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Prescribed investor rates (PIRs)

If you're an individual and a New Zealand tax resident, your portfolio investment entity (PIE) income will be taxed using the prescribed investor rate (PIR) you should have provided to the PIE. Your prescribed investor rate is based on your income from the last 2 income years, including PIE income or loss. 

The prescribed investor rates are 10.5%, 17.5% and 28%.

If you invest in a multi-rate PIE (MRP), you need to provide them with your IRD number and prescribed investor rate. A common type of multi-rate PIE is a KiwiSaver scheme. If you do not provide the multi-rate PIE with your details, you will be taxed at the default rate of 28%. You have 6 weeks from opening a PIE investment to provide your IRD number, otherwise the PIE is required to close your account.

You may be taxed at 0% (zero rated) if you exit entirely from a quarterly  multi-rate PIE. A transitional resident who invests in a foreign investment zero-rate PIE may also have the 0% rate applied.

Prescribed investor rates for portfolio investment entities

Using prescribed investor rates

PIE income and your end of year tax assessment

2021 and future tax years

Your PIE income will still be taxed by your portfolio investment entity though we may advise them to use a different rate if we think you are using the wrong prescribed investor rate (PIR).

Your PIE income will be included on your end of year income tax assessment or in your individual income tax return – IR3. The PIE calculation will now be squared up using your correct PIR and not at your marginal tax rate. Customers can now receive a credit for overpaid tax on PIE income. Any over or under payment will be offset against any income tax over or under payment.

For example, if your PIE tax was overpaid by $50 and your income tax was underpaid by $150, your end of year tax assessment will show you have tax to pay of $100.

Working for Families and student loan customers that include their locked-in PIE income on their income tax return no longer need to also include this on an IR215 form.

End-of-year portfolio investment entity (PIE) calculation

2020 and tax year and earlier

If you’ve been taxed at your correct prescribed investor rate, your PIE income is not included in your end of year tax return or assessment.

If your rate is too low, you may have a tax bill. However, if your prescribed investor rate is too high and you overpay your tax, you cannot get a refund.  

Your multi-rate PIE income must be included in your end of year tax assessment if you have:

  • used a prescribed investor rate that's too low
  • been taxed at 0% because you exited a quarterly multi-rate PIE during the year
  • chosen not to include your worldwide income as a new tax resident.

If you stop being a New Zealand tax resident, you should have a prescribed investor rate of 28% from the date you leave New Zealand. However, if you become a notified foreign investor and you advise your foreign investment PIE, they will apply the appropriate rate(s). You need to let your multi-rate PIE know as soon as possible.

New residents should include their worldwide income when working out their prescribed investor rate. You may choose not to account for worldwide income if you expect income in either of your first 2 resident years will be much lower than your total income from previous years.  

Adjusting your income

If you receive Working for Families Tax Credits or you have a student loan, you may need to adjust your income.

Adjusting your income for Working for Families and student loans

Income from a retirement savings or superannuation scheme PIE.

Information handling

Multi-rate PIEs generally need to provide you with details of your income by 31 May or 30 June of the following tax year. If you do not receive details from your multi-rate PIE or you think the investor statement is wrong, you need to contact the multi-rate PIE.

If your multi-rate PIE income has been taxed at 0% or if you have given a prescribed investor rate that is not correct, you will need to keep records relating to that income for seven years. 

Portfolio investment entities