A prescribed investor rate (PIR) is the tax rate that a multi-rate PIE (MRP) uses to work out tax on income from an investment. PIRs are only provided when investing in an MRP.
How PIRs are worked out
PIRs are worked out using the following:
- one of the last two years of taxable income of an investor
- attributed PIE income. New investors are required to provide their IRD number within six weeks of becoming a member otherwise MRPs need to close their account.
Investors have six weeks to provide a PIR and an IRD number. If these are not provided, the MRP must close the account and refund the investment.
If income has been attributed during the six weeks, the MRP will:
- work out tax using the default rate and pay this to us
- include any net balance in the refund of an investment.
An MRP should review its PIRs every year before the beginning of its income year. Investors need to notify the MRP of changes to their PIR.
MRPs usually have a 31 March balance date. The income years used to work out PIRs may change if an investors balance date is different to the MRP's.
How information is handled
Superannuation fund and retirement savings PIEs send their investors information by 30 June following the PIEs tax year.
Other MRPs need to provide information by 31 May.