You must have one of the following to accurately calculate base pay. You cannot use the IRD summary alone

• Westpac Only - Take the lowest of the 3 most recent payslips. Annualise the gross income, use this figure as base pay.
  
  Note that Westpac may override the other below ways of calculating base pay with this lowest payslip determined method. Make sure your annualised gross income on the lowest payslip is at least as much as your stated base pay using the below methods.

• 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

For this you will need

• 12 month IRD summary

• Base salary already calculated
  
  This also requires that the client has spent 12 months with the same employer on their IRD.

  If 12 months are not completed, we can only use base salary.

  How to calculate

1. Take the base salary. For our example, we will use $79,007 gross per year.

2. We take our figure from the IRD summary. In our example, let’s use $87,856.
   
   Important Note: This is not the figure on the first page of the summary. It is the figure under ‘salaries and wages’ for that employer.
   

3. The calculation is -

   (figure from IRD summary - base salary = gross annual overtime)

   $87,856 - 79,007 = $8,849 gross annual overtime

Requirements

• Client has worked the role for 6 months (non-KO) or 2 years (KO)

When the client is not on a permanent contract, we must use the average of the last 6 months income, according to their IRD summary to determine their income.

This doesn't have to be tax years, it should be 6M - 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

• Note in the diary notes any loans against the business.

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%, assuming they relate to your client.

Net Income Calculations

Take the net income. Note if on the financials is is after tax or before tax

• Before tax - use gross in the calculator under ‘business income’

• After tax - use Net in the calculator under ‘business income’

Note: Net income in business accounting terms does not mean after tax, it means after expenses.

Use the Self Employed Business tab on the Westpac Calculator. Note that in the calculator, we are using the most recent tax year but if the income is not stable, so perhaps it has either increased or decreased drastically in the last 12 months, then assessors may choose to average the last 2 years.