Self-employed

What self-employed income add-backs do lenders accept?

Add-backs can adjust accounting profit, but only when the expense meets the selected lender's rules.

Short answer

Common potential add-backs include depreciation, interest on debts being refinanced, certain one-off expenses and some excess owner superannuation or salary adjustments. No add-back is automatic. The lender checks whether the cost is non-cash, non-recurring, discretionary or already accounted for elsewhere, then applies its own policy.

Add-backs normalise profit

Financial statements are prepared for accounting and tax purposes, while a lender is estimating sustainable cash available for repayments. An accepted add-back reverses a specific expense for that lending calculation. It does not change the tax return and does not permit normal operating costs to be ignored.

Identify the exact line in the financial statements.
Provide evidence that a one-off cost will not recur.
Remove debt interest only when the debt treatment allows it.
Avoid counting salary, profit or depreciation twice.

Normal expenses generally stay

Rent, wages, materials, vehicles, insurance, marketing and regular professional fees usually remain when they are necessary to earn business income. Calling a cost discretionary does not make it available for household repayments.

Depreciation and amortisation

Depreciation is a non-cash accounting expense for the decline in value of assets, so lenders commonly consider adding it back. However, a business may still need real cash to replace vehicles, tools or equipment. The lending calculation and business budget answer different questions. Amortisation can receive similar treatment where policy permits. The figure should come from final accounts and be applied once, not added to a profit number that already excludes it.

Interest, owner wages and superannuation

Interest may be added back when the related debt will be repaid or when the lender separately includes its repayments. Owner salary can sometimes be reconciled with company profit to avoid understating or double counting income. Superannuation above a required amount may receive limited treatment under some policies. These calculations depend heavily on company structure and ownership. They should follow the accounts and lender method, not a generic list copied between applications.

One-off expenses need evidence

A genuine legal dispute, relocation or abnormal repair may not continue, but the assessor needs evidence and an explanation. A cost that appears every year under a different description is not genuinely one-off. The lender may also question whether removing it would impair future revenue. Prepare invoices, notes from the accounts or an accountant explanation where useful. The strongest add-back is transparent, identifiable and clearly unnecessary for normal future trading.

Questions to ask before you proceed

Which financial years and income method will this lender use for my structure?
How will add-backs, retained profit, tax debt and business facilities be treated?
Which current documents will support changes since the last completed financial year?

Key takeaway

Use add-backs to explain sustainable cash flow, not to manufacture income that the business does not produce.

Official guidance: APRA: Residential mortgage lending guidance

This is general information, not personal financial, tax or legal advice. Lending criteria, fees and eligibility vary.

Explore all Learn Hub topics

START A CONVERSATION

Want to discuss your situation?

Give us the starting point. We will use your answers to make the first conversation more useful.