Self Employed
What do we mean by self-employed?
For simplicity, we mean anyone that is not a PAYG employee.
Effectively, it means that most of your income comes from sources OTHER than from wages / salaries from an employer..
Examples of self-employed people
- Sole traders
- Professional investors
- People who own their own companies
- People with a ‘significant interest in companies (10% ownership or more)
Issues for self-employed
- Only just started – you have only recently commenced self-employment and do not have a history of earning levels
- Business income fluctuations - the income in your business may fluctuate from year to year (for a wide variety of reasons)
- Tax return lodgment - you may be behind in the lodgment in tax returns (as you are so busy running your business)
- Complexity – some self-employed have complex income structures involving a number of entities (companies, trusts, partnerships, etc) making it difficult to calculate an ‘objective’ income figure
Documents required by the lenders
- Full doc home loans – this is where you provide 2 or 3 years personal tax returns plus 2 or 3 years financial statements and tax returns for all the entities you own / have ownership / direct
- Low doc loans – tax returns are not required to be sent to the lender. Lenders rely on a declaration made by the borrower. Note that there are a number of eligibility requirements for low doc loans
