September 4, 2019 Strong CA

Understanding how your investment is taxed

What is a PIE and PIR?

A portfolio investment entity (PIE) is a type of investment entity (such as a managed fund) that pays tax at each investors tax rate and is subject to special tax rules.

Your prescribed investor rate (PIR) is the rate used to calculate how much tax is to be paid on your investment. For example, if your PIE income is $100 and your PIR is 28%, your gross payable tax is $28.

What is my correct PIR?

The questions below will help you work out your PIR. You will need to know what your taxable income and PIE income were for the last two income years before the tax year in which the PIR is to be applied.

Your PIE income or loss is the amount attributed to you by PIE’s as recorded in tax certificates issued by PIE’s at the end of each income year.

Working out your PIR (for individual investors)¹

  1. Are you a New Zealand tax resident?
    No – your PIR is 28%
    Yes – go to question 2
  2. In either of the last two income years:
    Was your taxable income $14,000 or less, AND
    Was your total income (taxable income and PIE income²) $48,000 or less?
    No – go to question 3
    Yes – your PIR is 10.5%
  3. In either of the last two income years:
    Was your taxable income $48,000 or less, AND
    Was your total income (taxable income and PIE income²) $70,000 or less?
    No – your PIR is 28%
    Yes – your PIR is 17.5%
¹Other than in the capacity as a trustee of a trust
²You can find your PIE income on your tax certificate. Your PIE income is your attributed PIE income after subtracting and attributable PIE loss

What happens if my PIR is incorrect?

If the PIR in your tax summary is lower than your correct PIR, you will need to file a tax return and pay any additional tax to Inland Revenue. Any tax already paid will be available as a tax credit.

If the PIR in your tax summary is higher than your correct PIR, the tax paid is treated as final and you cannot claim a refund of any overpaid tax from Inland Revenue.

How do I change my PIR?

You will need to get in touch with your PIE provider.

How your investment affects your tax depends on your personal circumstance.
The information provided on this page is intended as a guide only.
Give us a call if you are uncertain or speak with Inland Revenue.

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