legal assistance
    • there is a special rule that may apply to people who are 60 years old or more and on a pension (see below for details).
  • equity in a farm or business that is the main source of income of the person applying for the grant of legal assistance (or of any FAP), up to a maximum amount as set out in Table 4
  • a lump sum payment of compensation, a payment made on the termination of employment or another payment – but only if the payment stops the person who is applying for the grant of legal assistance (or any FAP) from getting a pension, allowance or benefit under the relevant part of the Social Security Act 1991 (Cth) (and see further below)
  • a lump sum payment, spouse maintenance, child maintenance or child support – but only if the payment has resulted in the person who is applying for the grant of legal assistance (or any FAP) getting a reduced rate of pension, allowance or benefit under Centrelink’s maintenance income test (and see further below).

What is the ‘principal home’?

‘Principal home’ means either:

  • any form of accommodation in which the person applying for a grant of legal assistance (including any FAP) normally lives
  • land on which the person (including any relevant FAP) is building or has recently finished building a house in which they intend to live.

Special rule for calculating equity in the principal home if applicant is 60 years old or more and on a pension

When VLA calculates the value of a person’s assets, VLA may ignore equity of more than $500,000 in the principal home if the person applying for the grant of legal assistance is 60 years old or more and:

  • the person (and any FAP) receives an income-tested pension, allowance or benefit; and
  • the person (and any FAP) has either:
    • lived in their principal home for five years or more
    • bought another home, because of disability or ill health.

When does a debt on an asset reduce a person’s equity in that asset?

When calculating a person's equity in an asset, VLA will only deduct a debt that can be secured by an instrument capable of being registered. For example, VLA would not consider money borrowed from a friend or relative to buy a property to be a debt for the purposes of calculating equity unless the debt is secured by a caveat registered over the property.

How does VLA treat lump sum payments of a pension or compensation or at the end of employment?

VLA assumes a person’s gross weekly income is $1135 if the person (including any FAP) normally receives a pension, allowance or benefit but cannot receive it for a period of time because of receiving one of the following payments:

  • a lump sum payment of compensation
  • a payment on the ending of their employment
  • any other payment that results in stopping that person from receiving the pension, allowance or benefit under the relevant part of the Social Security Act (Cth).

VLA excludes the amount of $1135 from the value of the person’s assets for each of the weeks during that period of time. However, VLA may include the balance of the lump sum as an asset in the calculation.

VLA includes in the income test the amount that is assumed to be income during that period of time, that is $1135.

What if the person applying for the grant of assistance might sell an allowable asset?

VLA may refuse to make a grant of legal assistance if it seems reasonably likely that the person applying for the grant:

  • will sell an asset which is excluded from the calculation of assets
    and
  • by doing so, will receive enough money to pay for the necessary legal services without a grant of legal assistance.

What if it is not clear who owns a particular asset?

If there is a dispute about who owns a particular asset (and the ownership is the subject of the case for which the person seeks assistance), VLA will exclude the value of the asset from its calculations of the total value of the person’s assets until ownership has been decided.

However, if the dispute is about the proportion of the assets owned by the parties in dispute, VLA will not exclude the value of the asset in its calculations of the total value of the person’s assets.

If VLA is satisfied that the person is not the owner of the asset, VLA will not include the value of the asset in its calculations of the value of the person’s total assets.

What if the person has property which has been restrained or confiscated?

Property restrained under State legislation

A person whose property has been restrained under the Confiscation Act 1997 may apply for a grant of legal assistance. However, VLA may refuse to make a grant of legal assistance until:

  • the person applies to the same court which made the original restraining order for a variation of the order
  • the court orders, under section 143(1) of the Confiscation Act, that VLA makes a grant of legal assistance to the person on any conditions specified by the court.

If a court has made an order for variation of the original restraining order under section 143(1) of the Confiscation Act, the person’s lawyer must immediately give VLA an authenticated copy of the order.

The lawyer must keep on their case file copies of both:

  • the affidavit material
  • the order made.

After VLA has received the order, VLA may make a grant of legal assistance to the person.

Property restrained or confiscated under Commonwealth legislation

In calculating the value of a person’s assets, VLA will disregard any property of the person which has been restrained or confiscated under the Proceeds of Crime Act 2002 (Cth) if the person is applying for a grant of legal assistance for either:

  • a Commonwealth criminal law matter
  • a Commonwealth civil proceeding under the Proceeds of Crime Act.

The cost of making a grant of legal assistance for such a matter will be reimbursed to VLA in accordance with sections 292 and 293 of the Proceeds of Crime Act.