Bonus, Overtime, and Commission Treatment in Lending Assessment

Canonical question

When do lenders include bonus, overtime, and commission income in servicing, and when is it reduced, averaged, or excluded?

Jurisdiction: Australia

Domain: Credit assessment — variable PAYG income recognition

Applies to: Residential and asset finance; commercial where PAYG supports repayment

Decision definition

Variable PAYG income is assessed for:

  • historical consistency
  • predictability
  • dependence on performance or rosters
  • alignment with employer confirmation
  • sustainability under stress

Because variable income fluctuates, lenders often apply:

  • averaging (typically over 6–24 months)
  • shading
  • caps relative to base salary
  • exclusion where history is insufficient

Common recognition rules

Variable income is more likely to be included where:

  • it is regularly received
  • it forms a consistent portion of overall income
  • it can be evidenced across sufficient history
  • employer confirms ongoing eligibility/structure

It is more likely to be reduced or excluded where:

  • history is short
  • it is highly performance-dependent
  • it has recently increased sharply
  • it is paid irregularly or seasonally
  • it is not clearly supported by payslips / payroll summaries

Evidence and verification

Common evidence includes:

  • multiple payslips showing variable components
  • payroll summaries showing YTD and consistency
  • employment letter confirming role and typical variable earnings
  • where required, bank credits matching payroll records

Edge cases

  • new role with commission ramp (initial low then rising)
  • overtime driven by temporary staffing shortages
  • bonus paid annually but inconsistent year to year
  • variable income that spikes due to one project period

Resolution is often conservative:

  • partial inclusion
  • delayed inclusion until history matures
  • stronger buffers required

Related income recognition questions

  • PAYG income stability
  • Income history requirements
  • Income continuity evidence
  • Unstable income decline conditions

Structured borrower mapping

Applying this assessment logic

Variable income outcomes depend on history length, regularity, and employer-confirmed structure.

Structur helps you map your income pattern and timing to see how variable income may be treated before seeking credit assistance.

→ Map your situation in Structur

Canonical status: Foundational reference

Role in lending assessment: Determines how variable PAYG components enter servicing

Next canonical question: Income continuity evidence

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