TL;DR Summary
Add-backs let lenders add certain business expenses back to your net profit to get a higher assessable income. The most commonly accepted add-backs are depreciation and personal super contributions. How much add-backs increase your borrowing power depends on which lender you use — policies vary significantly. A specialist broker will match you to the lender with the most favourable add-back policy for your situation.
What Is a Tax Add-Back?
Your tax return shows your net profit after all allowable deductions. Lenders use this net profit figure to assess serviceability — your ability to repay a home loan. The problem for self-employed borrowers is that tax deductions (which are designed to reduce your tax bill) also reduce the income that lenders assess.
An "add-back" is where a lender adds certain expenses back to your net profit when calculating your assessable income. These are generally non-cash expenses (like depreciation) or one-off expenses that aren't expected to recur. The result is a higher assessable income — and higher borrowing capacity.
For a deeper dive into how this connects to your overall borrowing capacity, see our guide on how much contractors can typically borrow as a self-employed borrower.
Common Add-Backs Accepted by Most Lenders
The following add-back categories are accepted by the majority of lenders, including some major banks — though the specifics of how much they'll add back may differ:
1. Depreciation
The most commonly accepted add-back. Depreciation is a non-cash expense — it reduces your taxable income but doesn't represent money leaving your bank account. Most lenders will add back depreciation on plant, equipment, and vehicles shown on your tax return's depreciation schedule.
- Appears as a line item on your depreciation schedule (attached to your tax return)
- Includes depreciation on vehicles, tools, equipment, machinery
- Non-cash nature makes it the easiest add-back for lenders to accept
2. Personal Superannuation Contributions
Super contributions you make for yourself as a sole trader or company director are a personal saving — not a business operating expense. Many lenders will add these back because they're technically discretionary and reduce your declared income without reducing your operational cash flow.
- Applies to personal super contributions (not mandatory employee super)
- Must be itemised on your tax return or accountant's letter
- Not all lenders accept this — check with your broker
3. One-Off Non-Recurring Expenses
Legal costs for a once-off business matter, restructuring costs, or other clearly non-recurring expenses can often be added back. The key is that the expense is genuinely one-off and unlikely to repeat.
- Must be clearly identified as non-recurring
- Accountant's letter should confirm the one-off nature
- The larger the amount, the more scrutiny from the lender
4. Interest on Business Loans (Some Lenders)
Some lenders will add back interest paid on business loans, on the basis that this interest is a cost of the business — not of the household. This is less universally accepted than depreciation but worth checking with your broker.
Add-Backs That NOT All Lenders Accept
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See which add-backs are disputed across lenders and get a free self-employed borrowing assessment from our team.
How Much Difference Can Add-Backs Make?
The impact of add-backs on borrowing power can be substantial. Here's a real-world example:
Add-Back Example: Sole Trader
A $35,000 increase in assessable income can add approximately $150,000–$200,000 to your borrowing capacity, depending on the lender and your expense commitments.
Use Our Income & Borrowing Calculator
Want to see how add-backs affect your borrowing capacity? Visit our income and borrowing calculator for a starting estimate, then book a free assessment with our self-employed specialist team for a full lender-specific calculation.
Frequently Asked Questions
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