No Tax bill!
This is not a sales pitch for Harmoney or P2P lending and I’m no investment adviser nor registered finance consultant. I will not receive any rewards from anyone for writing and publishing this information. I just found something that’s working well for me, that could do likewise for you too and unlike investment advisers, who charge a fat fee and get commissions, I personally have invested my money in Harmoney – you could say, I have put my money where my mouth is. There will be an equivalent organization like Harmoney in your country.
Most other ways of creating wealth from home, on line over the Internet look good until you deduct taxes. They focus on gross returns, not net.
One of the biggest killers of any investment is tax. Many investments can get you into trouble because you receive your returns with interest and spend it. Then comes tax time and there’s a nasty surprise when you do your tax return – a large debt to the tax man.
Something I forgot to mention, Harmoney withhold an amount you choose, for tax. Depending on your other earnings you might have some extra tax at the end of the year but whatever it is, it is usually less than you would have from franked shares. Compared to other investments you’ll get to keep more of the rewards. Just to be safe plan on losing a bit extra in tax at the end of the year.
Some P2P lenders do not withhold investor funds for tax. If this applies to your lender, you will need to deduct tax from your investment earnings. I’d look at what your usual tax rate and deduct tax from your investment at the next rate up. For example, if my top tax rate is 30% (30c in the dollar) then I should withhold tax at the nest level up (in NZ that’s 33%). By doing this, you won’t get any nasty shocks at tax time. Remember that’s tax only on earnings.