Allowable deductions

Allowable deductions

‘Allowable deductions’ are expenses that Victoria Legal Aid (VLA) will subtract from the person’s (and any relevant financially assisted person (FAP) or dependant’s) gross income to calculate the person’s net disposable income. These expenses include:

  • income tax
  • the Medicare levy
  • business expenses
  • weekly housing costs (to a maximum of $400 per week for inner, middle and metropolitan areas; $300 per week for outer areas; and $240 per week for regional areas)
  • childcare costs that are necessary because of the person’s work or study (to a maximum of $310 per household per week)
  • the ‘FAP or dependant’s allowance’ – that is, VLA deducts $130 for the first FAP or dependant (other than a child for whom maintenance or child support is being paid) of the person applying for a grant of legal assistance, and $125 for each of any other FAPs or dependants (other than a child, as above)
  • maintenance or child support payments to a maximum of $130 for the first child and $125 for each of any other child.

What is included as ‘business expenses’?

‘Business expenses’ are the amounts of money that a person must spend in order to earn an income. However, even if such amounts are or have been claimed by a person as tax deductions under the Income Tax Assessment Act 1936 (Cth), that does not necessarily mean that VLA will consider them to be allowable deductions for the purposes of the income test.

VLA may also consider the lifestyle, activities and interests of the person applying for the grant of legal assistance to assess whether their declared business expenses are genuine or whether they appear to be personal expenses.

What is included as ‘weekly housing costs’?

‘Weekly housing costs’ mean the person’s (and any relevant FAPs):

  • rent and water rates
  • mortgage instalments and local government and water rates for the principal home
  • half of any other accommodation payments that the person (and any relevant FAP) pay at their principal home (for example, board payments).

What is the ‘principal home’?

‘Principal home’ means either:

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

Next step

After considering the part of the means test based on income, the next step is to consider whether a person may qualify for a grant of legal assistance under the assets test.

Usually, to qualify for a grant of legal assistance, a person must satisfy both the income test and the assets test.