Understand your PIR to make the most of investments

Just what is a PIR?

If you're a New Zealand resident investing in KiwiSaver or PIEs (Portfolio Investment Entities), your Prescribed Investor Rate (PIR) determines the tax rate on your investment earnings. Providing your PIR to the investment organisation ensures the correct rate is used.

Finding your PIR

Your PIR is generally based on your highest income tax rate (marginal tax rate) from the past two income tax years. If your PIE income exceeds $22,000, it must be included in the calculation. Here's how it works:

• If your total income is over $48,000, your PIR is 28%.
• If your income is under $48,000 but adding PIE income pushes it over $70,000, your PIR is 28%.

For example:

• Income $45,000 + PIE income $23,000 = PIR is 17.5%.
• Income $45,000 + PIE income $28,000 = PIR is 28%.

How to find your PIR for the year ending 31 March 2025

Look at your income tax for the last two years: 31 March 2024, and 31 March 2023.

Choose the lower marginal tax rate to be your PIR.

Example:

• If your income for 31 March 2024 was $49,000, you’d be paying 30% tax on income over $48,000, so your PIR would be 28%.
• If your income for 31 March 2023 was $47,000, your highest tax rate would be 17.5%, so your PIR would be 17.5%.
• Choose the lower one, which is 17.5%.

What are PIEs?

PIEs are investment funds with specific criteria. They offer a maximum tax rate of 28%, encouraging investment. Common types include:

• Multi-Rate PIEs: The most common type.
• Listed PIEs: Shares or unit trusts on the stock exchange, which may include dividends with attached tax credits (imputation credits).

Imputation credits: A tax advantage

Listed PIEs may offer dividends with imputation credits, representing tax already paid by the company. If your tax rate is lower than the imputation credit rate, you can claim a tax refund by including them in your tax return.

Other considerations

• Non-residents generally use a PIR of 28%, with some exceptions.
• Trusts can choose a PIR suitable for the beneficiaries. If not using 28%, undistributed PIE income will be taxed at the higher trust income rate. A trust choosing the 28% rate can exclude PIE income from its tax return but can’t distribute the PIE income to its beneficiaries.
• Companies should always use a PIR of 0% and include the income in the tax return.