Harmoney

[Bjauck]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.

[alistar_mid]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.

lol, i phoned IRD explained to IRD what harmoney was, sent them a letter with my tax return

I claimed harmoneys fees as an expense.

[darrenc]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.

Have you actually tried investing in Lending Crowd? I only have $25k in there and unless I put $250+ in each loan (only B1 or B2) it's impossible to get it all invested. I had $700 sitting in there for a fortnight and managed to get $300 out yesterday in one loan, but missed the second loan. Loans disappear in a matter of seconds so unless you have your own software that auto invests you're going to be out-of-luck; even the available auto investor doesn't pick them all up because it only checks every couple of minutes.

I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job.

[Bjauck]

Have you actually tried investing in Lending Crowd? I only have $25k in there and unless I put $250+ in each loan (only B1 or B2) it's impossible to get it all invested. I had $700 sitting in there for a fortnight and managed to get $300 out yesterday in one loan, but missed the second loan. Loans disappear in a matter of seconds so unless you have your own software that auto invests you're going to be out-of-luck; even the available auto investor doesn't pick them all up because it only checks every couple of minutes.

Agree there are pros and cons with all P2P. However at least your LC balance sitting unused can be withdrawn in full and deployed elsewhere should you become impatient or decide not to use an off-site auto-investor.

I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job.

I think that is how it should be treated however there has not been guidance to that effect from the IRD (or from Harmoney for all retail investors for that matter). Clarity would be great. In fact I have only seen Financial Review articles - sorry no citations - that would cast doubt on that, especially in regards to write-offs. If everyone could claim Lender fees why doesn't Harmoney deduct RWT from gross interest less fees? One could pay a couple of hundred? for an accountant's researched opinion (and for an investor with say $10,000 that would severely diminish their year's interest) first but would the accountant's opinion coincide with the IRD's - whatever that is? Definitely DYOR.

It would be great to have guidance for all investors to the effect that the net blended return (interest-fees-chargeoffs) from P2P is taxable income. Still no sign of that.

[alistar_mid]

. If everyone could claim Lender fees why doesn't Harmoney deduct RWT from gross interest less fees? .

they are claimable, Like I have said, I have checked with the IRD, you guys should check for yourself though.

and I did ask harmoney this, but they just gave some generic stupid answer



You didn't really answer my question.


You are paying my tax based on gross interest.

Tax is normally paid on profit, that being gross interest less harmoney fees.

Is it possible for you guys to do this or do I need to keep doing an adjustment with the IRD?

Thanks heaps!


Hi Alistar - thanks for your reply.

Harmoney allow lenders to set the rate for the RWT deductions based on their personal tax situation and the RWT percentage can be reviewed and updated in the tax section of your lending account:
https://www.harmoney.co.nz/lender/po...ax/tax-details

We expect that fees paid by Lenders to Harmoney will be tax deductible and recommend seeking independent tax advice from an accountant or tax specialist when preparing a tax return.

The platform loan volumes over time are now available on our Marketplace Statistics page (currently: $710m for NZ as at 18/02).
https://www.harmoney.co.nz/investors...ace-statistics

[Bjauck]

they are claimable, Like I have said, I have checked with the IRD, you guys should check for yourself though.

and I did ask harmoney this, but they just gave some generic stupid answer...

Thanks for the communication with Harmoney.
I agree that fees should be deductible for all. It would be great for a clear public statement from the IRD and Harmoney on that point.

If lender fees are claimable by all, then Harmoney and IRD should state that fact definitively and arrange for RWT to be deducted on the Gross interest less fees basis. I have seen no reports that either have made definitive statements. As I am a small retail investor, I would be in the category of investor that would be least likely of all investors to be able to claim fees. I feel prudence would suggest not being able to claim even Harmoney fees let alone charge-offs.

I am still awaiting official guidance to the effect that, as there is considerable work (more than with a term deposit for example) involved with a Harmoney investment for even a small retail investor, the net blended return is all that is taxable. That has not been forthcoming, unfortunately.

[BJ1]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible - and there is guidance in the Act that can lead to a justifiable decision that they are. If the IRD disagrees and you have justifiable reason to have determined what you did then the normal worst is you pay the tax only. But don't take this as advice from me. It's just my opinion.

[777]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible - and there is guidance in the Act that can lead to a justifiable decision that they are. If the IRD disagrees and you have justifiable reason to have determined what you did then the normal worst is you pay the tax only. But don't take this as advice from me. It's just my opinion.

And very well thought out opinion.

[Bjauck]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible...

It's not Harmoney's responsibility but they could apply and pay for a ruling on behalf of their "not in business"investors...

Where is the guidance that bad debts are deductible for retail investors? The retail investors in collapsed finance companies were informed that their bad debts were not deductible. Are investments in P2P vehicles different? That is the crux...and is a grey area, pending guidance.

[alistar_mid]

I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job.

Same, didn't have write offs this time last year as was only 6 months in, but have nearly $5k this year, will be claiming them too