Self-employed income

Definition

Income from a business or self-employed activity. The lender does not use revenue: it looks at the net income reported on tax returns, often averaged over two years, using notices of assessment and the returns. Expenses deducted to lower tax also lower the income the lender counts. Example: $90,000 of gross business income, $30,000 of deducted expenses, $60,000 of net income: the lender calculates your borrowing capacity on $60,000. Depending on the lender and the file, some expenses may be added back. Prepare two years of returns and notices of assessment, with no unpaid tax debt.