Key Takeaways
- Company income is assessed across director wages, dividends, and sometimes retained profits, depending on the lender.
- Trust distributions can be counted, but distributions to non-applicant family members are often excluded.
- Borrowing in a company or trust name is possible but adds guarantees and lender restrictions.
- Lenders vary widely on structures, so matching your entities to the right lender is central to the outcome.
Many accountants run their income through a company or trust, for tax efficiency, asset protection, or both, and while that structuring is sound, it adds real complexity to a home loan. The same arrangements that protect assets and distribute income can obscure your true earnings from a lender, and how those entities are assessed varies considerably from one lender to another. With variable rates around the 6% mark and serviceability tested well above that, an accountant borrowing through or behind a company or trust needs the structure presented in a way a lender can read clearly, or borrowing capacity can look far smaller than it is.
Presenting entity income and structure so a lender assesses it correctly is something a specialist mortgage broker for accountants handles as part of the process. This article explains how company income is assessed, how trust distributions are treated, the entity-as-borrower question, and how structure interacts with the professional concessions.
How Company Income Is Assessed
Where you earn through a company, the lender has to decide which parts of the company’s income belong to you for serviceability. This is where a well-structured arrangement can understate income unless presented carefully.
Lenders generally start with your director wages and any dividends paid to you, evidenced through payslips, financial statements, and tax returns, with two years of figures usually required. The more difficult question is retained profit, the money left in the company after wages and tax. Where you pay yourself a modest salary and retain profit in the company for tax or reinvestment, your personal income can look low even though the business is performing well. Some lenders will add back or count your share of retained company profits toward serviceability, while others will only use what has actually been paid out to you. This single difference can change borrowing capacity substantially, which is why the company’s position needs presenting to a lender whose policy recognises retained earnings where appropriate.
How Trust Income Is Treated
Trusts are common among accountants for asset protection and income distribution, but they introduce specific assessment questions. Understanding how distributions are read matters as much as the structure itself.
Distributions to the Applicant
Where a discretionary or family trust distributes income to you as a beneficiary, lenders can generally count those distributions toward your income, supported by two years of trust financials and your personal returns. A consistent distribution history strengthens this, since a one-off distribution carries less weight than a steady pattern.
Distributions to Family Members
A common feature of family trusts is distributing income to a spouse or other family members to manage tax. Where those people are not applicants on the loan, lenders usually exclude their distributions from your assessable income, even though the trust generated the income. This can create a gap between what the trust earns and what a lender will attribute to you, which is worth understanding before you apply.
Retained Trust Income
Income retained in the trust rather than distributed is treated cautiously, much like retained company profit, and lenders differ on whether and how they will count it. Clear financials showing the trust’s position help a lender form a view.
Borrowing in a Company or Trust Name
Separate from how income is assessed is the question of who actually borrows. Accountants sometimes wish to hold property inside an entity, and this carries its own considerations.
Where the borrower is a company or a trust with a corporate trustee, rather than you personally, the loan is structured differently. Lenders typically require directors and beneficiaries to provide personal guarantees, so you remain personally responsible despite the entity holding the property, and they will usually want to understand the full structure, including the trust deed. Not every lender lends to every structure, and some restrict or decline certain trust types or more complex arrangements, which narrows the field of available lenders. The structure may serve genuine asset-protection or tax purposes, but it can reduce lender choice and, in some cases, affect pricing, so the benefit of holding property in an entity is worth weighing against the lending consequences with your own advisers.
Why Lender Choice Is Central with Structures
More than almost any other factor, the lender you choose determines how a structured accountant’s application is read. The variation between lenders here is wide.
Lenders differ on whether they count retained company profits, how they treat trust distributions, which trust types they accept, whether they require financials for every entity in the group, and how they handle personal guarantees. One lender may assess a structured accountant close to their real earning capacity while another, looking at the same entities, lands well below it or declines the structure altogether. A borrower with several interlinked entities can find that some lenders demand full financials for all of them, complicating an application unnecessarily, while others will focus on the income that reaches the applicant. Whatever the structure, the lender then tests serviceability at the actual rate plus a buffer of 3 percentage points set by the Australian Prudential Regulation Authority (APRA), roughly 9% at current rates. Matching your particular structure to a lender whose policy reads it favourably is often the single most valuable decision in the application.
How Structure Interacts with the Professional Concessions
Using a company or trust does not remove the professional concessions; it sits alongside the structural assessment. It is worth confirming both parts of your position.
Where you hold current membership of a recognised body such as CPA Australia (Certified Practising Accountant), Chartered Accountants Australia and New Zealand (CA ANZ), or the Institute of Public Accountants (IPA), you can generally access the waiver of Lenders Mortgage Insurance (LMI), the premium normally charged on borrowing above 80% of a property’s value, which can save a premium exceeding $20,000 on a higher-loan-to-value-ratio (LVR) purchase. Where the borrower is an entity rather than you personally, the availability of the concession can depend on the lender and the structure, so it is worth confirming. In all cases the waiver lowers cost without changing serviceability, so the assessed income reaching you from your structure remains the binding constraint.
Frequently Asked Questions (FAQs)
How do lenders assess my income if I earn through a company?
Generally on your director wages and dividends, evidenced by two years of payslips, financial statements, and tax returns. The key variable is retained profit: some lenders will count your share of profit retained in the company, while others use only what has been paid out to you. This difference can materially change your assessed income, so lender choice matters.
Will trust distributions count toward my borrowing capacity?
Distributions made to you as a beneficiary can generally be counted, supported by two years of trust financials and a consistent distribution history. Distributions to a spouse or family members who are not applicants on the loan are usually excluded, even though the trust earned the income, which can create a gap between trust earnings and your assessable income.
Can I buy a property in my company or trust name?
Often yes, though it changes the application. The entity becomes the borrower, directors and beneficiaries typically provide personal guarantees, and the lender will want to understand the full structure including the trust deed. Not every lender accepts every structure, so this can narrow your options and sometimes affect pricing, which is worth weighing with your advisers.
Does a complex structure reduce how much I can borrow?
It can, if it is not presented well or is submitted to the wrong lender. Income retained in entities, distributions to non-applicants, and multiple interlinked entities can all understate the income a lender attributes to you. The right lender and clear, complete financials are what prevent a sound structure from limiting your borrowing.
Do I need to provide financials for every entity I control?
It depends on the lender. Some require full financials for every entity in the group, which can complicate an application, while others focus on the income that actually reaches you as the applicant. Where you control several entities, choosing a lender whose policy suits your structure avoids unnecessary documentation and delay.
Can I still get the LMI waiver if I use a company or trust?
Generally yes where you hold a recognised membership such as CPA Australia, CA ANZ, or the IPA, though where the borrower is an entity rather than you personally, availability can depend on the lender and structure. It is worth confirming both your membership eligibility and how the concession applies to your particular borrowing structure before applying.
The Bottom Line
For accountants borrowing through or behind a company or trust, the structure that serves your tax and asset-protection goals is also the thing a lender must read correctly. Company income turns on how director wages, dividends, and retained profits are counted; trust income turns on which distributions reach you versus family members; and borrowing in an entity’s name adds guarantees and narrows lender choice. The professional LMI waiver still applies where you hold a recognised membership and can remove a premium exceeding $20,000 on a higher-LVR loan, but it does not change the serviceability test at the actual rate plus 3 percentage points. Above all, lenders read structures very differently, so presenting your entities clearly and matching them to the right lender is what turns a sophisticated structure into strong borrowing power.