Harmoney

[777]

Hi Monica,
Welcome.
I would really like to hear the state of your discussions with IRD regarding investors being able to deduct your service fee and charge offs against income for tax purposes.
The out come of this has big implications for the returns of investors.
Regards

This has been discussed before. Service fee (costs of earning revenue) is deductible the write offs (capital loss) are not. Go back and have a look.

[Finite]

This has been discussed before. Service fee (costs of earning revenue) is deductible the write offs (capital loss) are not. Go back and have a look.

This is clearly not the case as Harmoney would allow for it in their tax withholding.
Earlier comments had said that Harmoney were having discussions with the IRD to get a clear ruling of this new investment class.

[Monica@Harmoney]

HI there, check out our Investor FAQs on the site. We expect that fees paid by investors to Harmoney will be tax deductible. As each investors circumstances are different, we recommend that you(they) seek independent tax advice tat suits their objectives, financial situation and needs. Monica.mathis@harmoney.co.nz

[777]

This is clearly not the case as Harmoney would allow for it in their tax withholding.

Rubbish. Harmoney is required to deduct RWT(Resident withholding tax) from gross interest earned. Any expenses against that income is your responsibility when you file your tax return. Your knowledge of NZ's tax regime needs attention.

[Monica@Harmoney]

Hi Cool Bear - we will put this onto our enhancements list. Cheers for the feedback. Monica.maths@harmoney.co.nz

[Bjauck]

HI there, check out our Investor FAQs on the site. We expect that fees paid by investors to Harmoney will be tax deductible. As each investors circumstances are different, we recommend that you(they) seek independent tax advice tat suits their objectives, financial situation and needs. Monica.mathis@harmoney.co.nz

In relation to the (not in business) individual taxpayer, of whom there must be many investing with Harmoney, I have had email discussions with Harmoney on the deductibility of charge-offs. The response from Harmoney: For charged off principal, due to that fact that we’re such a new asset class, it’s still up for debate. The IRD has not given us a definitive answer to this question. Harmoney is pursuing this matter with the IRD so we can give our investors a definite answer. Unfortunately there is no exact time frame on when it will arrive.

So the question remains: Is Harmoney still pursuing the IRD for an answer tothis question?
Or do all individual taxpayer investors need to seek professional advice (as it is a new asset class the professionals may need to undertake their own research). Whereas Harmoney could seek a ruling which could apply to a large class of its investors?

For an individual taxpayer, the extra cost of employing a professional to determine whether charge-offs (and indeed service charges) are deductible for an individual in itself will undermine their return from Harmoney in the first year - depending on the size of their investment.

[Harvey Specter]

So the question remains: Is Harmoney still pursuing the IRD for an answer to this question?
Or do all individual taxpayer investors need to seek professional advice (as it is a new asset class the professionals may need to undertake their own research). Whereas Harmoney could seek a ruling which could apply to a large class of its investors?

A ruling can not be sought as it depends on the individuals fact situation. A rule can only be on application of law, not fact.

The best we could hope for is a (non binding) press release or 'questions we've been asked' from IRD.

[Monica@Harmoney]

Hi all
On the subject of transactions and statements. We are in the middle of enhancing our statements and they will be out soon. You will receive an email letting you know when they are complete. They will enhance the reporting of transactions - we hope you enjoy. Monica.mathis@harmoney.co.nz

[Bjauck]

A ruling can not be sought as it depends on the individuals fact situation. A rule can only be on application of law, not fact.

The best we could hope for is a (non binding) press release or 'questions we've been asked' from IRD.

Sorry "Ruling" is the wrong word...At risk of repetition, guidance for various classes (such as company taxpayers, individuals and individuals in the business) of investors is often sought by companies for the effect of proposals and actions. Harmoney have said they are pursuing this matter with the IRD so we can give our investors a definite answer.

SO it remains a reasonable question to ask if Harmoney are still pursuing the matter with the IRD so they can then pass on the response to their investors

[Finite]

SO it remains a reasonable question to ask if Harmoney are still pursuing the matter with the IRD so they can then pass on the response to their investors

Well said!
So Monica, can you please respond?