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Entry 03 · ASIC and the ATO

Documents a lender may ask for, and where each comes from

For a self-employed borrower, ASIC’s guidance to lenders lists recent income tax returns, Business Activity Statements, an accountant’s statement of actual or likely income, financial statements for any related business entities, statements for business accounts, and bank statements that show money coming in. ASIC says its lists are neither complete nor mandatory, so a lender may ask for different papers; this page follows each one back to where it is made.

General information, not financial or tax advice. The official places to check are ASIC’s Regulatory Guide 209 and the ATO’s own pages.

Receipt 1RG 209 Tables 1 and 5

The papers, and who makes them

ASIC says these papers will generally show net income and patterns of variable income for a self-employed borrower. The third column is where each one starts.

Papers ASIC lists for self-employed borrowers, with their origin
PaperWhat ASIC says it can showWhere it comes from
Income tax returns and notices of assessment Listed first for self-employed borrowers. In its small business example, ASIC lists “income tax assessment notices and returns” as sources that show amounts generally available to the owner. The ATO issues a notice of assessment when it processes a tax return. With myGov linked to the ATO, it arrives in the myGov Inbox.
Business Activity Statements Listed for self-employed borrowers, and named in ASIC’s small business example among the papers showing amounts generally available to the owner. Lodged by the business with the ATO to report its taxes, including GST and PAYG.
An accountant’s statement “Details of the consumer’s actual or likely income levels.” In ASIC’s example, written advice confirming the business’s profit and loss and the amount available to the owner as personal income. The borrower’s accountant, as RG 209 describes it.
Financial statements for related business entities Listed in the same row, for the same purpose. The business entities themselves; ASIC lists the information as available from the consumer.
Business account and bank statements Regular and variable income and spending patterns, existing debts and their payments, usual types of spending, and sometimes savings or “red flag” signs such as regular overdraw or default fees. The bank. ASIC notes the borrower’s own bank holds them in its records, and another lender can get them from the borrower, or from the bank with the borrower’s consent.
An open lever-arch file packed with papers, beside a calculator with a red pen lying across it.
A full lever-arch file: the papers behind an application. Photo by jackmac34 on Pixabay.

Receipt 2ATO

The notice of assessment, up close

The ATO describes the notice of assessment as the statement it issues that explains how a tax assessment is calculated. It shows the tax owed on taxable income, the credit for tax already paid during the income year, and the tax to pay or the refund.

For a copy of a current or earlier year’s notice that is not in the myGov Inbox, the ATO gives these steps:

  1. Sign in to myGov.
  2. Select ATO from the linked services.
  3. Select My profile from the menu.
  4. Select Communication, then History.

A notice can change after it arrives. The ATO says it has a period to review a tax return, normally 2 years and in certain circumstances 4, during which it may increase or decrease the tax on the first notice.

Receipt 3ABN Lookup

What anyone can see about a business

Not every check needs a paper from the borrower. ABN Lookup gives free public access to Australian Business Number information from the Australian Business Register, with no login: whether an ABN is active or cancelled, the business type and GST status, public details given to the register, and historical trading names where available.

ASIC’s guidance shows why a lender might look. In one of its examples, an application for a business loan came from a borrower who had obtained an ABN shortly before applying and gave no details of a business; ASIC says a lender or broker that failed to verify the existence of any business would be unlikely to meet the standard of reasonable inquiries. That example, and the business purpose declaration it turns on, are in entry 2.

Receipt 4RG 209 · Consumer Data Right

Statements by consent instead of on paper

ASIC’s guidance expects that what counts as reasonable verification will change as new sources of information become available, and names open banking and digital data capture services as developments that affect how easily transaction information can be obtained. It also says lenders can take into account a borrower’s privacy rights and the need for informed consent, and that it may be reasonable to offer a choice of how to provide information. In its example, a lender offers a digital data capture service and also accepts digital or paper statements from anyone who would rather not use it.

The government’s scheme for this is the Consumer Data Right. Its official site describes it as opt-in, active in banking and energy, and run so that only providers accredited by the ACCC can offer services using it. Details are on cdr.gov.au.