Quick answer
A tax return is the annual statement a business or individual lodges with the ATO, reporting income, deductions and the tax payable for the financial year ending 30 June. For business loans, lenders typically ask for the last two years of returns plus the matching notices of assessment, because together they show taxable income that has been declared to the ATO and accepted.
Key points
- Lodged annually for the financial year ending 30 June
- Each business structure lodges its own type of return
- Full-doc lenders usually want two years of returns and notices of assessment
- Low taxable income can limit borrowing, even if the business is doing well
- Late returns don't rule you out, but they narrow the options
Ask a bank for a business loan and the document checklist will almost always include tax returns. They’re the closest thing a lender has to a verified, independent record of what your business earned, because the figures have been declared to the ATO.
What a tax return is
A tax return is the yearly report lodged with the ATO covering a financial year, which in Australia runs from 1 July to 30 June. It sets out income, claims deductions and works out the tax payable. Once processed, the ATO issues a notice of assessment confirming the result.
The type of return depends on how the business is set up:
| Structure | What gets lodged |
|---|---|
| Sole trader | An individual return with a business schedule |
| Partnership | A partnership return, plus each partner’s individual return |
| Trust | A trust return, plus returns for beneficiaries receiving distributions |
| Company | A company return, plus each director’s individual return |
Due dates vary by entity type, size and lodgment history, and a registered tax agent can usually access later dates than someone lodging for themselves. Your accountant will know exactly which dates apply to you.
Why lenders lean on tax returns
A full-doc lender typically asks for the last two years of returns and notices of assessment for the business and its owners. From them it works out serviceability: whether the income comfortably covers existing commitments plus the new loan.
Two years matters because it shows a trend. A strong recent year after a weak one tells a different story from a decline.
The lender doesn’t simply take net profit at face value. It will usually add back items that reduce taxable income without reducing cash, such as depreciation, interest on loans being refinanced and genuine one-off costs. These add-backs can make a meaningful difference.
The tension between low tax and borrowing power
Here’s the trade-off many owners only discover at application time. Every legitimate deduction that lowers your tax bill also lowers the income a bank can see. A business might be healthy, with steady cash flow in the bank account, but show a modest taxable profit after depreciation, prepaid expenses and owner super contributions.
Example. A sole trader electrician turns over $480k. After claiming a new van, tools, prepaid expenses and a large super contribution, taxable income comes in at $64k. A bank adds back $28k of depreciation and the super, but the assessed income still struggles to support the $180k loan they want for a second vehicle and stock.
Their options: wait for next year’s return, ask the accountant whether some items can be presented differently in future years, or approach a lender that assesses from bank statements or BAS, where the business’s real trading is visible. Talking to your accountant before the financial year closes, if a loan is on the horizon, pays off more than almost anything else.
If you’re in that spot now, let us know what you’re trying to fund and we’ll explain which lenders look past the tax figure.
When returns are late or missing
Plenty of owners are a year or two behind, often because of a busy period, a change of accountant or a tax debt they’ve been avoiding looking at. It narrows the field but doesn’t close it. Low-doc business loans and bank statement lending rely on other evidence, and property-secured lenders focus mainly on the security. Our page on business loans when tax returns aren’t up to date covers this in detail.
Returns not telling the full story?
If your tax figures undersell the business, or your accountant hasn’t caught up yet, you’re far from the only one, and there are lenders who assess on a different basis. Sending the form takes a minute or so, and no credit search is run when you do. One person reviews what you send and calls you, rather than handing your details around a list of lenders. Tell us accurately where your returns are up to, and we’ll know straight away which options are worth your time.
Frequently asked questions
Which tax returns does a lender want to see?
Usually the last two years for the business entity and for each director or owner. For a company, that means the company return plus the directors' individual returns. Trusts and partnerships lodge their own returns too.
What is a notice of assessment?
The ATO's response after it processes a tax return, showing the taxable income it has accepted and the tax payable or refundable. Lenders like it because it confirms the return was actually lodged.
Can I get a business loan if my tax returns aren't up to date?
Often, yes. Low-doc and bank statement lenders may assess using BAS, bank statements or an accountant's letter instead. Property-secured lenders may care more about the security than the returns.
My return shows a low profit. Will that stop me borrowing?
It can limit what a bank will lend, because they assess serviceability from taxable income. Lenders do add back certain non-cash or one-off items, and other lenders can assess from bank statements instead.
When are business tax returns due?
It depends on the entity, its size, its lodgment history and whether a registered tax agent lodges for it. Agent clients often get later dates than self-lodgers. Check your own dates with your accountant or in ATO online services.