Don’t Fall into This Common ATO Trap When Buying!

As we approach tax time, there's one common trap I see many buyers fall into — and now is the perfect time to make sure you don’t.

We often think about two types of household income:

• What we actually earn, and

• What the ATO sees on paper

Here’s the key: only the income you declare to the ATO is what your bank will consider when assessing your mortgage application.

Before I go on — I’m not an Accountant or Financial Advisor. But there’s an important crossover between your tax return and your borrowing power.

Why This Matters

If you’re a PAYG employee with no side income, this may not be an issue. But many buyers today have additional income sources — such as:

• Freelancing or running a side hustle

• Owning a small business or being a sole trader

• Renting out a spare room or an investment property

• Selling items online (e.g. Marketplace, eBay)

• Earning tips or casual cash jobs

• Earning income from overseas

The Trap

It’s natural to want to minimise your taxable income. But if you don’t declare that income to the ATO, your bank won’t count it — even if it’s regular and reliable.

I often hear, “We know we can afford more, but the bank says we can’t.” That’s because your bank is only looking at what’s officially on record.

Planning to Buy in 2025 or 2026?

If you're planning to purchase in the next year or two and will rely on a bank loan, make sure your income is fully declared on your tax return. Yes, you may pay a bit more tax — but it could significantly increase your borrowing power or help you qualify for better interest rates.

Even if you’re not borrowing at your max, showing more verified income makes you a lower-risk borrower in the bank’s eyes.

Final Tip

Accountants and mortgage brokers serve different roles. Make sure your full team of professionals is aligned with your goals — especially if buying property is on the horizon.