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What is a PIE?

Introduction

A portfolio investment entity (PIE) is a new type of entity, such as a managed fund that invests the contributions from investors in different types of investments.

New tax rules have allowed eligible entities to become PIEs from 1 October 2007.

Eligible entities that elect to become a PIE will generally pay tax on investment income based on the prescribed investor rate (PIR) of their investors, rather than at the entity's tax rate. Resident trustees can collectively choose a PIR of 0%, 17.5% or 28% to best suit the trust's beneficiaries. Trustees of testamentary trusts can also choose 10.5%.

Excluded income earned through a PIE will generally not affect beneficiaries’ entitlements to working for families tax credits, or their student loan or child support obligations.

Eligible entities

Entities that meet the eligibility requirements can elect to become a PIE if they are a:

  • managed fund, such as a:
    • unit trust, or
    • superannuation fund
  • company
  • defined benefit fund
  • life fund, or
  • group investment fund.

To find out more about the types of PIEs, please read Portfolio investment entities (PIE).

Investing in a PIE

We cannot comment or provide advice on investment schemes. You should talk to your tax agent or financial adviser.

Record-keeping requirements

There are no record-keeping requirements for excluded income.

If the PIE income is not excluded income because:

  • you as the resident trustee have supplied the PIE with the zero rate, or
  • the income attributed by the PIE has been taxed at a zero rate on exit from the PIE

then you must keep your records relating to that income for at least seven years.

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Date published: 21 Sep 2010

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