PIE vs Direct Shares vs Bank Deposit Calculator
Compare how PIE funds, direct NZ shares, and bank deposits grow after tax based on your income, return composition, and investment horizon.
Your PIR: 28.0% · Marginal rate: 30.0%
Applies to direct NZ shares only — PIE funds tax all returns at PIR, bank deposits tax all returns as interest.
Winner after 10 years
Direct NZ Shares
Direct NZ shares beat PIE by $2,424 because 40% of your return is tax-free capital growth
PIE Fund
$16,351
Tax paid: $2,470 at 28.0% PIR
Direct NZ Shares ✓
$18,775
Tax paid: $672
Bank Deposit
$16,134
Tax paid: $2,629 at 30.0% marginal
| Year | PIE Fund | Direct Shares | Bank Deposit |
|---|---|---|---|
| 1 | $10,504 | $10,650 | $10,490 |
| 2 | $11,033 | $11,343 | $11,004 |
| 3 | $11,589 | $12,080 | $11,543 |
| 4 | $12,174 | $12,866 | $12,109 |
| 5 | $12,787 | $13,702 | $12,702 |
| 6 | $13,432 | $14,593 | $13,325 |
| 7 | $14,109 | $15,542 | $13,977 |
| 8 | $14,820 | $16,553 | $14,662 |
| 9 | $15,567 | $17,629 | $15,381 |
| 10 | $16,351 | $18,775 | $16,134 |
PIE Funds vs Direct Shares vs Bank Deposits in New Zealand
A Portfolio Investment Entity (PIE) is a special type of NZ investment fund (such as a managed fund or KiwiSaver fund) that is taxed differently from direct investments like shares, term deposits, or bonds held in your own name.
The key advantage of PIE funds is that your investment returns are taxed at your Prescribed Investor Rate (PIR) — which is capped at 28% — rather than your personal marginal income tax rate, which can be as high as 39%.
PIE income is excluded income: it does not need to be declared on your personal tax return, and it cannot push you into a higher personal tax bracket.
However, direct NZ shares have their own tax advantages: capital growth is generally tax-free for NZ individual investors, and NZ company dividends come with imputation credits that can reduce or eliminate additional tax. Bank deposits are taxed entirely as interest at your full marginal rate with no equivalent offset.
Understanding Return Composition
The tax treatment of your investment returns depends on what type of return you receive. This matters most for direct NZ shares:
- Interest — Fully taxable at your marginal rate each year. This applies to bank deposits, term deposits, bonds, and interest-bearing accounts. RWT (Resident Withholding Tax) is deducted at source.
- Dividends — Taxable, but NZ companies pay 28% tax on their profits before distributing dividends. Shareholders receive imputation credits for this pre-paid tax. If your marginal rate is below 28%, you may receive a tax refund on dividends.
- Capital Growth — Generally tax-free for NZ individual investors who are not share traders. This is a significant advantage of direct NZ shares compared to PIE funds or deposits, where capital gains inside the fund are effectively taxed as income.
For bank deposits, all returns are interest by definition — the return composition input has no effect on the bank deposit result. PIE funds tax all returns at your PIR regardless of composition.
Prescribed Investor Rate (PIR) Brackets
| Taxable Income | PIR | Max Marginal Rate | PIE Saving |
|---|---|---|---|
| $0 – $15,600 | 10.5% | 10.5% | No advantage |
| $15,601 – $53,500 | 17.5% | 17.5% | No advantage |
| $53,501 – $78,100 | 28% | 30% | Save 2% |
| $78,101 – $180,000 | 28% | 33% | Save 5% |
| $180,001+ | 28% | 39% | Save 11% |
PIR is based on your taxable income in either of the two previous income years.
Frequently asked questions
What is a PIE fund?
A Portfolio Investment Entity (PIE) is a type of NZ managed investment fund — including KiwiSaver funds — that qualifies for special tax treatment. Returns earned inside a PIE are taxed at the investor's Prescribed Investor Rate (PIR) rather than their marginal income tax rate.
What is the Prescribed Investor Rate (PIR)?
Your PIR is the tax rate applied to your PIE investment income. It is based on your taxable income from either of the two previous income years. The three PIR rates are 10.5% (income ≤ $15,600), 17.5% ($15,601–$53,500), and 28% ($53,501+). You must notify your PIE provider of your correct PIR.
Why is PIE income excluded from my tax return?
PIE income is treated as excluded income under the Income Tax Act 2007. The PIE pays tax on your behalf at your PIR, so you do not need to include it in your personal tax return. Crucially, it also does not count toward your total taxable income for other purposes.
Who benefits most from PIE funds?
Investors earning over $53,500 benefit most from PIE funds. At this level, your marginal rate is 30%, 33%, or 39%, but your PIR is capped at 28%. The higher your income, the greater the annual tax saving — compounded over years, this can result in a significantly larger portfolio. That said, if your direct NZ shares generate most of their return as tax-free capital growth, direct shares can outperform even a PIE fund.
What are imputation credits?
NZ companies pay 28% income tax on their profits before distributing dividends to shareholders. Imputation credits allow shareholders to claim credit for this pre-paid tax. If your personal marginal tax rate is 28% or below, you pay no additional tax on dividends (and may receive a refund if your rate is below 28%). If your marginal rate is above 28%, you pay the difference. This makes NZ company dividends more tax-efficient than they might initially appear.
Why does return composition matter?
Different types of investment returns are taxed very differently for direct NZ shareholders. Capital growth (share price appreciation) is generally tax-free for NZ investors who are not share traders. Dividends are taxed but come with imputation credits. Interest is fully taxable at your marginal rate. A portfolio that generates 60% of its return as capital growth and dividends can significantly outperform a bank deposit or even a PIE fund — despite earning the same gross return. The return composition inputs let you model your specific investment mix.
What is the maximum PIE tax rate?
The maximum PIR is 28%, even for investors on the 33% or 39% personal tax rate. This is a significant advantage for higher earners. There is no further PIR above 28% regardless of how high your income is.
Does overpaying my PIR matter?
If you use a PIR that is too high, the excess tax is not refunded by IRD — it is forfeit. You should always use the correct (or lower) PIR. If you use a PIR that is too low, IRD can require you to pay the shortfall.
What types of investments are PIEs?
Common PIE investments include KiwiSaver funds, NZ managed funds and unit trusts, some listed PIEs on the NZX (such as Heartland Group Holdings Ltd), and some term deposit 'PIE wrap' products offered by banks.
How does this calculator work?
The calculator models annual compounding returns taxed at the relevant rate each year. PIE returns are taxed at your PIR. Direct NZ shares are taxed based on your return composition: interest at marginal rate, dividends adjusted for imputation credits, and capital growth tax-free. Bank deposits are taxed entirely as interest at your marginal rate. All three paths start with the same amount and earn the same gross return, isolating the combined effect of tax rate and return composition.
Sources
Related Calculators
Last updated April 2026. Rates sourced from IRD. Capital growth assumed tax-free for NZ individual investors who are not share traders. Imputation credit rate assumed at 28% (full imputation). This calculator is a simplified model and does not account for FIF rules, foreign dividends, or partial-year investments.