Last Updated: 22nd June, 2021

Some applicants will need to provide up-to-date tax returns in order for their application to be processed.

However, the requirements for this vary from lender to lender and the type of home loan you’re applying for.

Self-employed requirements

For standard loans, most lenders will require your two most recent payslips and most recent Notice of Assessment (NoA).

However, for self-employed applicants, the normal way to verify your income to a bank is to provide:

  • Last two years’ financial statements (profit & loss and balance sheet)
  • Last two years’ business tax returns
  • Last two years’ personal tax returns
  • Last two years’ notices of assessment
  • Last two years’ trust tax returns (if borrowing through a trust)

All lenders will accept the above information as full evidence of your income.

As an alternative to NoA, a major bank on our panel will accept a letter from your accountant confirming your personal tax return is final and lodged with the ATO.

Are draft tax returns acceptable?

Generally speaking, the lender will check to make sure the tax returns are signed and certified and backed up by notices of assessment. This is a simple fraud check to make sure that these are the tax returns you lodged with the Australian Taxation Office.

Draft tax returns are only accepted by some of our lenders if your accountant can write a letter confirming they are the final copy that will be lodged with the ATO.

You can find more information on how banks will assess your tax returns on our self-employed home loan page. Alternatively, make an online enquiry or call us on 1300 889 743

Age of tax returns

This is where the banks really show a large difference in the way they read your tax returns! By March or April each year most lenders begin to ask for tax returns for the most recently completed financial year. Up until that point you can provide the tax returns from the year before!

So, for example, if you applied in January 2014 most lenders would require your tax returns for 2011 and 2012 but in March 2014 most lenders would require 2012 and 2013 returns.

One of our lenders will only require you to provide one year’s tax returns (no older than 18 months) which is helpful for people who may have had a bad year the year before or who only recently started their business.

In this circumstance, the lender will also require:

  • Last year’s financial statements (profit & loss and balance sheet)
  • Last year’s business tax returns
  • Last year’s personal tax returns
  • Last year’s notices of assessment

We have special arrangements with some of our lenders that allow borrowers to provide this alternative documentation for 90% loans and, for one lender, loans up to 95% of the property purchase price.

Call us on 1300 889 743 to find out if you are eligible for a low doc loan.

Older tax returns

Out of date tax returns can be accepted by some of our lenders which is great news for people who have a good income but have not yet completed their most recent tax return.

As a general rule you must meet the following criteria:

  • The tax return must be from the financial year that ended no more than two years ago
  • Your old tax returns must show a high income
  • You must show two years returns & financial statements
  • Your tax return must be no more than two years old (see below)
  • You can borrow up to 90% of the property value

What if my old tax returns don’t show a good income?

  • We can sometimes use an old tax return combined with a 12 months business activity statement (BAS) to prove your income
  • The lender will use your old tax return to work out the profit margin for your business
  • You must show two years returns & financial statements
  • They then use the turnover from your BAS and apply this profit margin to work out your current profit. With this method you can borrow up to 90% of the property value

There are many other ways to prove your business income or you can apply for a low doc loan.

Call us on 1300 889 743 to find out more.

Can we cut down the paperwork?

If you have multiple companies or a complex financial situation, then you may find that we need a lot of documents.

Simply provide us with your accountant’s details and we’ll give them a call to ask for soft copies of each document. That way you don’t have to worry about scanning or photocopying.

What surprises do banks find in tax returns?

Banks aren’t just looking at your income! They sometimes find things in people’s tax returns that result in the loan being declined:

  • Undisclosed spouse or children
  • Undisclosed debts
  • Undisclosed investment properties
  • Losses from previous years

Our mortgage brokers will read your tax returns in full before sending them to the bank to make sure that the information on your application matches the information in your tax returns.

SMSF loans

For self-managed superannuation fund (SMSF) loans, most banks will need the last two years’ tax returns of your trust in order to properly assess its current income.

If your trust is new then we can use alternative methods to prove its income by assuming a certain return on the total value of the fund’s assets.

The lender wants to make sure that the trust’s income plus the proposed rental income will be sufficient enough to service the debt.

Our SMSF loan page can provides more information on how borrowing within a trust works and what the benefits are.

Need help applying for an SMSF loan? Call us on 1300 889 743 or enquire online and one of our mortgage brokers can get you started on your application.