Understanding portfolio investment entities (PIEs)
A portfolio investment entity (PIE) is a type of investment entity that may have tax advantages for you. That’s because it has special tax rules.
You could benefit from investing in a PIE because you’ll pay tax on any investment income based on your prescribed investor rate (PIR), instead of your personal income tax rate.^
A PIE that invests in New Zealand shares and certain Australian shares won’t be taxed on any capital gains (or losses) from those investments.^
The PIE rules may also provide advantages to some trustee investors.
Who can benefit from investing in a PIE
You may benefit from investing in a portfolio investment entity (PIE) if:
- you pay income tax at a rate of 30%, 33%, or 39%. That’s because the highest prescribed investor rate (PIR) is 28%.
- you’ve returned to the workforce following a period of being out of work for at least two years.
- you’ve had an increase in salary and, as a result, you’re now paying a higher rate of income tax.
- you’re a trust with a trustee tax rate of 33% or 39%, or a trust beneficiary on a 30%, 33%, or 39% income tax rate.
See our examples of how a PIE investment could benefit investors with different goals.
PIE Income and tax returns
When you invest in a portfolio investment entity (PIE), it’ll pay tax on your behalf, using the prescribed investor rate (PIR) you have provided.
PIE tax is generally a ‘final’ tax. This means you don’t have to include your PIE taxable income in your income tax return – as long as you’ve provided the correct PIR. If you’ve provided the correct rate, your PIE tax liability (either at the end of the year or at the time of a taxable event like a withdrawal) will be taken care of.
However, if you understate your PIR, you will have to complete an income tax return to make up any tax shortfall (which you’ll need to pay at your personal income tax rate).
It’s important to check your PIR regularly and to notify us of any changes.
Important: The information on this page is general in nature and does not constitute specific tax advice to any person. We recommend you obtain independent tax advice for your own circumstances. Neither BNZ Investment Services Limited nor any other person accepts any liability for the use of, or reliance on, this information.