Hi Everyone,
Can anyone explain exactly a bit about Lodoc incomes. Apparently its up to 5 yr prison for overstating your income so i would like to understand how it works. How do u determine you income?
I assume its based on your income for the current financial year?
What if u expect say 100k but then quit your job a week after the loan – your tax return income is now a lot less. Does that make u liable for fraud? What if u expect to boost your income in capital gains from selling some property, can u include that projected income in your lowdoc declaration?? What if your sole source of income is from selling houses or borrowing against them to live on? Could that be justified in a Lodoc income?
Has anyone actually been penalised for a wrong Lodoc income yet?
Ive never actually done a Lodoc loan yet so its still a bit unclear.Thanks
GrantOver 20,000 have been fined for overstating there incomes in Low Doc Loans check the ATO website for more.
You should know how your business is performing and how much it would earn. So you should know an approx of how much you should be earning for the current Financial year (at the point of application). ATO only looks for higher “substianted” incomes. If its a couple of thousand, this can always been explained.
Basically Low Doc Loan, is you stating your income, asset and liabilities, however, the lender doesnt verify your income, so you do what they call a Self-Certify your income and if fits the servicabilitiy, its all good.
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieHi Joshua,
Do u have a link to that ATO article? I had a search but the only thing I can find is people being fined for understating thier income in thier tax return or not even submitting thier tax return.
But im not talking about that, rather what can be included in Lodoc income. Especially profit from selling a property.Thanks
GrantHey Bud,
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr2004042.htm
and
http://www.ato.gov.au/corporate/content.asp?doc=/content/76377.htm
Hope this helps. any questions dont hesitate to ask
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett Christieanything you can earn as cash for anything can be used, remember lender doesnt verify this income, so whatever you feel you will earn during the year, you can place. Well, any income that is claimed on a tax return can be used as income. People who earn cash in hand, can place this onto the application, however if the ATO catches you, then you gotta explain why you are no stating this income on your tax return.
Clients can be Investors and use rental income and profit from these properties as there income for the year.
Hope this helps
Regards
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieHi,
What happens in the situation where you run a seasonal business, say maybe an ice cream shop or a beach kiosk, & you expect your taxable income to be higher than it actually is? Is there a general rule of thumb that the ATO works on, maybe a %? It would seem to me that there would be heaps of people who would find themselves in this situation.
We run a business in it’s 2nd year, so it is quite hard to predict what will happen season to season. We keep all the records & run all the reports, but we have no idea whether this year will bring a 50% growth or a more normal 20% growth. (Last year’s growth was well above 50%!).
Any info or suggestions would be great!
E.
Hi
If you have a look at a few Low Doc declarations they are all slightly different. Some ask for your income this current financial year, while others don’t specify the year. Some ask for net Profit before tax, but others just ask for personal income.
In the end, the lender will usually accept whatever you put down. What you have to worry about is the ATO.
If you get audited you may have to justify what you have written down. Depending on the wording of the declaration, you may be able to argue that you included future profit, or projected income, or even income before expenses etc.
Afterall, if it is July 2 and they ask for your income for the year, what can you do but estimate?
Terryw
Discover Home Loans
Parramatta
[email protected]
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hmmm,
So if your projected income is some capital gain from selling a house the profit might be 100k. But the after tax profit after 50% CG dscnt and all other deductions might be 30k? Or less if a trust involoved.
So on your tax return its 30k.
So is your Lodoc income 100k or 30k???Thanks
GRAntJosh-Prestigeloans Posted – 07/09/2006 : 01:18:24
Over 20,000 have been fined for overstating there incomes in Low Doc Loans check the ATO website for more.
http://www.ato.gov.au/corporate/content.asp?doc=/content/mr2004042.htm
http://www.ato.gov.au/corporate/content.asp?doc=/content/76377.htmI checked the websites Josh and I cant find any articles about 20000 people being fined for overstating thier incomes?
There is a mention of 19000 Lodoc people being late with thier tax returns – is this what your referring to? Hardly a capital offence.If all these people were fined what were the penalties??
After more searching I still can only find the ATO having penalised people for understating thier income on tax returns…
Thanks
GrantOriginally posted by grant7:Hmmm,
So if your projected income is some capital gain from selling a house the profit might be 100k. But the after tax profit after 50% CG dscnt and all other deductions might be 30k? Or less if a trust involoved.
So on your tax return its 30k.
So is your Lodoc income 100k or 30k???Thanks
GRAntWell, it is whatever you feel comfortable with, keeping in mind you may have to explain your reasoning to the ATO if challenged. Technicially speaking it would probably be the taxable income, after expenses, but before tax. ie the figure that would show on your ATO notice of assessment. If the gain was made to a trust, then the Low Doc figure should only include the trust income distributed to yourself. Its a it of a grey area when it comes down to it.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you only need 80% LVR then i would suggest you go the “no doc” option on your declaration. This is where you dont state an income at all – simply that you can afford the repayments. No income, asset or liability verification is required. Interest rates are now very competitive for No Doc loans and this doesnt tie you into any income declaration at all. [blink]
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]
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