Are Harmoney investments eligible for PIE tax (28%)?

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Forums › Finance and wealth management › Are Harmoney investments eligible for PIE tax (28%)?

Aaroona

3190 posts

Uber Geek

#191917 20-Feb-2016 14:13

Or must it be taxed at the standard income tax?

I've hada quick look around the IRD website, and all that has done is confuse me a little more.

Has anyone else found out the answer to this?

EDIT: I'm leaning more towards that it probably isn't eligible for PIE tax rates, but better to ask the question.

nigelj

856 posts

Ultimate Geek

#1496263 20-Feb-2016 14:19

Ask a financial advisor to look over the documents, but generally PIE tax is handled for you and you are advised that "taxation has been handled" on annual statements.

You could always ask Harmoney directly or re-read their Ts & Cs/FAQs as it should be pointed out there.

Edit: Decided to have a quick look because I've been curious how it works.... read the Tax section of https://www.harmoney.co.nz/how-it-works/legal/investor-agreement lots of talk about RWT/NRWT so my belief is no, no PIE for you.

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Aaroona

3190 posts

Uber Geek

#1496264 20-Feb-2016 14:26

nigelj:

Ask a financial advisor to look over the documents, but generally PIE tax is handled for you and you are advised that "taxation has been handled" on annual statements.

You could always ask Harmoney directly or re-read their Ts & Cs/FAQs as it should be pointed out there.

For some reason I didn't think to check the investors agreement for any wording on that... but here's what they say;

29. When you register as an Investor:
(a) you must notify Harmoney (acting on behalf of the Trustee) whether you are an NZ Tax Resident or a Non-NZ Tax Resident;
(b) if you are an NZ Tax Resident, you must provide to Harmoney:
(i) your IRD number;
(ii) a copy of your RWT Exemption Certificate (if applicable);
(iii) the rate at which RWT should be withheld from interest payments accruing for your benefit under a Loan; and
(iv) such other tax-related information as Harmoney requests; and
(c) if you are a Non-NZ Tax Resident, you must provide to Harmoney:
(i) the country in which you are resident for income tax purposes; and
(ii) such other tax-related information as Harmoney requests.

I'm thinking it's probably standard income tax. Surely if it was PIE they'd say so.

I'll flick Harmoney an email directly to find out.

nigelj

856 posts

Ultimate Geek

#1496362 20-Feb-2016 17:02

Aaroona:

nigelj:

Ask a financial advisor to look over the documents, but generally PIE tax is handled for you and you are advised that "taxation has been handled" on annual statements.

You could always ask Harmoney directly or re-read their Ts & Cs/FAQs as it should be pointed out there.

For some reason I didn't think to check the investors agreement for any wording on that... but here's what they say;

29. When you register as an Investor:
(a) you must notify Harmoney (acting on behalf of the Trustee) whether you are an NZ Tax Resident or a Non-NZ Tax Resident;
(b) if you are an NZ Tax Resident, you must provide to Harmoney:
(i) your IRD number;
(ii) a copy of your RWT Exemption Certificate (if applicable);
(iii) the rate at which RWT should be withheld from interest payments accruing for your benefit under a Loan; and
(iv) such other tax-related information as Harmoney requests; and
(c) if you are a Non-NZ Tax Resident, you must provide to Harmoney:
(i) the country in which you are resident for income tax purposes; and
(ii) such other tax-related information as Harmoney requests.

I'm thinking it's probably standard income tax. Surely if it was PIE they'd say so.

I'll flick Harmoney an email directly to find out.

Yeah, well

20(b)(iii) the rate at which RWT should be withheld from interest payments accruing for your benefit under a Loan; and

reads to me as standard tax, (RWT = Resident Withholding Tax, i.e. the type of tax the banks have always deducted on old school savings/term deposit accounts).

mattwnz

19994 posts

Uber Geek

#1496381 20-Feb-2016 18:50

How do you find them as an investment?

Aaroona

3190 posts

Uber Geek

#1496399 20-Feb-2016 20:17

mattwnz:

How do you find them as an investment?

Personally they work well for me.

They have an easy to understand pricing model (though I do disagree with some of the fees), it's a self managed investment, where I can easily watch it's performance at any given time, while giving me the opportunity to select where I want my money invested- Makes me feel a little more involved.

Returns wise I can't really speak to, as I've only been in for about a month and a half. But I'm going to continue to invest money in there for the next year and see what happens. YMWV depending on what loans you decide to invest in, since the interest rates and risk varies greatly.

The Platform still has a ways to go in terms of maturing- one thing I really would like is a notification (summary) of when a loan I've invested in has been re-written (thereby releasing my principal back to me, ready to re-invest somewhere), and/or maybe a notification if my account gets above a certain threshold of non-invested funds.

I would also like to see them open their secondary market to sell my investments if I wanted to, to other investors- this is coming they tell me, but no ETA given.

I'm also going to be evaluating other options such as SquirrelMoney and the other 3-4 options we have here in NZ very shortly, if for no other reason than to give me some more diversity in my portfolio, but more so to give me a better view of what my preference of platform is. They have their strengths and weaknesses- SquirrelMoney generally has lower returns, but by extension also has secured loans, rather than Harmoney's unsecured loans. Harmoney unfortunately isn't as for the lender as I would have hoped when it comes to early repayments (not re-writes). They've changed their re-write fee structure to remove taking their fees on the principal if a loan is re-written, which is good - but I think they should take it a step further and should do something similar for early repayments.

For me, this type of investment works quite well, because it's gives me a better feeling of being involved in the investment, than say Kiwisaver, this is probably largely to do with the web portal and the stats available at any given time.

TLDR; Works for me, so far I'm happy, despite only being 1.5 months in. Still evaluating options.