Term PIE
A fixed term investment with tax advantages that maximise your returns
- Individuals won't pay more than 28% tax on returns2,3
- Competitive fixed rates of return on investments of $5,000 or more
- Range of terms from 30 days to five years to suit your financial plans
- Available to individuals, partnerships, trusts, companies and organisations
- There are currently no entry, exit or management fees
More detail
Returns are maximised because tax is minimised
BNZ Term PIE1 works in a similar way to a Term Deposit because you lock in your investment at a fixed rate of return for a fixed period of time. The main difference is that Term PIE is a unit trust with special tax rules because it is a Portfolio Investment Entity (PIE). Under current legislation, your Term PIE returns are taxed at your Prescribed Investor Rate (PIR) up to a maximum rate of 28% for most investors3.
Benefits for all types of investors
If you're an individual in the 30% or 33% tax bracket, you stand to gain because you won't pay more than 28% tax on your Term PIE returns. And if you are on a lower tax rate you could also maximise your returns by investing in a PIE. This is because of the way that PIE income is taxed.
Here are some examples of how a PIE investment benefits investors with different goals.
- Parking your funds for the short term
Rachel is on a top tax rate of 33%. She wants to invest her house deposit while she goes away for six months. - Saving for a long-term goal
Brian is on a tax rate of 30%. He's trying to maximise his savings so he can buy an expensive car one day. - Boosting retirement income
Caitlin's retired and receives superannuation. But extra income earned from her investments means her tax rate may be 30%. - Helping with living expenses
Luke's got a part time job while he's at uni and is on a lower tax rate. He has inherited some money which he plans to invest so he can use the returns it generates to help him out with his living expenses.
Select fixed terms to suit your financial plans
You can have as many Term PIE investments as you need. For example, you could have one investment with a fixed term of two years, so that it matures in time for a major expense (such as a family wedding); and another separate investment with a term of six months, so that it matures in time for your next holiday.
Decide when you'd like to receive your return payments
Depending on the term of your investment, you may be able to choose how you receive your returns, e.g. throughout your investment period or at the end of it. You can also decide whether to have returns paid out to you, (to provide you with an income) or retained in the Fund (compounded) to steadily increase your investment.
Your investment stays with BNZ
- Term PIE is an investment fund managed by BNZ Investment Services Limited.
- The money you put into Term PIE is pooled with other investors' money and is invested in a New Zealand dollar, interest bearing account with BNZ.
- You buy units in the Fund and each unit has a fixed price of $1.00.
Investing is straightforward
You simply need to read and understand the BNZ Term PIE Investment Statement PDF 487KB, complete and sign the application form, and come and see us.
BNZ Cash PIE and BNZ Term PIE Prospectus
On 23 September 2011, BNZ Investment Services Limited registered a prospectus for the offer of units in the BNZ Cash PIE and BNZ Term PIE dated 23 September 2011. On 8 December 2011, BNZ Investment Services Limited registered a Memorandum of Amendments to the registered prospectus. Download a copy of the Memorandum of Amendments and the prospectus (as amended) PDF 3.3MB.
Parking your money for the short-term
Rachel has saved a $50,000 deposit for a house, but hasn't found the right one yet. She's taking an extended holiday and won't be looking at houses for a while. So she's decided to invest her deposit for six months.
- Rachel earns $100,000 of taxable income from her job. She pays PAYE on this income and her marginal tax rate is 33%. She doesn't have any other income.
- Rachel knows that she can lock her savings, of $50,000, at BNZ in a 180-day Term Deposit or Term PIE at 4.80% p.a. The returns will be paid at maturity.
- Rachel's worked out that she'd pay 33% Resident Withholding Tax (RWT) on her Term Deposit returns. But she'll only pay 28% tax on her Term PIE returns because this is the top tax rate (Prescribed Investor Rate or PIR) for a PIE investment.
Rachel compares the after-tax returns for each investment. Here are her calculations:
| $50,000 investment for 180 days | Term Deposit (Taxed at 33%) |
Term PIE* (Taxed at 28%) |
|---|---|---|
| 4.80% p.a. return (before tax) over whole term |
$ 1,183.56
|
$ 1,183.56
|
| Tax to be deducted from Rachel's returns |
-$ 390.58
|
-$ 331.40
|
| Total return (after tax) |
$ 792.99
|
$ 852.16
|
Rachel would receive $59.18 more in after-tax returns by investing in the BNZ Term PIE*.
Small print
* These calculations do not include the impact of the PIE tax that will be deducted from investors' accounts on or around 31 March each year.
These case studies are for illustration purposes only and should not be relied upon or used as a substitute for professional advice. You should obtain professional advice for your particular circumstances.
Rates are subject to change. Account opening criteria apply. Details, Standard Terms and Conditions, disclosure statement and Investment Statement for Term Investments may be obtained free at any BNZ store.
BNZ Term PIE (Fund) is offered and managed by BNZ Investment Services Limited - a wholly owned subsidiary of Bank of New Zealand (BNZ). A current Investment Statement can be obtained free of charge from any BNZ store. BNZ is a promoter of the Fund. An investment in the Fund does not represent a deposit or other liability of the BNZ, National Australia Bank Limited or any member of the BNZ group of companies. An investment in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value of investments and the income from them may go down as well as up. Neither BNZ, National Australia Bank Limited nor any other person guarantees (either partially or fully) the capital value or performance of the investment.
PIE funds provide some individual and trustee investors with a significant benefit over holding assets (or investments) directly. This is because PIE funds will pay tax on behalf of such investors at their Prescribed Investor Rate (PIR) with the highest or default PIR capped at 28%. Provided you have notified your correct PIR, no further tax will be payable. This means that individual investors with a higher marginal tax rate than 28% and a PIR of 28% will save tax. Certain trusts with a 33% tax rate may elect a PIR of 17.5% or 28% (certain testamentary trusts can elect a PIR of 10.5%) and therefore may save tax.
BNZ Authorised Financial Advisers' disclosure statements are available on request and free of charge.
Saving for a long-term goal
Brian is really interested in motor racing and wants to buy a V8 supercar one day. He realises that his goal will only be achieved if he can resist the temptation to spend his savings on other things. So he's decided to lock his current savings of $60,000 away for two years.
- Brian earns $55,000 of taxable income from his job. He pays PAYE on this income and his marginal tax rate is 30%. He doesn't have any other income.
- Brian knows that he can lock in his savings at a before-tax rate of 5.20% p.a. for two years if he invests in a Term Deposit or a Term PIE at BNZ.
- Brian's worked out that he'd pay 30% Resident Withholding Tax (RWT) on his Term Deposit returns. But he'll only pay 28% tax on his Term PIE returns because this is the top tax rate (Prescribed Investor Rate or PIR) for a PIE investment.
- Because Brian's looking at a longer-term investments, he can choose to have his returns reinvested (compounded) every three months so he can maximise his returns.
Brian compares the two investments. Here are his calculations:
| $60,000 investment for two years | Term Deposit (Taxed at 30%) |
Term PIE* (Taxed at 28%) |
|---|---|---|
| 5.20% p.a. return (before tax) over whole term |
$ 6,462.59
|
$ 6,513.42
|
| Tax to be deducted from Brian's returns |
- $ 1,938.78
|
- $ 1,823.76
|
| Total return (after tax) |
$ 4,523.81
|
$ 4,689.66
|
Brian would receive $165.85 more in after-tax returns by investing in Term PIE for two reasons:
- He would benefit from the lower tax rate that will be applied to his PIE investment
- He only gets taxed on his Term PIE investment on March 31 each year and at maturity. This means his returns are reinvested each quarter without tax being deducted. With a Term Deposit, he'd pay tax on his returns each quarter before they are reinvested.
Small print
* These calculations do not include the impact of the PIE tax that will be deducted from investors' accounts on or around 31 March each year.
These case studies are for illustration purposes only and should not be relied upon or used as a substitute for professional advice. You should obtain professional advice for your particular circumstances.
Rates are subject to change. Account opening criteria apply. Details, Standard Terms and Conditions, disclosure statement and Investment Statement for Term Investments may be obtained free at any BNZ store.
BNZ Term PIE (Fund) is offered and managed by BNZ Investment Services Limited - a wholly owned subsidiary of Bank of New Zealand (BNZ). A current Investment Statement can be obtained free of charge from any BNZ store. BNZ is a promoter of the Fund. An investment in the Fund does not represent a deposit or other liability of the BNZ, National Australia Bank Limited or any member of the BNZ group of companies. An investment in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value of investments and the income from them may go down as well as up. Neither BNZ, National Australia Bank Limited nor any other person guarantees (either partially or fully) the capital value or performance of the investment.
PIE funds provide some individual and trustee investors with a significant benefit over holding assets (or investments) directly. This is because PIE funds will pay tax on behalf of such investors at their Prescribed Investor Rate (PIR) with the highest or default PIR capped at 28%. Provided you have notified your correct PIR, no further tax will be payable. This means that individual investors with a higher marginal tax rate than 28% and a PIR of 28% will save tax. Certain trusts with a 33% tax rate may elect a PIR of 17.5% or 28% (certain testamentary trusts can elect a PIR of 10.5%) and therefore may save tax.
BNZ Authorised Financial Advisers' disclosure statements are available on request and free of charge.
Boosting retirement income
Caitlin retired recently and receives $19,425 a year in national superannuation. Two years ago Caitlin was working full time and earned $75,000 in taxable income, but this dropped to $46,000 (including superannuation) last year when she retired. So Caitlin has just sold one of her rental properties and wants to invest the $400,000 sale proceeds to boost her retirement income.
Caitlin wants to know how much income she'll have each month. So she has decided to lock in her $400,000 for three years and have her returns paid monthly. She has negotiated a special rate of 5.80% p.a. annually.
- This year, she's expecting her taxable income (excluding any returns on the $400,000) to remain at $46,000 – a combination of her superannuation and returns from her rental properties.
- Caitlin's worked out that her gross annual returns before tax from her $400,000 investment would be $23,200. This would bring her taxable income to a total of $69,200 this year ($23,200 + $46,000).
- Caitlin has worked out that if she invests in a Term Deposit she'll pay Resident Withholding Tax (RWT) on her returns at 30%
- But if she puts her money in Term PIE, her tax rate (Prescribed Investor Rate or PIR) will only be 17.5%. This is because her total taxable income of $46,000 last year was below $48,000 with no PIE income.
- Caitlin will need to review her PIR each year to ensure that she remains eligible for the 17.5% rate.
Here's how Term Deposit stacks up next to Term PIE for Caitlin:
| $400,000 investment for three years | Term Deposit (Taxed at 30%) |
Term PIE* (Taxed at 17.5%) |
|---|---|---|
| 5.80% p.a. return (before tax) over whole term |
$ 69,600.00
|
$ 69,600.00
|
| Tax to be deducted from Caitlin's returns |
-$ 20,880.00
|
-$ 12,180.00
|
| Total return (after tax) |
$ 48,720.00
|
$ 57,420.00
|
Caitlin would receive $8,700.00 more in after-tax returns over the life of her three-year investment by investing in Term PIE*.
The additional after-tax return would be spread throughout the three-year period. Overall it means she has an extra $241.67 per month to live off.
Caitlin will need to review her PIR each year to ensure that she remains eligible for the 17.5% rate.
Small print
* These calculations do not include the impact of the PIE tax that will be deducted from investors' accounts on or around 31 March each year.
These case studies are for illustration purposes only and should not be relied upon or used as a substitute for professional advice. You should obtain professional advice for your particular circumstances.
Rates are subject to change. Account opening criteria apply. Details, Standard Terms and Conditions, disclosure statement and Investment Statement for Term Investments may be obtained free at any BNZ store.
BNZ Term PIE (Fund) is offered and managed by BNZ Investment Services Limited - a wholly owned subsidiary of Bank of New Zealand (BNZ). A current Investment Statement can be obtained free of charge from any BNZ store. BNZ is a promoter of the Fund. An investment in the Fund does not represent a deposit or other liability of the BNZ, National Australia Bank Limited or any member of the BNZ group of companies. An investment in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value of investments and the income from them may go down as well as up. Neither BNZ, National Australia Bank Limited nor any other person guarantees (either partially or fully) the capital value or performance of the investment.
PIE funds provide some individual and trustee investors with a significant benefit over holding assets (or investments) directly. This is because PIE funds will pay tax on behalf of such investors at their Prescribed Investor Rate (PIR) with the highest or default PIR capped at 28%. Provided you have notified your correct PIR, no further tax will be payable. This means that individual investors with a higher marginal tax rate than 28% and a PIR of 28% will save tax. Certain trusts with a 33% tax rate may elect a PIR of 17.5% or 28% (certain testamentary trusts can elect a PIR of 10.5%) and therefore may save tax.
BNZ Authorised Financial Advisers' disclosure statements are available on request and free of charge.
Helping with university living expenses
Luke's off to university soon. He has recently inherited $200,000. Luke knows if he invests this amount, he can use the returns to support himself through uni and supplement his part-time job income where he earned $9000 last year. When he leaves uni in three years, he wants to use the principal (i.e. his original investment amount) as a deposit on his first house.
Being a bright lad, Luke has decided to invest the money one year at a time and have the returns paid into his bank account each month. He doesn't want to lock money in for longer than a year because he knows that interest rates are likely to rise. Luke has been offered a rate of 4.50% p.a. for either a one-year Term Deposit or Term PIE.
- Luke expects his part-time wages to remain around $9000 this year. So if he invests the $200,000 in a Term Deposit, he's worked out he'll pay Resident Withholding Tax (RWT) at 17.5%. This is because his total taxable income next year will be $18,000.
- If he invests in a Term PIE, he will be only be taxed at the lowest Prescribed Investor Rate (or PIR) of 10.5%, based on his previous year's taxable income of $9000.
Luke decided to compare which investment would give him the highest after-tax return. Here are his calculations:
| $200,000 investment for one year | Term Deposit (Taxed at 17.5%) |
Term PIE* (Taxed at 10.5%) |
|---|---|---|
| 4.50% p.a. return (before tax) over the whole term |
$ 9,000.00
|
$ 9,000.00
|
| Tax to be deducted from Caitlin's returns |
-$ 1,575.00
|
-$ 945.00
|
| Total return (after tax) |
$ 7,425.00
|
$ 8,055.00
|
Luke would receive $630.00 more in after-tax returns by investing in Term PIE over one year*.
This after-tax return would be spread throughout the year, which means he'll have an extra $52.50 a month to live off. For Luke, that's an extra few cups of coffee each week to keep him awake while he's studying!
Luke will need to review his PIR each year to ensure that he is still eligible for the 10.5% rate.
Small print
* These calculations do not include the impact of the PIE tax that will be deducted from investors' accounts on or around 31 March each year.
These case studies are for illustration purposes only and should not be relied upon or used as a substitute for professional advice. You should obtain professional advice for your particular circumstances.
Rates are subject to change. Account opening criteria apply. Details, Standard Terms and Conditions, disclosure statement and Investment Statement for Term Investments may be obtained free at any BNZ store.
BNZ Term PIE (Fund) is offered and managed by BNZ Investment Services Limited - a wholly owned subsidiary of Bank of New Zealand (BNZ). A current Investment Statement can be obtained free of charge from any BNZ store. BNZ is a promoter of the Fund. An investment in the Fund does not represent a deposit or other liability of the BNZ, National Australia Bank Limited or any member of the BNZ group of companies. An investment in the Fund is subject to investment risk, including possible delays in repayment and loss of income and principal invested. The value of investments and the income from them may go down as well as up. Neither BNZ, National Australia Bank Limited nor any other person guarantees (either partially or fully) the capital value or performance of the investment.
PIE funds provide some individual and trustee investors with a significant benefit over holding assets (or investments) directly. This is because PIE funds will pay tax on behalf of such investors at their Prescribed Investor Rate (PIR) with the highest or default PIR capped at 28%. Provided you have notified your correct PIR, no further tax will be payable. This means that individual investors with a higher marginal tax rate than 28% and a PIR of 28% will save tax. Certain trusts with a 33% tax rate may elect a PIR of 17.5% or 28% (certain testamentary trusts can elect a PIR of 10.5%) and therefore may save tax.
BNZ Authorised Financial Advisers' disclosure statements are available on request and free of charge.
| Term | $5,000 - $1,000,000 |
|---|---|
| 30 days* | View rates here |
| 60 days* | View rates here |
| 90 days* | View rates here |
| 120 days* | View rates here |
| 150 days* | View rates here |
| 180 days** | View rates here |
| 210 days** | View rates here |
| 240 days** | View rates here |
| 270 days** | View rates here |
| 1 year** | View rates here |
| 18 months** | View rates here |
| 2 years** | View rates here |
| 3 years** | View rates here |
| 4 years** | View rates here |
| 5 years** | View rates here |
