ASB Income Calculations

  • You must have one of the following to accurately calculate base pay.

    • Payslip clearly stating annual base salary

    • Employer Letter/Contract confirming base salary or hourly rate and minimum hours per week.
      The employer letter cannot state average hours, it must be ‘minimum’

    • 3x payslips that show the exact same amount of income every pay cycle - annualise this figure

    • Payslips regularly showing ‘ordinary hours’ or similar wording. For example, if the payslip shows ‘Ordinary hours - 40 x $26ph’ and then all other payments are on top of things like bonuses, overtime, meal allowances etc, then we can take 40 x 26 = $1,040 per week or $54,080PA as the base pay

  • Overtime & Commission

    For this you will need

    Base salary with ASB can be taken at 100% of the ‘Salary and wages’ figure on the 12 month IRD, but this may be marked down to 80% depending on the assessors interpretation of this being consistent and reliable income. Try to make sure the application works at 80% of overtime but use 100%.

    If you are struggling to calculate base pay, ASB have been known to just use the IRD summary figure on occasion, but best practice is to provide base pay if possible.

    Bonus

    Give the last 2 years IRD summary and use the lower of the last 2 years as your bonus figure.

  • Requirements

    • Client has worked the role for 2 years

    When the client is not on a permanent contract, we must use the average of the last 2 years income, according to their IRD summary to determine their income.

    This doesnt have to be tax years, it can be 2 years from todays date.

    It is not scaled further and is used at 100% in the calculator.

  • You will need

    • Last 2 years financials

    • IR4 if in a company

    • IR3, IR7, or IR10 if in personal/trust names

    Before beginning, take note of the owners as per companies office/annual report. If the client is only one of two owners with equal holdings, then only take 50% of any numbers calculated below.

    Take out any shareholder salaries or directors fees and include those at 100% under ‘Salaries & Wages’, assuming they relate to your client.

    Include all business loans in servicing and provide 3 months statements for each.

    Net Income Calculations

    Take the net income.

    x0.72 - this will take off 28% of assumed tax.

    Example

    Net Income = $50,000

    $50,000 x 0.72 = $36,000

    Do this for the last 2 financial years and average the 2 figures OR use the most recent tax year, if that is lower than the average.

    Put this figure into the ‘Amount (Annual After Tax)’ box

    Addbacks

    Acceptable addbacks

    • Depreciation

    • Home Office

    • Interest

    Add these up for each year and average the 2 years. No need to take tax off as these are already net of tax. Add this to your ‘Amount (Annual After Tax)’ box.

    Example continued from above

    • Depreciation: $10,000

    • Home Office: $2,000

    • Interest: $1,000

    Total = $13,000

  • You will need

    • Clearly split projections. There cannot be a mix of actual and projected in the same figues.
      EG: It must say

      Apr - Jul Actuals
      Jul - Mar Projections

    Usually in 2 separate columns.

    • Previous years actual financials

    • IR4’s, IR3, IR7’s and IR10’s as appropriate (proof of income lodged with IRD)

    1. Calculate the full previous years financials as per the above category ‘Self Employed Business: No Projections’.

      Note these figures in your diary notes.

    2. Now we need to calculate the projected year’s final income. This has to be done in 2 parts. The actual part year, and the remaining projections.

    3. For the Actuals, take the income and addbacks as in ‘Self Employed Business: No projections and keep the final Annual NET figures to one side. This will likely be a small amount depending on how much of the financial year has passed.

    4. Scale the projected income at 50%

    5. Take the Net Profit Before Tax as in the projections. Take off 28% tax (x0.72).

      EG: NPBT = $40,000 x 0.72 = $28,800 Annual NET.

    6. Add in any addbacks, without taking off anything for tax as addbacks are already net of tax.

      EG: Home Office - $2,000

      $28,800 + $2,000 = $30,800.

    7. Average this figure out with your previous year’s financials for your final Annual Net Income figures.