Brisbane couple David and Penny Jones had a highly successful business they had owned for over a decade, little debt and lived a reasonably extravagant lifestyle.
They were dumbfounded when they applied to their bank for a $900,000 home loan and were turned down.
“When David and Penny came to me for help, I reviewed their financials and noticed there were two distributions of income to persons other than themselves,” she said.
“They explained that they had made the distributions through their two now 19 year old children for taxation purposes.
Rochelle said she discovered that since the distributions were made, the children had both finished school and had full time jobs.
“Bingo!!! I knew I could argue the case that these distributions were made for taxation purposes only and, that since my clients (who were the sole directors of the company acting as trustee for the discretionary trust) were able to stop making the distributions with-out causing financial hardship to their children who were now supporting themselves, these distributions should be viewed as having been income earnt by my clients from a borrowing capacity perspective.”
Rochelle then had the couple’s accountant support the argument by drafting a letter stating that her clients were under no obligation to make distributions to parties other than themselves in the future.
“Result? Loan approved through exactly the same bank that had told my clients ‘no’,” she said.
“It’s been more than a couple of years now. My clients are enjoying their home at New Farm and continue to travel and dine out on a regular basis without any financial hardship.”
Rochelle said the Jones’s story is commonplace. “In a scenario such as theirs, dealing with a ‘so called’ professional who has a no or little comprehension of self employed business structure and self employed financials can be a deal breaker, and unfortunately, these are real people with real dreams and real goals that are placing their future in someone else’s hands.”