Benefits of a PIE fund

The main benefits of investing in a PIE fund are:

• PIE tax rates: You may be able to pay less tax (compared with an investment subject to normal income tax), for the following reasons:
  • An individual’s share of income from a PIE is taxed at a maximum of 28% (the rate is based on the investor’s taxable income plus PIE income, and is based on the lower of the previous two years’ income).
  • Investing in a PIE can extend the amount of income that a 10.5% or 17.5% tax rate is applied to, depending on the other income sources of an investor.
  • Where the correct PIR tax rate is used, tax paid by the Fund is a final tax.  This means that there is no requirement for individuals to include PIE income in their own tax return.
• No tax returns: PIE  funds pay tax on behalf of each individual New Zealand resident investor, at the investor’s nominated PIR tax rate. Investors do not, therefore, generally have to file separate tax returns if all of their sources of income are subject to taxation at source and they have elected the correct rate.
• Flow through vehicle for some investors: Where an investor is “zero rated” a PIE is a flow through tax structure. This has advantages for non-taxable investors.