Tax returns and notices of assessment in a business loan file

Of all the documents in a loan file, tax returns carry a particular kind of weight: they’re the figures you declared to the ATO. Lenders like them for exactly that reason — they’re hard to embellish. Paired with notices of assessment, they confirm both what was declared and that it was processed. This page explains what lenders look for, how many years they want and what to do if the latest return isn’t done yet.

Returns versus notices of assessment

Document	What it is	What the lender reads from it
Tax return	The return lodged by your tax agent for the business or individual	Income, deductions, structure, distributions
Notice of assessment (NOA)	The ATO’s confirmation that the return was processed	That it was lodged and accepted; tax payable or refundable

Many lenders ask for both. The return shows the detail; the NOA proves it’s not a draft sitting on someone’s desk.

Whose returns, and how many years?

Typically:

• The borrowing entity — company, trust, partnership or sole trader — for the last one or two years
• Each guarantor — individual returns and NOAs, often for the same period
• Related entities, if they’re providing security or their income is relied on

Smaller cash flow loans may need none of these, relying on bank statements and BAS instead. Larger unsecured term loans and many secured loans will ask.

What lenders cross-check

Lenders compare tax returns with the other documents in your file:

• Financial statements — net profit should reconcile with taxable income, allowing for tax adjustments
• BAS — sales on BAS across the year should broadly match income in the return
• Bank statements — deposits should be consistent with declared turnover
• Personal returns — trust distributions and wages from the business should appear as income

Differences can be legitimate, but should be explained. Your accountant is the best person to do that. See accountant-prepared financials for how statements and returns fit together.

Low taxable income and add-backs

Small businesses often legitimately minimise taxable income — through depreciation, the instant asset write-off, super contributions and other deductions. That’s sensible tax planning, but it can make servicing look thinner than reality. Your accountant can prepare a short list of add-backs so the lender sees the business’s true repayment capacity. Our page on the P&L and servicing explains how lenders treat them.

When the latest return isn’t lodged yet

This is common, especially early in the financial year. Options include:

• Last lodged year plus management accounts for the current period (format guide)
• BAS for recent periods, showing turnover
• An accountant’s letter confirming specific facts about the unlodged year (how accountants approach it)
• Property security, where lighter income evidence may be acceptable

Our guide to interim financials before the tax return covers this situation in full.

When returns are overdue

There’s a difference between “not yet due” and “overdue”. If returns are overdue, lenders will ask why and when they’ll be lodged. The best move is to get them lodged, even if there’s tax to pay. An overdue return can mean an undisclosed liability, which makes lenders cautious. Once lodged, the NOA closes the question.

Trust distributions: a common source of confusion

For businesses run through a discretionary trust, profit is usually distributed to beneficiaries each year, so the trust’s own taxable income may be nil. Lenders understand this, but they need to see where the income went. Provide:

• The trust’s return, showing net income and distributions
• The beneficiaries’ personal returns, showing the distributions received
• A short note from your accountant tying the two together

Without that link, a lender might wrongly conclude the trust earns nothing — or that the beneficiaries’ income comes from somewhere else entirely.

How lenders treat different types of income

Income type	How it’s usually viewed
Business net profit	Core servicing income, with add-backs considered
Director wages from the business	Counted once — not as both business profit and personal income
Trust distributions	Accepted when the trust’s return supports them
Rental income	Often counted, sometimes at a discounted level
One-off capital gains	Generally excluded from ongoing servicing

Finding your documents

The ATO says most business records must be kept for five years, so copies should be available. Your registered tax agent holds lodged returns and receives NOAs; you can also access NOAs through myGov or Online services for business. You can confirm your agent’s registration on the Tax Practitioners Board register.

An illustrative example

A hypothetical physiotherapy clinic company applies for a $300,000 secured loan to fit out a second site. The lender asks for two years of company returns and NOAs, both directors’ personal returns and NOAs, and year-to-date management accounts. The latest company return shows modest taxable income after a large equipment write-off; the accountant’s note lists depreciation and the write-off as add-backs. The directors’ returns show wages and dividends consistent with the company’s records. With everything reconciling, assessment is straightforward. The scenario is illustrative.

Bring your returns, find your match

If your returns are lodged and your accountant can explain the numbers, you’re in a strong position. Start a 60-second enquiry and tell us which years are lodged. No credit check is run when you enquire, your details are linked with one lender suited to your file rather than many, and a real specialist calls you to go through it. Please answer accurately about lodgement status and income — it helps us find the right lender first time. See your options.