Self employed separation finance
in Australia

Being self employed makes the lending process more complex at the best of times. Add separation into the mix and you are dealing with two layers of complexity at once. Lenders are more cautious with self employed borrowers, and the financial upheaval of a separation can make an already nuanced situation feel overwhelming.

At Lendology, we regularly help self employed clients navigate separation finance. Whether you are a sole trader, contractor, or company director, this guide explains how lenders assess your income, what documentation you need, and how to position yourself for the best possible outcome.

How lenders assess self employed income

The fundamental difference between PAYG and self employed lending is income verification. For a PAYG employee, two recent payslips and a tax return tell the story clearly. For self employed borrowers, the picture is more complex and lenders take a more conservative approach.

The two year tax return requirement

Most mainstream lenders require two full years of personal and business tax returns, together with ATO notices of assessment. They use this information to calculate your assessed income, which is almost always different from what you actually earn on a day to day basis.

The assessed income is typically the average of the last two years' net business income (or salary drawn from a company), with certain add backs considered. Add backs are legitimate business expenses that lenders recognise do not reduce your actual capacity to repay, such as depreciation, one off expenses, or interest on business loans that will be refinanced.

If your income has been declining year on year, most lenders will use the lower of the two years rather than the average. This is where things can become difficult during separation, because the stress and disruption of separating often coincides with a dip in business performance.

BAS statements

Business Activity Statements provide lenders with a quarterly snapshot of your business turnover. Most lenders who request BAS want to see the last four to eight quarters. They use BAS primarily to verify that the business is still trading at a consistent level and that the income shown in the tax returns has not dropped significantly since those returns were lodged.

BAS figures show GST inclusive turnover, which lenders then reconcile with the tax return figures. Inconsistencies between BAS and tax return income raise red flags and can delay your application.

Accountant's letter

Many lenders require (or accept) an accountant's letter confirming your current year income. This letter, sometimes called an accountant's declaration, states the estimated net profit for the current financial year based on the accountant's knowledge of the business. It carries more weight than a self declaration and can be particularly useful if your current year income is stronger than your tax returns suggest.

Which lenders accept ABN income

Not all lenders treat self employed income the same way. The differences between lender policies can mean the difference between approval and decline, or between borrowing $500,000 and $650,000. Here are the key policy variations.

Full doc lenders

Most major banks and mainstream lenders offer full doc loans to self employed borrowers. They require the complete set of documentation: two years of tax returns, ATO notices, BAS, and often an accountant's letter. Assessment is thorough but tends to offer the most competitive interest rates.

Alt doc lenders

Alternative documentation (alt doc) lenders allow you to verify income using fewer or different documents. Common alt doc options include:

• BAS only. Some lenders will assess income using 12 months of BAS statements without requiring tax returns. They calculate an assumed profit margin based on your industry.
• Accountant's letter only. A signed declaration from your accountant stating your current income, without the need for completed tax returns.
• Bank statement verification. Some lenders will review 6 to 12 months of business bank statements and assess income based on the deposits, applying an industry specific profit margin.

Alt doc loans typically require a minimum 20% deposit, carry interest rates 0.50% to 1.50% higher than full doc loans, and may have maximum LVR restrictions. But for self employed borrowers whose tax returns do not reflect their true earning capacity (a common situation during separation), they can be the pathway to approval.

Specialist and non bank lenders

Beyond the major banks and standard alt doc lenders, specialist lenders exist who cater to more complex self employed situations. These include borrowers with less than two years of ABN history, borrowers with recent credit blemishes, and those whose business structure is unusual. The rates are higher, but access to these lenders through a broker means you have options even in difficult circumstances.

Business structure implications

How your business is structured affects how lenders assess your income and can create additional complexity during separation.

Sole trader

This is the simplest structure from a lending perspective. Your business income is your personal income. Lenders assess your net business profit as shown on your personal tax return. The challenge during separation is that if you have been using the business account for personal expenses (or vice versa), the figures may need to be clarified before a lender will accept them.

Company or trust

If you operate through a company or trust, the income that reaches you personally may be significantly different from the business's total revenue. Lenders look at salary and dividends paid to you from the company, or distributions from the trust, plus any add backs for depreciation or other non cash expenses.

During separation, the ownership and control of a company or trust becomes a legal matter for your family lawyer. From a lending perspective, the key question is: what income will you personally receive from the business going forward? If your former partner was also a director, shareholder, or beneficiary, the restructuring of the entity needs to be resolved before a lender can assess your application properly.

Partnership

If you and your former partner were business partners, the separation may involve dissolving or restructuring the partnership. Lenders need to see that the business income is sustainable on an ongoing basis in its new structure. This typically requires updated partnership agreements, revised tax returns, and clear documentation of each party's entitlements going forward.

Joint business ownership during separation

When both partners own or work in the same business, separation becomes a three way challenge: personal, legal, and commercial. The business is an asset that needs to be valued and included in the property pool, but it is also the source of income that one or both parties rely on to service their future borrowing.

Valuing the business

The business needs to be valued as part of the asset pool. This is typically done by a forensic accountant or business valuer appointed by the parties or by the court. The valuation methodology depends on the type of business and can range from a simple multiple of earnings to a discounted cash flow analysis.

Income continuity

Lenders need to be confident that your income from the business will continue after separation. If your former partner is being bought out of the business, or if one partner is leaving and taking clients or revenue with them, the income picture changes. Lenders will want to see evidence that the business is viable on an ongoing basis without the departing partner's contribution.

Separation of business and personal finances

During separation, it is critical to separate business and personal finances clearly. Joint business accounts, shared credit cards, and intermingled transactions make it extremely difficult for lenders to assess your position. Your accountant should help you establish clean financial boundaries as early as possible.

Documents you will need

Self employed separation borrowers need a more extensive document set than PAYG employees. Here is a comprehensive list.

Income and business documents

• Two years of personal tax returns with ATO notices of assessment
• Two years of business tax returns (if operating through a company or trust)
• Two years of company or trust financial statements
• Last 4 to 8 BAS statements
• Accountant's letter confirming current year income (if available)
• ABN registration confirmation
• Current business bank statements (3 to 6 months)

Separation documents

• Consent Orders, Binding Financial Agreement, or separation agreement
• Details of any child support arrangements
• Evidence of any spousal maintenance payments
• Current business valuation (if the business is part of the asset pool)

Standard lending documents

• 90 days of personal bank statements
• Statements for all existing loans and credit cards
• HECS/HELP balance from MyGov
• Details of other financial commitments

Strategies to strengthen your application

How Lendology helps self employed clients

Self employed separation finance is one of the more complex areas we work in, and it is one where the right broker makes the biggest difference. We know which lenders are the most favourable for self employed borrowers, which ones accept alt doc applications, and which ones have the most flexible policies around separation documentation.

We work alongside your accountant to present your income in the most accurate and favourable way, and we coordinate with your lawyer to ensure the finance timeline aligns with your property settlement. Every conversation is completely confidential.

Jason Given

Director & Mortgage Broker · MFAA Member · MFPA Designated
Lendology

Jason specialises in separation finance, helping clients across Australia refinance, restructure, and move forward after relationship changes. He works alongside family lawyers and financial advisers to ensure the finance side is handled with care.

Last reviewed: June 2026

Jason Given and Steve Chin

Licensed mortgage brokers · MFPA designated · MFAA members · Australia-wide

We are not just explaining the process. We arrange the actual finance: refinancing into your sole name, funding a partner buyout, or setting up a new loan independently after settlement. We work with a panel of over 60 lenders to find the one that fits your situation.