The Commission assesses an applicant’s means by reference to the applicant’s
- assets; and
- commercial activities or lifestyle.
Each matter is assessed separately and an applicant must be eligible in relation to each matter to satisfy the Means Test.
In assessing an applicant’s means
- the income and assets of any financially associated person is assessed in the same manner as the income and assets of the applicant; and
- the commercial activities or lifestyle of any financially associated person is assessed in the same manner as the commercial activities or lifestyle of the applicant.
In addition, money received but not now available to the applicant or any financially associated person that could have been used to pay for the matter is taken into account. If the applicant has dissipated these funds without making provision for the payment of legal expenses, an application for a grant of legal assistance may be refused.
Ability to borrow is also considered. To the extent that an applicant is considered able to raise funds, borrow, or obtain credit he or she will be expected to do so and the application for legal assistance may be refused.
The Means Test determines the initial contribution an applicant is required to make towards the cost of a matter. If the amount of the contribution (on the basis of the income or assets available to the applicant) is more than the value of the grant of legal assistance, the application may be refused.
The application of the Means Test may result in a determination that the applicant–
- is eligible on means in which case, if also eligible on Merit, Guidelines and the Forum Test, the application for legal assistance will be granted from the date the completed application was received, subject to the payment of the calculated contribution;
- is not eligible on means but may become eligible once an assessed sum has been spent on legal fees, in which case the applicant should reapply when able to provide proof of this expenditure; or
- is not eligible on means and will not become eligible, in which case the application will be refused.
The income of an applicant is determined by calculating the total income of the applicant and any financially associated person and then making certain deductions. A sliding scale is applied to the balance to determine whether the applicant meets the income test for a grant of legal assistance and, if so, the sliding scale is applied to determine the contribution payable.
The sliding scale is determined by reference to the Head in workforce, cost other than housing, set out in Table 1 of the Henderson Poverty Line tables.
To determine the income level of the applicant, all funds received by the applicant and any financially associated person are taken into account including
- pensions, benefits and allowances from any source;
- income from any paid work, including overtime, shift and penalty pay;
- commissions and allowances;
- royalties, licence or copyright fees or other proceeds of intellectual property;
- periodic receipts such as dividends, interest, instalments of debts and the like;
- board or rent received (if board is received, a deduction is allowed as if the boarder were a dependant);
- child or spouse maintenance received;
- lump sum payments such as compensation (including workers compensation or other insurance payments), superannuation, annuity payments, retrenchment pay or like sums may be averaged where the applicant asks for it to be treated as weekly income (unless requested, it will normally be treated as a lump sum). For example, where neither the applicant nor a financially associated person is employed, and the payment has resulted in a period of preclusion from Centrelink entitlements, the applicant, for the duration of the preclusion period, is deemed to be earning weekly earnings from the lump sum averaged over the preclusion period; and
- lump sum child support or spouse maintenance received by the applicant, if the applicant is receiving a pension or benefit at a reduced rate due to receipt of this sum.
The only funds received that are not taken into account in determining the income levels of the applicants for the purpose of the Means Test (exceptions) are
- the base rate of Family Tax Benefit Part A (although Family Tax Benefit Part A supplement is treated as income); and
- reasonable business expenses and overheads incurred in earning a living (that an expense has been allowed as a tax deduction is not conclusive for the purposes of determining a grant of legal assistance).
On determining the income of the applicant, allowable deductions are made to arrive at the applicant’s assessable income. Allowable deductions (up to the allowable maximum) are amounts paid by the applicant or a financially associated person in
- income tax;
- Medicare levy;
- rent or mortgage on the applicant’s or a financially associated person’s place of residence (up to the median private rent for a two bedroom flat in Adelaide) or half the amount paid in board (on the basis that the other half relates to food etc rather than accommodation);
- council and water rates on the applicant’s or a financially associated person’s place of residence;
- child care costs necessary to enable the applicant or a financially associated person to work or study but not for respite or elective child care;
- supporting dependants (a deemed amount);
- child support payments made in relation to children who do not live with the applicant (up to the dependant ceiling);
- spouse maintenance payments (up to the deemed amount for supporting dependants).
The amount to be deducted will be the amount actually spent on an item or the allowable maximum, whichever is lower.
The asset level of an applicant is determined by calculating equity in all assets (other than excluded assets). An allowable asset amount is deducted and a sliding scale is applied to the balance to determine whether the applicant meets the assets test for a grant of legal assistance and, if so, the contribution payable.
A debt will not normally be set off against an asset unless secured over it by a registrable instrument.
The allowable asset amount is a figure set and updated in accordance with the weighted average of the Consumer Price Index/Average Weekly Earnings. The amount varies, depending on whether a person is single or has dependants.
When applying for a grant of legal assistance all assets of the applicant and any financially associated person must be declared.
An asset includes
- any item in which the applicant or a financially associated person has a legal or equitable interest, and includes items not registered in the person's name;
- a lump sum payment received by the applicant or a financially associated person that does not prevent the applicant drawing a Centrelink benefit such as compensation (including workers compensation or other insurance payments), payments from accessible superannuation funds, annuity payments, retrenchment pay or like sums.
If an asset is owned jointly or in common, ownership is apportioned accordingly.
The assets of a financially associated person are disregarded if
- the applicant is separated from the financially associated person and it is not reasonable to expect any support;
- the financially associated person has a contrary interest in the case;
- disclosure of the application for legal assistance could damage the applicant's interests; or
- the financial association should be disregarded for some other reason.
Assets that must be declared but that do not normally preclude a grant of aid (excluded assets) are
- ordinary household furniture, clothing and personal effects;
- tools of trade, unless of exceptional value;
- equity in a motor vehicle, up to a maximum based on the published average price for a five year old six cylinder family car, as set by the RAA;
- if the applicant lives in a household of two or more, and both incomes are assessable, combined equity in two vehicles will be allowed, up to the maximum;
- equity in the place the applicant or financially associated person lives, regardless of the type of accommodation, up to a maximum based on the median value of an established home in Adelaide, and includes land on which a home is being built in which the applicant or financially associated person intends to live; and
- equity in a farm or business that is the main source of income, up to a maximum based on assets limits set under the pensions assets test.
An asset that would normally be excluded may be taken into account if it appears likely to be sold during the case or will otherwise yield funds from which the applicant could pay for legal representation.
Equity in real estate will give rise to a statutory charge if costs exceed $2 200.
Maximum allowed when determining deductions and excluded assets for the purposes of the Means Test
Cost of housing
The deduction for housing is determined by reference to the average rent of a two bedroom flat in Adelaide as stated in the Real Estate Institute (REI) moving median rental index.
The deduction for child care is determined by the childcare relief figure set by the Commonwealth Department of Health and Community Services, up to a maximum of 50 hours per week.
The deduction for dependants is
- first dependant – the difference between the Head in workforce, cost other than housing, single parent plus one and Head in workforce, cost other than housing, single person figures, from the Henderson Poverty Line tables; and
- second and subsequent dependants – the difference between Head in workforce, cost other than housing, single parent plus two, and Head in workforce, cost other than housing, single parent plus one figures, from the Henderson Poverty Line tables.
The deduction for maintenance is equal to that paid or up to the maximum of the amount allowed for dependants, whichever is the lesser.
Excluded equity in a home is determined by the median price of an established home in Adelaide, by reference to the REI moving median index.
Equity in farm or business
Excluded equity in a farm or business is determined by the assets test used by Centrelink to determine eligibility for a full benefit or allowance, such that
- where the applicant or a financially associated person owns a farm in his or her sole name, the test applies to the whole property less the value of the home and the surrounding five acres and an amount up to the Centrelink limit is allowed; and
- where the applicant or a financially associated person owns a farm jointly with another who is not a financially associated person, the test applies to the whole property less the value of the non-financially associated person's interest and an amount up to the Centrelink limit is allowed.
Income and assets assessment for a child applicant
If a child applicant is supporting him or herself, or receiving a Centrelink benefit in his or her own right, the child’s income and assets are assessed in the same manner as any other applicant.
If a child applicant is financially supported by a parent or guardian, the income and assets of that person are assessed. If a child applicant is financially supported by two parents or guardians, the income and assets of both are assessed.
The income and assets of a parent or guardian financially supporting a child may be disregarded if
- he or she has a contrary interest in the case; or
- disclosure of the legal aid application to the parent or guardian would damage the child's interests.
The income and assets of any parent or guardian must be disclosed, even if grounds exist for it to be disregarded.
Commercial activities or Lifestyle
The commercial activities or lifestyle of an applicant and any financially associated person may be taken into account when determining whether the applicant meets the Means Test. If, by reason of the commercial activities or lifestyle of the applicant or a financially associated person the Commission considers that the applicant or a financially associated person could afford to pay privately for legal representation, an application for legal assistance may be refused.
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