MAP is often contacted by Australian citizens living in London working as independent IT, banking or accounting contractors who would like to buy property in Australia and arrange home loan / mortgage finance. Generally the applicant is operating under a certain structure, registered in the UK or offshore, in order to minimise their taxation liability. These structures take various forms and can include contracting directly in ones own name, via a limited company or via an umbrella company (or a combination of one or all of the above).
Most mortgage providers in Australia will apply self employed rules for Australian Expat contractors operating through one of these structures. Self employed rules require that applicants provide 2 years tax returns and financials before the bank will consider approving the home loan. The issue is that these structures allow for distribution of income in tax effective ways such as via loans or dividends which result in a low taxable income. As most lenders in Australia will base your borrowing capacity on your taxable income, a low taxable income will result in low borrowing capacity.
Similar structures are not readily available in Australia due to the operation of the PSI rules. The PSI rules pierce the corporate veil so that a sole contractor operating through a limited company will not obtain a taxation benefit by doing so as the income is treated as Personal Services Income. As such, most home loan providers in Australia are not aware of these structures and how they work. Combine this lack of knowledge with the strict home loan lending policy that applies to Australian expats living abroad, and getting approval can be extremely difficult.