Income Spliting and Loan Application

Hi all,

Does income splitting have any effect on the loan application process?

Example, I currently split my income with my wife via distributions from a trust. Does this effect the loan calculations and the way lenders assess your loan application as opposed to having a single income earner with a dependant?

From a lender point of view this has two effects when compared to a standard PAYG income:

  • Your serviceability will increase, therefore you could afford to borrow more. This is because you will both be in a lower tax bracket compared to if you had received all of the income yourself.
  • Many lenders will view you as self employed, even if one main employer pays your income. Because of this you may need to provide additional documents such as two years tax returns and or an accountant's letter to verify what you are doing and that this is ongoing.

It really depends on what the ultimate source of your income is as to exactly how they assess it.
Hi M

U are safe :)

2 years tax rtns and financial statements and ATO assessment notices and the lender will treat you similarly to those with a job