PIE

A Portfolio Investment Entity (PIE) is a type of managed investment fund that is taxed at the investor's Prescribed Investor Rate (PIR) rather than the standard income tax rates. Most KiwiSaver funds, many term deposits, and a wide range of managed funds operate as PIEs.

The key advantage of PIE funds is that the maximum PIR is 28% — even if your marginal income tax rate is 33% or 39%. This makes PIE investments tax-efficient for anyone earning over $78,100. Additionally, PIE tax is a final tax, meaning the income is not included in your personal tax return and won't push you into a higher tax bracket.

To ensure you pay the correct amount of tax on PIE income, you need to provide your PIR to your fund provider. If your PIR is too low, you'll have a tax bill; if it's too high, you can't get a refund on the overpaid amount — so it's important to get it right.