How Lenders Assess Self Employed Home Loan Income

For a self-employed home loan, lenders use your tax returns and business financials to work out how much income they can count. They also assess the debts that income needs to cover.

Different lenders can arrive at different figures from the same business accounts. Some allow certain expenses to be added back to profit, while others use the taxable income shown on your tax assessment. The assessment method can make a substantial difference to your borrowing power.

Classify the Business

Classify the business by the entity that earns the income, because that entity decides which documents the lender reads. If you’re a sole trader, your business income sits in your personal tax return, and the Australian Taxation Office (ATO) notice of assessment (NOA) confirms the result. A company, trust or partnership lodges its own return, which the lender reads alongside your personal return.

Structure	Where your income shows	Documents the lender reads
Sole trader	Business schedule in your personal tax return	Your personal tax returns and NOAs, plus financials where the lender asks for them
Partnership	Your share of the partnership profit	The partnership’s tax returns and financials, plus your personal returns
Company	Salary or director’s fees, dividends and your share of company profit	Company tax returns and financials, plus your personal returns
Trust	Distributions from the trust and any wage the trust’s business pays	Trust tax returns, financials and, where the lender asks, the trust deed

Ownership and Trading History

Ownership decides how much of an entity’s profit the lender counts. Macquarie’s 10 September 2026 residential credit guidelines count income in line with your ownership, such as your shares or trust units. Trusts raise their own questions about who controls distributions, which the family trust home loan guide covers.

A minority shareholding needs more evidence at Macquarie. If you hold less than 50% of a company and another shareholder isn’t your spouse, Macquarie counts company profit only where actual dividends support it.

Macquarie and Westpac measure trading history in the business that earns the income now. Macquarie asks for at least two years of trading in the current business. As at September 2026, Westpac’s Fast Track needs two full financial years in the same business.

More Than One Income Source

If you earn a pay as you go (PAYG) wage from another employer and also run a business, payslips verify the wage and the financials verify the business income. A wage from your own company is already an expense in its financials, so it counts once, either as personal income or as a salary add-back.

Servicing, also called serviceability, is the lender’s test of whether you can afford the repayments. A wage counted twice overstates the income in that test.

If you own less than 25% of your company and only your salary counts in servicing, Macquarie’s guidelines apply its PAYG rules. A director who owns 25% or more, or whose company profits are used, goes through Macquarie’s self-employed rules instead.

Related Businesses

Westpac’s minimum required documents checklist asks for each company director’s directorships, shareholdings and interests in other entities, as at September 2026. It also needs details and supporting documents for the commitments and liabilities of each company, trust and partnership.

Macquarie still checks a related entity when your income from it isn’t used. Under its guidelines, you declare that each entity you direct or act as trustee for is profitable and can meet its liabilities. For an entity that has stopped operating, you declare it has no outstanding liabilities.

If that declaration isn’t true, such as for a company running at a loss, Macquarie asks for the entity’s financials. For an entity being wound up, Macquarie counts its outstanding liabilities in servicing.

Income Assessed Under Other Rules

Macquarie’s guidelines move rental income out of business profit and assess it under Macquarie’s rental income rules. Passive distributions from a share or managed fund portfolio outside the operating business need their own history checks, which the investment income home loan guide explains.

You can hold an Australian Business Number (ABN) and still earn income from a PAYG contract, a fixed-term role or labour hire. The contractor home loan guide explains how that contract and fixed-term income is classified.

Read the Financials

Read the financials by starting from net profit, adjusting it for add-backs and one-off income, then matching each figure to a second source. Macquarie’s 10 September 2026 guidelines define self-employed income as net profit before tax, minus one-off income, plus allowable add-backs.

That adjusted figure is the business income the lender uses in servicing, which the loan serviceability guide explains. It can sit well above the taxable income on your NOA. Add-backs return expenses that reduced taxable profit, and a company’s retained profit doesn’t appear on its owner’s NOA.

Adjust Profit and Match the Evidence

An add-back is an amount the financials deduct from profit that the lender adds back, so it counts as income in servicing. Macquarie’s guidelines allow these add-backs.

• Directors’ or partners’ salaries, when servicing doesn’t already count them as personal income.
• Directors’ superannuation contributions above the compulsory minimum, because those contributions are voluntary.
• Interest on loans being refinanced, because servicing counts the new loan’s repayments instead.
• Business depreciation up to 20% of business net profit, because depreciation is a non-cash expense.
• One-off expenses, once your accountant confirms they won’t recur.
• Distributions from a discretionary family trust to children under 18.

Macquarie deducts one-off income, such as a profit from selling an asset. Its guidelines don’t accept cash flow projections or other projected income.

Westpac’s Fast Track tests servicing on NOA taxable income alone, so add-backs don’t count there. As at September 2026, Westpac’s standard two-year assessment is the route when you need business profits and add-backs included.

Then match each figure to a second source. The NOA confirms the ATO assessed your personal tax return, and its taxable income needs to match the return.

Revenue in the profit and loss statement needs to line up with the sales in the business activity statements (BAS) for the same year. BAS sales include goods and services tax (GST), so remove it before you compare. Business bank statements show whether loan repayments and ATO instalments are being paid as the balance sheet suggests.

One Year of Figures or Two

Macquarie’s and Westpac’s standard self-employed assessments both read two years of financials and compare the years to see the trend. Macquarie’s guidelines ask for the latest two years of business tax returns or accountant-prepared financials, plus two years of personal tax returns.

When income rises, Macquarie counts up to 120% of the previous year, but never more than the higher year. Macquarie can use the full latest year when the rise is ongoing. At least six months of year-to-date BAS must then show annualised revenue of 90% or more of that year.

When income falls, Macquarie uses the most recent year. If the fall is over 20% and you want a cash-out on top of the refinance, Macquarie also asks for year-to-date BAS supporting that year’s revenue. A cash-out means borrowing more than the debt being refinanced.

Westpac’s self-employed broker page says Westpac may use the latest year’s income when year-on-year profit growth is 60% or less. When growth is above 60% and the latest year is used, Westpac asks for at least six months of year-to-date BAS to show the business is still performing.

Westpac’s 1 Year Assessment reads one year of documents, but only for a business that has traded for at least two full financial years. It takes individual borrowers only, each with a credit bureau score of at least 650, at a loan-to-value ratio (LVR) of 80% or less.

NAB will consider a single year’s financials when other conditions are met, according to its self-employed home loan page as at September 2026. The loan’s LVR must be 80% or less. A lender that reads one year of documents can still expect a longer trading history, as Westpac’s 1 Year Assessment shows.

Macquarie accepts listed self-employed professionals, such as accountants, lawyers and registered medical professionals, after 12 months of trading. Its guidelines cap the LVR at 80% for this policy, and one year of income documents is enough.

Neither Macquarie’s nor Westpac’s standard policy fits a business owner who has traded for one to two years outside a listed profession. For that business owner, compare other lenders’ full-documentation (full-doc) policies with a low-documentation (low-doc) route.

Westpac’s broker page says there may be other ways to review a business with less than two financial years of trading. Macquarie also accepts a self-employed contract worker with over two years of PAYG work in the same field. The contractor home loan guide explains how lenders classify contract income.

Add-back and trading-history rules differ by lender, so they can change the income counted for your loan. Your broker can use Bulma to compare those rules across 52+ lenders. Each answer includes the lender’s policy wording.

Worked Example: A Company Reconciliation

This fictional example reconciles a company owner’s financials for a Macquarie refinance. Sam owns 100% of Harbour Joinery Pty Ltd, which has traded since 2019. In September 2026, Sam wants to refinance her home loan with Macquarie before her 2025-26 financials are ready.

Macquarie’s guidelines require the previous year’s financials from 1 April each year, with a two-week grace period. From 1 April 2026, that previous year is 2024-25, so Macquarie can assess Sam on her 2023-24 and 2024-25 figures. Macquarie’s credit analyst can still ask for updated financials at any time.

The 2024-25 profit and loss statement shows revenue of $812,000 and net profit before tax of $118,000. The four BAS for that year report sales of $893,200 including GST, which is $812,000 before GST.

Revenue in the financials matches the BAS. Sam’s personal tax return shows taxable income of $90,000 in each year, all from her company salary. The company paid no dividends, and its financials show the same wage.

The table applies Macquarie’s add-back rules to the company’s net profit. Sam’s accountant has confirmed that the legal costs from a lease dispute won’t recur.

Line	2023-24	2024-25	Treatment
Net profit before tax	$104,000	$118,000	Starting point
Profit on sale of the old van	$0	-$12,000	Deducted as one-off income
Depreciation	+$17,000	+$19,000	Added back, below the 20% cap in both years
Sam’s superannuation above the compulsory minimum	+$15,000	+$15,000	Added back
Legal costs from a one-off lease dispute	$0	+$9,000	Added back with the accountant’s confirmation
Interest on the equipment loan	$0	$0	Not added back, because the loan isn’t being refinanced
Adjusted business income	$136,000	$149,000

Adjusted business income rose about 10%, from $136,000 to $149,000. Macquarie’s cap of 120% of the previous year is $163,200 here, and the higher year is $149,000, so Macquarie can use the full $149,000.

Sam’s $90,000 salary counts once, as her personal income. Her assessable income is $239,000 before tax, which is the $149,000 of adjusted business income plus her salary.

If Sam qualified for Westpac’s Fast Track, only the $90,000 of taxable income on each of her NOAs would count. That’s $149,000 less than Macquarie’s figure. Fast Track reads only Sam’s NOAs, and the company’s $149,000 of adjusted business income never appears on them.

Macquarie treats a business loan that isn’t being refinanced as already paid for in the financials. Its interest stays as an expense, and its repayments aren’t added to Sam’s commitments.

Tax Debts and ATO Payment Plans

Reconcile every tax debt against the financials and your current ATO statements before you apply. The balance sheet shows what was owed at 30 June. The ATO statements show what’s owed today, whether a payment plan is running and whether any lodgement is overdue.

In Sam’s case, the 30 June 2025 balance sheet shows $18,400 owing on the company’s activity statements and $9,600 of company income tax. Sam’s current ATO statements show where those debts and her personal tax stand in September 2026.

• The company paid the $9,600 income tax in December 2025.
• The company’s activity statement debt is now $24,000, on an ATO payment plan at $2,000 a month.
• One instalment was missed in July 2026, and the June 2026 quarter BAS hasn’t been lodged.
• Sam personally owes $6,200 from her 2024-25 return, with no payment plan in place.

Sam declares the company’s $24,000 debt as a liability and lists the $2,000 monthly instalment among her commitments, with the payment plan letter as evidence. Servicing then leaves less of her income for the new loan’s repayments. Westpac’s checklist, for example, lists tax debts among the existing liabilities it verifies.

Sam needs the overdue BAS lodged and the missed July instalment paid before she applies. The ATO’s payment plan rules say a plan can default when the business falls behind on lodgements or new tax payments. The full overdue balance then becomes payable at once.

Sam’s personal $6,200 sits outside the company’s payment plan, so she pays it in full or sets up a separate plan for it. Until it’s paid, she declares it as a liability, and any plan instalment adds to her commitments.

Sam can’t clear the $30,200 of tax debt with a Macquarie cash-out. Macquarie’s guidelines list tax debt as an unacceptable cash-out purpose and exclude loans for paying tax liabilities.

Before you plan a cash-out with another lender to clear tax debt, check that lender’s cash-out purpose rules. The cash-out refinance guide explains how lenders assess the purpose of a cash-out.

Until the debt is cleared, the ATO’s general interest charge keeps compounding daily, even on a payment plan. A shorter plan means less interest to pay.

Choose a Documentation Route

Choose full-doc assessment when lodged tax returns, NOAs and financials support the income you need. A low-doc route fits when that full set isn’t available or the trading history is too short for the lender’s full-doc policy.

Low-doc lenders verify income from other evidence. In a 2014 review of 12 lenders’ low-doc practices, the Australian Securities and Investments Commission (ASIC) found lenders verifying self-employed income with business bank statements or accountants’ letters.

Low-doc doesn’t mean the income goes unverified. The responsible lending obligations in the National Consumer Credit Protection Act 2009 require credit licensees to take reasonable steps to verify a consumer’s financial situation. A low-doc lender still asks for evidence of your income.

A short trading history narrows the lenders that will consider the application, and so do financials that miss a lender’s deadline. Match your position to one of these routes.

• If two years of lodged returns and financials support the income, choose full-doc and compare add-back rules across lenders.
• If you’ve run the same business for the last two full financial years and your last two NOAs alone cover the income needed, check Westpac’s Fast Track. As at September 2026, it assesses those NOAs without business financials, at an LVR of 80% or less.
• If the business has traded for two full financial years and you want the lender to read only the latest year, check Westpac’s 1 Year Assessment. It takes individual borrowers with credit bureau scores of 650 or more at an LVR of 80% or less.
• If you’re a listed professional with 12 months of trading, check Macquarie’s professional policy. Macquarie’s 10 September 2026 guidelines accept one year of documents under it, at an LVR of 80% or less.
• If the business has traded for one to two years outside a listed profession, Macquarie’s and Westpac’s standard policies don’t fit. The exception is Macquarie’s rule for self-employed contract workers with over two years of PAYG work. Compare other lenders’ full-doc policies with the low-doc lenders in the low-doc home loan guide, or wait for two years of trading.
• If the lender’s deadline for the latest year’s financials has passed and the returns aren’t lodged yet, Macquarie still considers draft returns. Your accountant must confirm by letter or email that they won’t change when lodged. Macquarie’s deadline is 1 April with a two-week grace period, and Westpac’s is 15 May. If your lender won’t accept draft returns, consider a low-doc route.

Waiting for the next set of lodged financials can move the application back into full-doc policy. Weigh that wait against when you need the loan before you choose a route.

Submission Evidence

Use this checklist to tie each document to the income or debt it proves. Collect everything before you apply.

Document	What it proves	Check before you apply
Personal tax returns for two years	Salary, director’s fees, dividends, distributions and sole-trader profit	Figures match the financials of the business that pays them
Payslips	A PAYG wage from an employer outside the business	The employer and year-to-date pay are consistent with the personal tax return
NOAs	The ATO assessed each personal return	The year and taxable income match the return
Business tax returns	Entity income for each year used	Every entity whose income is used is included
Profit and loss statements	Net profit, add-backs and one-off items	Each add-back is itemised with its amount
Balance sheets	Business debts, tax payable and loans to or from you	Every liability is explained in the application
BAS for the year and year to date	Turnover and current trading	Sales, less GST, match the profit and loss statement, and every quarter is lodged
Business bank statements	Repayments and ATO instalments are being paid	Amounts match the loan and payment plan terms
ATO statements and payment plan letter	Current tax debts and repayment terms	No overdue lodgements or missed instalments remain
Accountant’s letter	One-off expenses, and draft returns that won’t change when lodged	Each one-off item is named with its amount
Director, shareholder and trust details	Ownership, directorships and control of distributions	Shareholdings match the income being counted
Business loan statements	Balances and repayments on business debt	Treatment matches the lender’s add-back rule

Set out the income calculation line by line, as in the worked example, before you apply. The lender’s assessor can then follow each step from net profit to assessable income. If a line has no document behind it, get that document or choose a route that doesn’t rely on the line.