Quick answer
Many Australian farms rely on off-farm income, such as a partner's wage, contract work or a second business, to help service debt. Lenders can count it, usually after checking it is stable and documented, and they weigh it against the farm's own cash flow. How much weight it gets depends on the lender and the type of income.
Key points
- Off-farm income is common and accepted, but lenders want it documented and reasonably stable.
- Wages are usually simpler to assess than business or investment income.
- The farm should still stand on its own feet in an average year; off-farm income supports it rather than replacing it.
- Off-farm income can affect tax concessions such as Farm Management Deposits, which have an income limit.
Why do so many farm families have off-farm income?
Farming income swings with seasons, commodity prices and costs. To smooth that out, many farm households have someone working off the farm. It might be a partner in town with a regular wage, a farmer who does contract work or shearing in quieter months, or a family business running alongside the farm. ABARES farm surveys track the economic performance of farm businesses over time, and they show a wide spread of results from year to year and farm to farm, which is part of why steady outside income is attractive to farm families and, in turn, to lenders.
Off-farm income can make the difference between a loan that works and one that does not. It also raises questions: how much will a lender count, what evidence is needed, and does it change anything about tax? This guide covers those points. Ownright Custom Finance arranges farm and rural finance Australia-wide, and director Trevor Scott’s team deals with these assessments constantly.
How do lenders view off-farm income?
Lenders generally treat off-farm income in two ways. It can be a supporting source, where the farm is expected to carry the debt in a normal year and off-farm income is a safety margin. Or it can be a primary source, where the property is smaller or part-time and household income pays most of the bills. The weighting changes the assessment.
| Type of off-farm income | How it tends to be treated |
|---|---|
| PAYG wages, permanent | Easiest to verify; usually counted in full or close to it |
| Partner’s wage | Counted when the partner is a borrower or guarantor |
| Contract or casual work | Averaged over a longer period; needs tax returns and invoices |
| Income from a separate business | Assessed on business financials; may be discounted for volatility |
| Rental or investment income | Considered with supporting documents; some lenders apply discounts |
| Government payments | Treated case by case, depending on the type and duration |
These are patterns, not rules. Each lender sets its own policy, and the same income can be received very differently by two of them. That is why comparing lenders is worthwhile.
Does the farm still need to stand on its own?
For a commercial farm, usually yes. Lenders like to see that the farm can service its debt in an average year without relying entirely on outside income, because droughts, price slumps and illness do not respect household budgets. A farm that only works with the partner’s wage is more fragile and will be assessed accordingly. That does not mean a loan is out of reach, but it may affect the amount, the structure or the lender.
For a smaller property where the owners work in town, the assessment shifts towards the household’s employment income and the property’s role as a home and lifestyle asset. See lifestyle and hobby farm loans for how that differs.
What evidence do lenders want for off-farm income?
- Recent payslips and a letter of employment, or an employment contract.
- Personal tax returns and notices of assessment for at least two years.
- Bank statements showing deposits.
- For contract work: invoices, ABN details, business activity statements and client lists.
- For a separate business: financial statements and tax returns for that entity.
- For rental or investment income: lease agreements and statements.
Lenders also check the probability of continuation. Someone in a new job on probation, or whose contract ends soon, will be assessed more cautiously than someone with years in the same role. If there is a gap in employment, explain it in a note.
How does off-farm income affect Farm Management Deposits?
The tax system treats off-farm income and farm income differently, and this has a direct effect on one popular tool. According to the ATO, to make a Farm Management Deposit an individual must be carrying on a primary production business and have taxable non-primary production income of no more than $100,000 in the year of the deposit. Deposits are deductible up to taxable primary production income for the year, total FMD balances cannot exceed $800,000 and each deposit must be at least $1,000.
So a household with substantial off-farm income may find FMDs closed to it in some years. This is not a reason to avoid off-farm work, but it is worth knowing when planning. How the rule applies to a particular family, including partners and trust beneficiaries, is a question for an accountant.
What if the off-farm work is inconsistent?
Rural work is often seasonal: harvest, shearing, mustering, fruit picking, tourism or construction. Lenders used to rural clients understand this and assess income over a longer period, usually averaging it. Helpful steps include:
- Presenting two to three years of tax returns showing a consistent pattern.
- Showing a stable base, such as the same employer or contractor client each year.
- Including a summary of expected work for the coming season, backed by a letter or contract if possible.
- Keeping personal and business finances separate, which makes the figures easier to read.
If documents are thin, low-doc options may exist for some farm borrowers. See low doc farm loans. These assess income on alternative evidence and are priced for the extra risk, so they suit specific situations.
How does the structure of the farm change things?
If the farm is held by a company or trust and the off-farm income belongs to an individual, lenders need to see how the pieces fit. Typically the individuals provide guarantees, and their personal income is considered as supporting the entity’s debt. If the partner is not on the loan or the title, the lender may treat their income differently or ask for additional documents. It is best to map these relationships at the start so the application matches the real structure.
How do lenders assess a part-time or hobby farm differently?
Not every rural property is a full-time commercial farm. Some are 20-acre or 100-acre blocks where the owners work in town and run a few head of cattle, a small orchard or horses on the side. Lenders separate these from commercial farms and apply different rules.
For a commercial farm, the farm’s income is the main driver and the lender uses rural or agribusiness policy. For a lifestyle property, the household’s employment income is the main driver and the lender may use home loan policy, often with limits on land size, zoning or the extent of any farming activity. Properties that sit between the two can be the trickiest, because the right policy is not always obvious. Part of our job is identifying which lenders treat a given property as a farm and which treat it as a residence, and then matching your application accordingly. For more detail, see our page on lifestyle and hobby farm loans.
Can a farm business income be combined with a separate self-employed business?
Many rural households run a side business, such as earthmoving, rural contracting, farm services, machinery hire or a trade. Lenders typically assess that business separately, using its own financials, and then combine the results. They look at turnover, profit, tax compliance and how long it has operated. If the second business relies on the same machinery or labour as the farm, lenders may adjust to avoid counting the same capacity twice.
That is where precise records help. Keeping the farm and the side business in separate accounts, with clear tax returns and activity statements, makes the assessment faster. Our guide on home loans when you are self-employed explains how lenders read self-employed income more broadly.
Do ATO debts or tax issues affect the assessment?
They can. Lenders check whether tax returns are lodged and whether any ATO debt exists, because tax arrears point to cash flow stress and can create priority claims on assets. A payment plan with the ATO is sometimes acceptable, but unpaid or growing debts raise concerns. If this applies, it is best to be upfront. Options may include refinancing to clear the debt, which we cover on our pages for home loans when you owe the ATO and refinancing ATO debt.
When should you speak with a broker about off-farm income?
The best time is before applying anywhere. Every application leaves a record, and several declined applications in a short period can make the next one harder. A broker can check how different lenders are likely to treat your income, so the first application lands with the lender most likely to say yes. If you are thinking about changing jobs, taking on a contract or starting a business alongside the farm, mention it, because timing can matter. Moving into a new role the week before applying is rarely ideal.
An illustrative example
An illustrative couple run a grazing property. One partner works as a nurse in the nearest town. The farm itself has made a modest surplus in most years but dipped in a dry one. They want to buy the neighbouring block. A lender that counts only farm income would struggle, but one that recognises the nurse’s stable wage and the farm’s multi-year average may see enough capacity. The couple provide payslips, tax returns for both entities, a farm budget and a letter showing the nurse’s permanent role. The application succeeds or fails on the clarity of that picture, not the size of any one number.
What happens if off-farm income stops?
Lenders ask this question for a reason. A redundancy, illness or business downturn can remove the income that was supporting the loan. Planning ahead means having a buffer, such as an offset balance or Farm Management Deposit where eligible, and knowing who to call early. A rural financial counsellor can help rebuild the budget quickly, and the lender may offer hardship options if approached before arrears build. Considering this scenario when choosing the loan size and structure is part of borrowing sensibly.
What mistakes should be avoided?
- Leaving off-farm income out of the application because it feels separate from the farm.
- Assuming a new job will be counted the same as a long-standing one.
- Overstating contract income that cannot be evidenced.
- Forgetting to check tax effects, such as FMD eligibility, before changing work patterns.
- Applying to multiple lenders with inconsistent figures.
What should be ready before applying?
- Two to three years of personal and entity tax returns.
- Recent payslips or contract evidence for each source of income.
- Statements for all existing loans and credit cards.
- A farm budget showing average-year results.
- An asset and liability statement.
- Notes explaining any gaps or changes in income.
How can Ownright help?
We know which lenders are more comfortable with off-farm income and which prefer the farm to carry the load alone, and we can present your position accordingly. We arrange rural finance in every state and territory, and where a mainstream path is closed we look at specialist and private options. No outcome is guaranteed, and each lender decides for itself. If you would like to see where you stand, share your farm and income details with us and we will talk it through. More background is on our off-farm income farm loans page.
Frequently asked questions
Do lenders count off-farm income for farm loans?
Yes, most do. They typically want to see it is regular, documented and likely to continue, such as PAYG wages, a partner's salary or long-running contract income. The farm's own capacity is still examined. Policies differ between lenders, so the same income can be treated differently by different institutions.
What counts as off-farm income?
Common examples include wages from employment, a partner's income, income from a separate business, shearing or contracting, rental income and investment returns. Each is assessed differently: employment income is usually easiest to verify, while business or variable income needs more history and documents.
How does off-farm income affect Farm Management Deposits?
The ATO says an individual must have taxable non-primary production income of no more than $100,000 in the income year of the deposit to make a Farm Management Deposit. Substantial off-farm earnings can therefore affect eligibility. An accountant can advise how this applies to your circumstances.
Can I get a farm loan if I work off the farm full-time?
It is possible, particularly for smaller or lifestyle properties and some part-time farms. Lenders will look at whether the property is a genuine primary production business or more of a rural residence, and assess it under the appropriate policy. Experience, the farm's plan and your employment record all matter.
What if my off-farm income is casual or seasonal?
Lenders can still consider it, usually by averaging over a longer period and requiring more evidence. Contract work, shearing, harvest labour and seasonal jobs are familiar to rural lenders. Presenting tax returns, invoices and bank statements clearly improves the assessment.
Does a partner's income help even if they are not a borrower?
Often the partner is a co-borrower or guarantor, and their income is counted. If they are not on the loan, lenders may treat the household position differently. The details vary by lender and structure, so it is best to raise it early in the conversation.