Harmoney

[BJ1]

I guess it is possible for a minority.

For the average retail investor not in the business of lending, .

I suggest that Harmoney investors need to carefully consider what the tax acts say about lending losses. Section DB31 states that a person is allowed a deduction for a bad debt written off in an income year. There are limitations but it seems to me that Harmoney investors are generally entitled to claim loss deductions under sub sections 2 and 3. Don't take my view as gospel, but have a good think about matters before accepting that you aren't entitled. If you are deriving taxable income from your activities, are you not "in business"?

On another note, I don't recall ever seeing stats on what percentage of loan charge offs has been recovered by collection action. If anyone can point me to such info I'd appreciate it, as it seems there is a lot of speculation about what Harmoney may or may not be doing, but no data available to assess the recent email advice.

[Bjauck]

I suggest that Harmoney investors need to carefully consider what the tax acts say about lending losses. Section DB31 states that a person is allowed a deduction for a bad debt written off in an income year. There are limitations but it seems to me that Harmoney investors are generally entitled to claim loss deductions under sub sections 2 and 3. Don't take my view as gospel, but have a good think about matters before accepting that you aren't entitled. If you are deriving taxable income from your activities, are you not "in business"?....

Definitely seek advice.

I agree there could be a good point that if you invest in many fractionalised notes through Harmoney that you could be said to be "in business". However there has been no ruling on this point and Harmoney is not bothering to seek a ruling, claiming that all their depositors have "different circumstances." There has been no general ruling as to how charge-offs should be treated, irrespective of the individual investors being "in business" or not.

If you use Harmoney's auto-invest to invest in Harmoney notes are you in a business?
If you log into the website several times a day to invest in notes are you in business?

Investors on the Harmoney platform are covered by the financial arrangement rules but may or may not "be in business"

It would be great to have clarity and for all P2P investors to be covered by the same rules as to deductibility of fees and charge-offs. A real peer-to-peer scenario? However NZ has not made such a ruling.

When all those finance companies collapsed, many small portfolio depositors ended up with bad debts which ended up not being deductible for tax purposes.

DYOR.

[BJ1]

Just one more point: Section EW11 states that financial arrangements rules do not apply to the calculation of resident passive income. Investments in finance companies are in my view passive as there is no interaction between the parties. Hence the inability to deduct losses when those companies failed. However, direct one to one lending via an agent who is paid to manage that lending on a daily basis and to conduct arrears management is not passive, in my view.

[permutation]

There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?

[Saamee]

There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?

A bit of confusion shown by HM between TWO messages!

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[joker]

There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?

I didn't get notified but my auto-lend got 9 of them. However one of them looks very dodgy...Monthly income $18,633 after tax, rewrite of previous loan after no payments and borrowing $30,000 @ 21.49%. Lives with parents! I've got a feeling an early charge-off is coming. Does Harmoney actually check the borrower's income details?
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[Bjauck]

Just one more point: Section EW11 states that financial arrangements rules do not apply to the calculation of resident passive income. Investments in finance companies are in my view passive as there is no interaction between the parties. Hence the inability to deduct losses when those companies failed. However, direct one to one lending via an agent who is paid to manage that lending on a daily basis and to conduct arrears management is not passive, in my view.

2016 Article from Deloitte on bad debts and P2P in NZ. https://www2.deloitte.com/nz/en/page...p-lending.html