Self-Employed Income Basics
How self-employed income is assessed
Self-employed income is assessed differently from PAYG income.
Lenders focus on business sustainability, not just drawings or distributions.
This explains why assessed income can differ materially from what a business owner takes home.
What lenders are testing
When assessing self-employed income, lenders assess:
- Business profitability
- Consistency over time
- Industry risk
- Personal reliance on business income
Income is assessed at the business level first, then attributed to the borrower.
Common income sources
Lenders may assess income derived from:
- Sole trader profits
- Company wages and dividends
- Trust distributions
Each structure has different evidentiary and policy treatment.
Timeframes and history
Most lenders require:
- Two years of financials
- Sometimes one year, subject to policy and strength
Irregular or declining income increases assessment conservatism.
Why assessed income differs from drawings
Differences arise because lenders:
- Use taxable profit, not cash flow
- Average income across years
- Exclude one-off or abnormal items
This reduces reliance on volatile earnings.
How self-employed income fits into the framework
Self-employed income directly affects:
- Capacity
- Borrowing limits
- Policy eligibility
It interacts strongly with borrower profile and stability.
See: How Income Is Assessed
How to use this information
This explainer helps you understand:
- Why lenders request financials
- Why profit matters more than cash
- Why outcomes differ between lenders
It does not assess eligibility.
Related assessment explainers
- How income is assessed
- Borrowing capacity: why it caps out
Important information
General information only. No personal advice is provided.