Self-employed applications

To consider self-employed income, your client will require 2 years of consistent income, which is supported by tax returns or their financials. Their ABN will also need to be registered for at least 2 years. 

 The below guidelines are to apply. Income to be considered in line with the borrower’s ownerships rights (e.g. shares, units):  

1. In an upward trend a maximum income to be used is 120% of the previous year, not exceeding the highest year. The most recent year (i.e. the higher income year) can be used if the increase in income is ongoing and the applicant is able to provide year to date Business Activity Statements (BAS**) for a minimum period of 6 months supporting revenue in line with (i.e. >=90% annualised) the most recent year.  
2. In a downward trend the income to be used is the most recent year. In addition, to ensure income continuity, year to date BAS** are required supporting revenue in line with (i.e. >=90% annualised) the most recent year. Also note the following:  
   • Where year to date BAS are not available or are deemed inappropriate based on business circumstances (e.g. due to annual or no lodgement being required based on business type/turnover), business transaction statements covering a minimum 90-day period (no older than 30 days at submission) can be considered in lieu.  

**Note the following where using BAS - from the 30th day following each quarter (60th day following the Oct - Dec quarter), BAS statements covering the period from the most recent financial statements through until the end of the most recent quarter are required. Accountant prepared interim financials covering the same period can also be considered in lieu of BAS to support the relevant income level. 

3. Rental income is to be taken out of the borrowers’ self-employed income and included in the rental income section to ensure the appropriate haircuts are applied.  

4. Self-employed contract workers only - Where self-employed income is greater than previous PAYG employment a maximum 120% of the PAYG income to be used, so long as this does not exceed the self-employed income. 

You should include:  

• supporting notes clarifying how you’ve calculated the income used in the application, and 
• any other mitigating factors to justify use of any non-standard add backs or entries on the financials supplied.