Who this covers: electricians, plumbers, builders, carpenters and other trades on an ABN, subcontractors, owner-operators and small company directors.
What lenders do differently
Two years of returns, usually
Most lenders take the last two years of tax returns and notices of assessment, using the lower year or an average with a cap on growth. Some take one year for an ABN over two years old, and a few accept the most recent year if it is higher and there is a reason.
Add-backs
Depreciation, interest on business loans being refinanced, one-off expenses and superannuation above the compulsory rate are added back to the taxable figure. The result is often well above the number on the return, which is why the return alone understates capacity.
Low-doc and alt-doc
Where returns are not yet lodged, a lender may accept an accountant's declaration, BAS statements and business bank statements. The rate is higher and the deposit larger, and it is usually a bridge to a full-doc refinance once the returns are in.
The ute and the tools
A chattel mortgage on the work vehicle or equipment is assessed on the business, separately from the home loan, and does not usually count against capacity the way a personal car loan does. The chattel mortgage calculator shows the repayment and the balloon.
Worth knowing before applying
A big instant-asset write-off in one year lowers taxable income for that year, which lenders then add back if it is clearly identified; a company and a trust are read together; and lodging returns on time is the single biggest help to the application.
The tools that fit
Policies on all of the above differ lender to lender and change without notice; the value of the conversation is knowing which lender's policy reads your payslip best on the day. Understanding how your income is read before you apply is what makes the application calm.