ABN Income
Income earned by a sole trader, partnership, company, or trust operating under an Australian Business Number.
In detail
ABN income covers all self employed structures. Sole traders declare business income through their personal tax return. Companies and trusts have their own tax returns alongside the director or beneficiary personal return. Each structure requires a different document set to verify income for lending purposes.
Most lenders require two years of personal tax returns and ATO notices of assessment for sole traders. For companies and trusts lenders typically require two years of business financials including profit and loss statements and balance sheets, plus the related personal returns. Some lenders accept one year of financials for ABN holders who have been registered and trading for the same period.
Why it matters for brokers
ABN income is where credit assessments get complex. Understanding how add backs, distributions, and retained profits flow through different structures is central to presenting self employed files accurately.
Example in practice
A client runs a trading company. The company made a $240,000 profit and paid the director a $90,000 salary. The broker combines the salary plus the company profit available for distribution, allowing for depreciation add back and director superannuation, to arrive at assessable income of around $310,000 at the lenders that accept this structure.
Related terms
Self Employed Income
Business income earned by borrowers operating under an ABN as sole traders, through a company, or via a trust structure.
Notice of Assessment (NOA)
A statement issued by the Australian Taxation Office confirming the income declared on a lodged tax return and the tax assessed.
Year to Date (YTD) Income
The cumulative gross income an employee has earned since the start of the financial year, shown on each payslip.
Base Salary
The fixed regular component of a PAYG employee income, excluding overtime, bonuses, commissions, and allowances.
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