Increased income from over seas - borrowing capacity?

Hi guys,

I possibly am going to start receiving around 2000$ per month in my account from my employer, on top of my normal salary (Family business). Cash will be deposited into my account with no description as it is rental income for property me and my siblings own overseas, that is transferred through our business here.

Question is how do I talk to banks/brokers about this income without triggering extra paper work and hassles regarding overseas funds? As the money is being deposited by my Australian employer, do I even need to tell them it's rental income from overseas? Getting paperwork from overseas will be a nightmare, so I really want to avoid 'what is the property value, what is the rental agreement' etc.

Could I tell them it is a company Bonus that is being paid monthly? I'm looking at purchasing another IP and would like this extra income to count toward my borrowing capacity.

 

The only evidence you've got of the income is $2000 per month deposit, which only starts about now. Most lenders would want to see any sort of income coming in for at least 3 months before allowing it, but even then they'll want more information.

Is it something you'll declare on your tax return?

If you want to use it, you'll need to provide more detail, which will likely require a lot more paperwork (given the source). If you don't need to use it, it can be ignored.

 

Cash payments into accounts cannot be used for servicing, if its not taxed or shown as "legit" income.

You can tell them it's a bonus, they'd want paperwork .

More importantly, if they know you have a debt overseas they might ask for a credit report from that country.

 

You don't need to provide much detail just
1 copy of the title .
2 copy of the lease.
3 copy of your tax return overseas.
4 copy of your Australian return.
5 copy of the financial accounts.Income statement and balance sheet
6 details of the other owners.
7 details of the profit sharing with your siblings
8 valuation of the property overseas.
9 copies of the bank account where the rent is paid into.
That should start the ball rolling and should not take you too long to gather.

 

This is a definite topic of interest for me.

I am presently employed by a foreign local government body. Unlike OP, this is by far my main source of income and - subject to further tax advice - I will be filing a tax return as an Australian resident (the work will be 50/50 based Aus/OS).

I have a contract that shows duration of employment, and the remuneration in AUD. I am being paid via bank transfer from a third party Australian account to my account.

Beyond the contract, a personal tax return, and regular bank deposits, are there any other factors or such I should get set up before I approach a lender for a refinance or further financing?

 

will it appear on your payslip?
Do they treat you as self employed considering it is a family business?

 

Paid in AUD into a local account, with a contract and presumably payslips, no problem. Your salary will likely be considered by lenders to be taxed at Australian rates even if it's tax free.

Foreign tax returns are tricky to verify. If you're self employed over seas, you'll struggle to get the income recognised by an Australian lender.


Fundamentally there's two challenges with foreign income.

1. Verification. All income needs to be verified that it actually exists. Fraud is a real challenge. A payslip isn't enough. Aussie payslips have ABNs, they can ring the employer, all sorts of things that they can't do with a foreign payslip. Usually the minimum is 3 months of payslips and corresponding deposits into a bank account.

2. Currency stability. You're paying the mortgage in AUD, so lenders want confidence that the value of your income will remain reasonbly stable compared to the AUD. There's plenty of currencies that lenders simply won't accept. Other's they'll use 70% or 80%.

Lenders will almost always apply Australian tax rates to the income regardless of the actual tax rate you pay. The rational is that if you return to Australia, you'd be in a similar field on a similar income and subject to local tax.

 

Thanks greatly @Peter_Tersteeg , and apologies to @Medusa - I don't mean to side-line the original question, it seems relevant to have similar queries in the same thread (for once.. )

Currency stability - wages have been set in AUD and will be paid in AUD.
Payslips/verification - noted. Nothing at present, will have to arrange that.
Tax - personal returns will be filed with ATO, and I will be paying the tax as a good citizen.

 

@Terry_w No it is not being shown on my payslip. Direct deposit in my account.

@Tony Xia It is not taxed, so yes I will be declaring it next tax season. No debt overseas.

@Rolf Latham I'm meeting with a broker today to discuss. May offer to wait 6months of income to see if they'll accept that. I'm not desperate to buy now, just looking to put the extra money to work, may just buy more stocks in the mean time.

I think the best solution is to talk to my family to somehow legally get these payments into my payslips rather then direct deposits. Very tricky situation, dealing with our FC overseas and tax agent, getting the money down monthly was an issue with their books, now it'll become an issue with out Aussie company's books if I ask for it to be added to payslips.