Add backs for a business loan: what a lender adds to your profit, and the proof it wants

You had a strong year. New work, a full diary, a second vehicle on the road. Then your accountant finishes the return and the bottom line says you made almost nothing.

That figure is correct for tax. It may also be the wrong figure for a lender, and the gap between the two is what add backs are for.

What does a lender add back to my profit?

Lenders who read your return start from taxable profit, then adjust it. They add back costs that reduced profit on paper but didn’t take the same amount of cash out of the business, or that won’t happen again. The adjusted number is what they test repayments against.

The principle is the one this site keeps returning to: the paperwork is swapped, not skipped. An add back is a claim. A lender accepts it only when a document stands behind it, so the whole job is matching each claim to its proof.

Here’s the working list.

Add back	Why it’s accepted	What proves it
Depreciation	Non-cash: the money left when you bought the asset, not this year	Depreciation schedule or asset register, tax return asset section
Instant asset write-off cost	A one-off purchase deducted in a single year	Purchase invoice, proof of payment, asset listing
Interest on loans being refinanced	The old loan goes; the new repayment is tested instead	Loan statements showing interest charged
One-off or non-recurring costs	Won’t repeat (a single legal matter, a relocation, a rebrand)	Invoice and a short explanation from your accountant
Super paid for an owner above the minimum	Discretionary, so it’s treated like owner remuneration	Super contribution notice, fund statement
Amortisation of start-up or lease costs	Non-cash write-down spread over years	Accountant’s workpapers, lease paperwork
Non-business items run through the books	Personal costs that aren’t a business expense	Bank statements, accountant’s letter

Policies differ between lenders, and some add back more than others. Treat the table as the common ground, not a promise.

Which add backs are biggest for an equipment-heavy business?

Depreciation and the instant asset write-off. If you bought a ute, a coffee machine or a piece of plant this year, the deduction can make a profitable year look poor.

Two current points matter here, both from the ATO:

• For small businesses (aggregated turnover under $10 million) using the simplified depreciation rules, the $20,000 instant asset write-off applies per asset, so you can write off several assets in the one year, according to the ATO’s guidance. The ATO’s tables list the $20,000 limit for assets first used or installed ready for use between 1 July 2025 and 30 June 2026.
• Assets that cost more than the limit go into the small business pool. The ATO says pooled assets depreciate at 15% in the first income year and 30% in each later year, which creates a steady non-cash deduction a lender can add back year after year.

On 12 May 2026 the Government announced in the Budget that the $20,000 limit would become permanent from 1 July 2026. Check the ATO’s small business newsroom for whether that has been legislated before you plan a purchase around it. The earlier pattern, where the threshold changed repeatedly and sometimes arrived late, is why accountants don’t promise it.

For a lender, the practical point is simpler: if the write-off happened in the year being assessed, get the invoice, the proof of payment and the asset listing together. They can then see exactly how much of your low profit was one purchase.

Does it matter that the return isn’t lodged yet?

It matters less than people fear. Add backs can be shown without a lodged return, because the evidence behind them is mostly invoices, loan statements and your accountant’s records. If the return is in progress, an accountant’s letter listing the adjusted profit and each add back can carry the assessment. Our page on accountant’s letters as evidence sets out what a good one includes.

What lenders check it against:

• BAS. Sales on G1 should line up with the turnover your adjusted profit is built on. See how they read a BAS label by label.
• Bank statements. The deposits should match, and the purchase you’re adding back should be visible going out. More on bank statements as evidence.
• Your position. Assets bought with that write-off appear in an assets and liabilities statement.

If you’re wondering what your numbers could support before you chase anyone for paperwork, tell us roughly where things stand and we’ll talk through which add backs are likely to count.

What will never be added back?

This is where owners get caught out, and it’s worth being straight about.

• Owner drawings. They aren’t an expense in the return, so there’s nothing to add back. Lenders usually assume you need to live on something.
• A real cash loss. If you spent more than you earned, the cash left the business. A paper profit lifted by add backs doesn’t change that, and statements will show it.
• Costs that recur every year. “One-off” repairs, marketing or consulting that appear in each of the last three returns are just running costs.
• Interest where the debt stays. If the loan is staying in place, the lender counts the repayment, so adding back the interest would double up.
• Money owed to or from the business by the owner. A director’s loan account isn’t income, and lenders treat movements on it with care.
• Wages you didn’t pay. Cutting your own pay on paper to boost profit isn’t accepted unless the books support it.

A good test: if the cost is going to come out of your bank account again next year, it isn’t an add back.

What does the maths look like?

Illustrative example only; not a real business or client.

Sam runs a small landscaping business as a company. The last return shows taxable profit of $38k. The accountant’s workpapers show:

Item	Amount
Taxable profit	$38,000
Depreciation (pooled assets and a trailer)	$14,500
Instant asset write-off: mower purchased in the year	$9,800
Interest on a truck loan being refinanced	$6,200
One-off legal fees on a lease dispute	$4,000
Adjusted profit	$72,500

Sam also draws $60,000 a year to live on, which is not added back and which the lender weighs against the adjusted profit. The result: a business that looked like it earned $38k turns out to have around $72k to cover drawings and a new repayment, provided each line is backed.

Sam’s evidence pack: depreciation schedule, the mower invoice and bank payment, truck loan statements, the lawyer’s invoice and a one-page accountant’s letter totalling the adjustments. A lender can tick each line off in about ten minutes. Without that pack the same $34.5k of add backs would be an argument.

How do I get ready before I apply?

1. Ask your accountant for the adjustments schedule. One page listing taxable profit, each add back and the adjusted profit.
2. Match each line to a document. If there’s no document, assume it won’t count.
3. Flag anything unusual in plain English. A two-line note on the legal bill saves a phone call.
4. Check the figures against your BAS and statements. If the adjusted turnover doesn’t match G1, find out why before the lender does.
5. Don’t stretch. Adding back a cost that looks routine reduces trust in the rest of the file.

Our substitute checker can show what else stands in when a document is missing, and the page on having no taxable profit covers the broader situation when the return really does show a loss.

When your accounts aren’t up to date at all, lending without tax returns is the better starting point than this one.

Your profit may be worth more than your return says

A low taxable profit is often a reflection of smart tax planning, not a struggling business. The work is in showing that cleanly: adjusted profit, a short list of add backs, a document behind each.

If that sounds like your last return, we’d like to look at it. The enquiry takes about 60 seconds, and asking doesn’t touch your credit file because there’s no credit check when you first enquire. Your details aren’t sent out to a pile of lenders, so there’s no flood of calls afterwards. A real person reads your situation and phones you to talk through it.

Please fill the form in accurately, especially turnover, the equipment you’ve bought and which paperwork is behind, so we can match the right lender first time.

Find out what your adjusted profit could support →