Hustle & GritWatch us on YouTube
Add-backs are non-cash or one-time expenses a lender adds back to a self-employed borrower’s net income reported on their Notice of Assessment, producing a higher qualifying income than the bottom-line figure the borrower actually claimed for tax purposes.
Capital cost allowance (CCA) — a non-cash deduction for depreciation — is one of the more commonly recognized add-backs, since it reduces reported net income without reducing actual cash available to the business-for-self borrower. Some lenders will also consider genuinely one-time or unusual expenses, on a file-by-file basis.
Which specific expenses qualify, and how many years of income are averaged, differs by lender rather than following a fixed list. Brokers typically gather Notices of Assessment, T1 Generals, and financial statements to support the add-back, and the resulting higher figure feeds directly into qualifying income for GDS and TDS.
Adjusted qualifying income = Net income (per NOA) + Recognized add-backs
CCA is a common candidate: capital cost allowance, a non-cash deduction, is one of the more commonly recognized add-backs to self-employed net income.
Lender discretion: which specific expenses qualify as add-backs, and how many years are averaged, differs by lender — there is no fixed federal list.
Documentation-heavy: brokers typically gather NOAs, T1 Generals, and financial statements to support the add-back for self-employed and business-for-self files.
Feeds qualifying income: add-backs increase the qualifying income figure used to calculate GDS and TDS, rather than changing the ratio ceilings themselves.
A self-employed borrower’s average net business income, per two years of Notices of Assessment, is $58,000:
$58,000 + $12,000 = $70,000. Which expenses a lender will add back, and by how much, varies by lender and file — this example is illustrative only.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
Every term a Canadian mortgage professional needs — defined, sourced, and kept current.
See how Treadstone can scale your brokerage — a free call, no commitment.