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