Oz lenders attitudes to Japanese Company income

[Patosan]

Being an expat I've always had to balance minimizing my Japanese tax with keeping enough income visible to satisfy Oz lenders. This has generally not pleased my wife who'd prefer we kept every yen hidden under the bed or in ficticious persons' bank accounts ... a famously popular system over here. Well now after expanding our English school we have a Japanese Company and need to decide how much salary to pay oursleves, keep in the Co and hide outright.

So my question which is primarily aimed at mortgage brokers or those in the lending arena is, would Oz banks take into account our Japanese Co profit if we desired to include as our income in a loan application ? We are the sole share owners and directors of the Co.

 

[Rolf Latham]

Hi Patosan

In theory yes, in reality probably no.

Much depends on the tax position of the cash in the co, if you can show that the company actually holds the after tax cash, and that company provides a guarantee, then maybe

The issue that I see is that while u are an Oz citizen, working as an "expat" the company is proper non resi entity, so that will really limit the lending options in any case.

Non resi isnt my area of expertise, I think Pete T does ore of this

ta

rolf

 

[Patosan]

Hi Patosan
... the company is proper non resi entity, so that will really limit the lending options in any case.
rolf

Not quite sure what you mean, we wouldn't be seeking to use the Co as collateral or even as guarantor for an Oz loan, merely as additional income.

The question for us is whether we manipulate the Jp Co profit to either create a 3-way spread of income ... Co, myself & wife ... perhaps the best overall tax minimising result here, or just between the 2 of us. I suspect that Oz banks would have a hard time verifying the Jp Co status and info for our small Oz resi loan apps. But I'd like to hear all opinions before we decide.

 

[Rolf Latham]

Hi Pato

Even in Oz, for most lenders to use company profits, the company needs to provide a servicing guarantee.............

What is the % spread of tax between co and personal in Japan ?

ta
rolf

 

[Terryw]

The bank here wouldn't know you were self employed (unless your company has your name in it maybe??) so you could just employ yourself on a high salary before getting your loan approved!

 

[Patosan]

The bank here wouldn't know you were self employed (unless your company has your name in it maybe??) so you could just employ yourself on a high salary before getting your loan approved!

That's right, from now I am no longer self employed, for Oz or Jp banks. Here we have to decide our salaries now and they can not change for 12 months, at least that's my understanding. So if we set our salaries too high then I'll end up paying too much personal tax which also determines the national medical insurance pay'ts ... much more than in Oz, as well as other local taxes. Thus getting the balance right has large cost flow-on effects.

Another question is will the Oz banks combine my wife's income with mine, in total when we apply for a loan jointly ? Or would they use a percentage of it, e.g. 80% or 70% for some reason.

 

[Marty McDonald]

That's right, from now I am no longer self employed, for Oz or Jp banks. Here we have to decide our salaries now and they can not change for 12 months, at least that's my understanding. So if we set our salaries too high then I'll end up paying too much personal tax which also determines the national medical insurance pay'ts ... much more than in Oz, as well as other local taxes. Thus getting the balance right has large cost flow-on effects.

Another question is will the Oz banks combine my wife's income with mine, in total when we apply for a loan jointly ? Or would they use a percentage of it, e.g. 80% or 70% for some reason.

Same old problem hide from the tax man hide from the lender. I don't think any would take company profit. Only you can Therefore answer the split question although with more details you could set the figures to be what you need to get the loan you need.

They should take both incomes less a bit to allow for currencey fluctuations. Fair enough too. Allow say 80% each less local tax and 80% of rental income.