Tax on investment income
The scheme is registered as a multi-rate PIE. So, taxable income related to your investment in the scheme is taxed at your prescribed investor rate (PIR), which may differ from the personal income tax rate applied to your salary and wages, rather than at a flat rate for the whole scheme. The current PIRs for individuals are 10.5%, 17.5% and 28%. Your PIR is determined by your taxable income (your income subject to tax, including salary and wages) and your PIE attributed income (for example, taxable income attributed to you by managed fund investments that are multi-rate PIEs).
You are responsible for ensuring your PIR is correct. If you do not provide us with your PIR, the 28% default rate will apply. It is important that you check your PIR before 31 March every year (i.e. end of the scheme’s year) as after this date PIE tax on your share of the scheme’s taxable earnings will be paid.
If the PIR that Inland Revenue (IRD) calculates differs from the PIR provided to us, there may be PIE tax payable or a refundable PIE tax credit in your MyIR account. If you are concerned about a difference between the PIR used by IRD and the PIR used by the scheme, please give us a call or contact IRD.
Periodically, IRD requests that we update PIRs for members they consider have incorrect PIRs applied, and we are required to apply those updates. You should also receive notification of any such update. If you disagree with the updated PIR provided by IRD, you can contact IRD to explain why and have it corrected if applicable.
The diagram below can assist with determining your PIR. Alternatively, please refer to IRD's online tool. If your circumstances have changed and you may need to change your PIR, fill in a confirmation of tax rate (PIR) form to return to us.
Your PIR is 28% if you are not a New Zealand resident for tax purposes. Complete the change of tax residency status form if you need to change your tax residency status. If you are not sure of your residency status, visit this page on IRD's website or consult with a tax specialist.