Is a PIE right for you?

Learn more about PIE.

PIE stands for Portfolio Investment Entity. A PIE can help you save more of your money because you could pay less tax if you are on the right PIE rate (called a “prescribed investor rate” or “PIR”).

Note: Personal income tax brackets changed from 31 July 2024. However, the PIR income bands do not change until 1 April 2025. A PIE product may not be beneficial for some individuals for the tax year ended 31 March 2025 where their interest income from regular savings accounts may be subject to a lower income tax rate under the new income tax brackets. You should seek advice from a tax advisor if you are unsure if a PIE product is suitable for you following the income tax bracket changes.

Example 1:

Individual investors currently earning over $53,500 of taxable income

Note - includes those holding a joint account.

If you are an individual currently earning over $53,500 of taxable income, your PIR will be capped at 28% and will be lower than your income tax rate - allowing you to benefit from a tax saving.

Taxable income¹	Income tax rate (on deposits in a regular savings account)	Prescribed Investor Rate (PIR)	Tax benefit on your PIE returns
$53,501 - $70,000 ($53,501 - $78,100 from 1 April 2025)	30%	28%	2%
$70,001 - $78,100 (Transitional: refer row above from 1 April 2025)	30.99%	28%	2.99%
$78,101 - $180,000	33%	28%	5%
Over $180,000	39%	28%	11%

¹ Examples of taxable income include salary, wages, commission, NZ Super, rent, interest and dividends, student allowances, parental leave, tips and gratuities. When calculating your taxable income to determine your PIR, you must also include non-New Zealand sourced income for the relevant income year, even if you were not a New Zealand tax resident when it was earned. New residents will be able to elect out of this treatment in some cases, see www.ird.govt.nz. For individuals, taxable income does not include PIE income that has been subject to a final tax from PIE compliant KiwiSaver schemes and managed funds.

Example 2:

Trustee or beneficiary of a family trust

A trust (excluding a unit trust or charitable trust) that invests in a PIE can potentially enjoy similar tax benefits as someone earning over $53,500 of taxable income if the PIE notifies a PIR of 28%.

A trust can either hold income from a PIE in the trust or pass the income to its beneficiaries.

If income from a regular savings account is held and taxed within the trust as trustee income, it will be taxed at the trustee income tax rate of 33% or 39% if trustee income is more than $10,000 p.a. (except for certain superannuation funds for which an income tax rate of 28% applies).

Taxable income¹		Income tax rate (on deposits in a regular savings account)	Prescribed Investor Rate (PIR)	Tax benefit on your PIE returns
Trustee	All income levels	33%/39%	28%	5%/11%
Beneficiary	$53,501 - $70,000 ($53,501 - $78,100 from 1 April 2025)	30%	28%	2%
	$70,001 - $78,100 (Transitional: refer row above from 1 April 2025)	30.99%	28%	2.99%
	$78,101 - $180,000	33%	28%	5%
	Over $180,000	39%	28%	11%

¹ Examples of taxable income include salary, wages, commission, NZ Super, rent, interest and dividends, student allowances, parental leave, tips and gratuities. When calculating your taxable income to determine your PIR, you must also include non-New Zealand sourced income for the relevant income year, even if you were not a New Zealand tax resident when it was earned. New residents will be able to elect out of this treatment in some cases, see www.ird.govt.nz. For individuals, taxable income does not include PIE income that has been subject to a final tax from PIE compliant KiwiSaver schemes and managed funds.

Notes

Example 3:

You are an individual whose taxable income has recently increased, and your income tax rate was previously 10.5% or 17.5%

Your PIR is based on your lowest taxable income in either of your previous two income years.

If you earn more taxable income in the current income year than either of the two previous income years and this puts you in a higher income tax bracket, tax on your PIE returns can temporarily remain on a lower rate, for up to two income years.

This situation may for example occur as a result of a salary increase (e.g. entry or return to full-time work) or an increase in rental income.

Scenario

Example 4:

From 1 April 2025, you earn below, but close to $15,600 or $53,500, and your savings income will push you into the next income tax bracket.

You can earn some additional income through a PIE without an increase in your tax rate on your PIE savings.

This is most likely to occur if you earn near the upper limit of your income tax bracket – that is, from 1 April 2025, if you earn below but close to $15,600 with a 10.5% income tax rate or $53,500 with a 17.5% income tax rate.

If you start or continue to save in a regular savings account, your taxable income may tip over $15,600 or $53,500. This will increase your income tax rate (for the portion of your taxable income above $15,600 or $53,500 respectively).

However, if you save through a PIE instead, your PIE income isn’t included in your taxable income for determining your income tax rate. This may enable you to save more without an increase in tax on your savings.

Scenario

From 1 April 2025, a retiree earns $53,000 of taxable income each income year from NZ Super, rental income and company dividends. Additional cash from a property sale and some of the company dividends are placed in a PIE.

The retiree can earn income from their PIE accounts until their total income (taxable income plus PIE income) exceeds $78,100 and still enjoy a PIR of 17.5%. Compared to investing in a regular savings account or term deposit (see below), this means up to an additional $24,600 of PIE income (i.e. the portion of total income above $53,500) can be earned and still taxed on a lower 17.5% PIR rather than 30%. By investing in a PIE, the retiree in this example enjoys a 12.5% tax benefit on their income over $53,500 (up to total income of $78,100).

To illustrate, the following table compares the situation where –

(a) the retiree invests through a term deposit earning interest of $10,000, with

(b) the situation where the retiree invests through a Term PIE account earning returns of $10,000 instead:

	(a)	(b)
NZ Super, rental income and company dividends	$53,000	$53,000
Interest on term deposit	$10,000	-
Taxable income	$63,000	$53,000
Returns on Term PIE investment	-	$10,000
Total income (taxable income plus PIE income)	$63,000	$63,000

Tax payable:*
Income tax @10.5% on taxable income up to $15,500	$1,628	$1,628
Income tax @17.5% on taxable income from $15,501 to $53,500	$6,650	$6,563
Income tax @30% on taxable income from $53,501 (up to $78,100)	$2,850	-
PIE tax @17.5% on PIE income	-	$1,750

Total tax payable	$11,127	$9,940
Tax benefit ($11,127 less $9,940)		$1,187

Under (a), the interest from the term deposit is counted as taxable income which puts the retiree into the next income tax bracket, meaning the portion of taxable income over $53,500 is taxed at 30%.

In comparison, under (b), the returns on the Term PIE investment are not counted as taxable income. This means the retiree’s taxable income stays within the 17.5% income tax bracket ($15,501 to $53,500), while returns on their Term PIE investment are taxed at a PIR of $17.5%.

* The above is based on income tax brackets and PIR income bands applying from 1 April 2025.

Next steps.

Examples of when a PIE might not be suitable for you

Learn more

Understanding your PIR

Learn more

Investing in a PIE

See your options

Investing in KiwiSaver

Learn more

Things you should know.

To ensure you can enjoy the potential tax benefits of PIEs, you must provide your IRD number and your correct PIR when you open your account. Please review your PIR each year and if your PIR changes due to a change in circumstances, let us know straight away.

The information on this webpage is intended for general tax information and illustrative purposes only, it does not constitute tax advice, and should not be relied upon for tax purposes.

Taxation legislation, its interpretation and the rates and bases of taxation may change. You should seek professional advice on the tax implications of investments based on your particular circumstances.

You should seek independent professional advice on the tax implications of your investments based on your particular circumstances.

Westpac, BT Funds Management (NZ) Limited and Trustees Executors Limited do not accept any responsibility for the tax consequences of your investment in a PIE.