Harmoney

[Harvey Specter]

I would have expected Harmoney to have sought legal advice as to what constitutes taxable income for an investor as they are obliged to deduct RWT from it.

The income bit is quite settled. It is any money coming in and to the extent it is interest, they withhold RWT.

The question is whether bad debts are deductible and the answer is murky and probably depends on the individual investors personal situation so not something Harmoney can answer (and neither can the IRD unless they put your account into dispute - you cant even get a binding ruling as the more I think about it, the answer is a question of fact, not law).

Re their 'annual net income', I think this is misleading as most think of net interest as after tax but they only mean net of defaults. It is not a tax effected number.

[Beagle]

Not sure about that. hardly worth going to court for unless you are big (which means less likely to be disputed as in business).

There's always the prospect of Taxation Review Authority decisions in due course and the prospect that if they're challenged in court the Judge may give a ruling that gives a view on general deductibility criteria notwithstanding the specific aspects of the case.

For my money it's a lot easier, (more time efficient and potentially far more rewarding as well as probably far less problematic), to invest in HNZ shares and let them take care of all the administration. Just sit back and allow the fully imputed dividends to increase my investment via shares in lieu of dividend and watch the share price increase over time

Harmoney could be a name that's suggestive of an investment experience that could prove to be anything but that for some investors...just saying.

Remember Geneva finance that was such a sweet name that was suggestive of a Swiss financial institutional banking experience ?...an Omen for Harmoney ?
Post #53 sum's up my concerns in a nutshell. Who needs the potential aggravation ????

[winner69]

The time to avoid Harmony will they get a big name on TV telling us great they are .... both as a lender as well as somewhere to invest

Somehow I feel I had God on my side when I failed who I am test and got rejected out of hand

[emveha]

Post #53 sum's up my concerns in a nutshell.

Where you're comparing borrowers with monkeys?

[Harvey Specter]

For my money it's a lot easier, to invest in HNZ shares

Evena TRA case is likely to cost more than the forgone deduction for capital loss unless you have 100k's invested.

Dont worry, I have a lot more invested in HNZ than I do in Harmoney.

[Harvey Specter]

Depends on the extent of the loss.

Say $100k with Harmoney (which would be alot!) and say 25% default (higher than they predict) so $25k loss in a year. But part of that can be offset against interest income so say $20k capital loss. Tax on that is under $7k. Unless this is multiple years (4 years x $7k) or there was a total market collapse (losses greater than $25k) then the cost to go to court would exceed the tax in question. And that is someone with a big holding who is more likely to claim they are in the business so less likely to be pursued by Inland Revenue.

[Beagle]

Say $100k with Harmoney (which would be alot!) and say 25% default (higher than they predict) so $25k loss in a year. But part of that can be offset against interest income so say $20k capital loss. Tax on that is under $7k. Unless this is multiple years (4 years x $7k) or there was a total market collapse (losses greater than $25k) then the cost to go to court would exceed the tax in question. And that is someone with a big holding who is more likely to claim they are in the business so less likely to be pursued by Inland Revenue.

Yep...I decided to quit that post. People will simply have to live with the uncertainty of whether they can deduct untoward delinquencies or stump up the cost of a binding ruling. From my experience with Geneva finance delinquency modelling with consumer finance is usually woefully inadequate. Who knows, maybe these guys are smarter than the management at Geneva, (which wouldn't be hard) or perish the thought, maybe they're worse Good luck

[Harvey Specter]

Heartland have invested $17m though Harmoney. Assuming the risk assessment is exactly the same for wholesale and retail investors (which I assume it is), then Harmoney must be happy with their algorithms.

Does instill a bit of confidence.

[newtrader]

As an investor, you do have to trust/believe they have a robust credit grading model which can accurately predict repayments and the probability of defaults.

The guys running Harmoney come from a traditional finance background so I assume they are using a battle-tested credit model.

But only time (3+ years) will tell if their credit model is any good...

discl. minor investor in Harmoney

Heartland have invested $17m though Harmoney. Assuming the risk assessment is exactly the same for wholesale and retail investors (which I assume it is), then Harmoney must be happy with their algorithms.

Does instill a bit of confidence.

[iceman]

This is one helluva leap if it happens http://www.interest.co.nz/news/74202...ortgage-market