Investing Through A Company Calculator NZ 2026/27
The appeal of holding investments in a company is easy to state and slightly misleading. The company rate is 28% while the top personal rate is 39%, so moving a portfolio into a company looks like an eleven point saving on every dollar it earns. The problem is that the calculation stops halfway. Money inside a company is not yours in any spendable sense, and getting it out is a taxable event that finishes the job the company started. When profits are distributed, imputation credits pass on the tax the company already paid, dividend withholding tax applies to the grossed-up amount, and a shareholder above 33% pays the remaining difference in their own return. Follow the whole chain and the total tax on the income lands exactly on the shareholder's marginal rate, which is where it would have landed had the company never existed. What the company genuinely provides is timing. Tax above 28% is postponed for as long as profits stay retained, and over a long enough period that deferral compounds into a real number worth having. What it cannot provide is the thing people are usually reaching for, which is a lower final rate, and there is an alternative that does exactly that. A portfolio investment entity taxes income at your prescribed investor rate, capped at 28%, and that is the end of it. No top-up arrives later, which makes it a permanently lower rate rather than a deferred one.
Maximum imputation ratio 28:72, confirmed against Inland Revenue guidance: a company may attach up to 28 cents of imputation credit to each 72 cents of profit distributed.
Dividend RWT of 33% is calculated on the gross dividend, which includes the credits attached, and is then reduced by the imputation credit. On a fully imputed dividend that leaves 5 cents in the dollar of gross to withhold.
The shareholder's top-up takes total tax to their marginal rate. A 33% shareholder has no further liability on a fully imputed dividend; a 39% shareholder pays the remaining 6 points in their own return.
PIE comparison uses the top prescribed investor rate of 28%, which is a final tax on the PIE income.
A company cannot use the PIE rate. Inland Revenue treats a New Zealand resident company as a zero-rated investor with a 0% PIR, and all income or loss from a multi-rate PIE must be included in the company tax return.
Deferral compounds the difference between retaining at the company rate and holding personally at the shareholder's rate, then applies the outstanding top-up to the accumulated gain on distribution, so the benefit is not overstated.
Excluded: the foreign investment fund rules; imputation credit account balances and whether full imputation is available; capital gains distributed on liquidation; look-through company elections; and every non-tax reason to use a company.
Not financial or tax advice. Last verified: .
The full chain, company to shareholder
| Step | Amount | What happens |
|---|---|---|
| Investment income | $100,000.00 | Earned inside the company |
| Company tax at 28.00% | -$28,000.00 | Paid by the company |
| Cash available to distribute | $72,000.00 | Retained profit |
| Imputation credit attached | $28,000.00 | Maximum 28:72 ratio |
| Gross dividend | $100,000.00 | Cash plus credits |
| Dividend RWT at 33.00%, less the credit | -$5,000.00 | $33,000.00 less $28,000.00 |
| Cash in your hand | $67,000.00 | After withholding |
| Top-up in your own return | -$6,000.00 | 39.00% less the 33.00% already paid |
| What you keep | $61,000.00 | Total tax $39,000.00, being 39.00% |
The total lands exactly on your marginal rate. Every step above simply moves the same liability between the company and you.
Company against PIE, by marginal rate
| Your marginal rate | Kept via a company | Kept via a PIE | PIE advantage | As a share of income |
|---|---|---|---|---|
| 39.00% | $61,000.00 | $72,000.00 | $11,000.00 | 11.00% |
| 33.00% | $67,000.00 | $72,000.00 | $5,000.00 | 5.00% |
| 30.00% | $70,000.00 | $72,000.00 | $2,000.00 | 2.00% |
| 17.50% | $82,500.00 | $72,000.00 | -$10,500.00 | -10.50% |
Below 28% the PIE stops helping, because you would be paying a 28% rate on income taxed at less than that. Check your PIR rather than assuming the top one.
What the deferral is worth
| Held for | Inside the company | After distributing | Held personally | Deferral worth |
|---|---|---|---|---|
| 1 year | $521,600.00 | $519,224.00 | $518,300.00 | $924.00 |
| 5 years | $617,743.09 | $604,791.35 | $598,447.46 | $6,343.89 |
| 10 years | $763,213.05 | $734,259.62 | $716,278.72 | $17,980.89 |
| 20 years | $1,164,988.32 | $1,091,839.61 | $1,026,110.41 | $65,729.19 |
Real but modest, and it only accrues while profits genuinely stay in the company. Weigh it against annual accounts, a company tax return and filing fees.
Why the company cannot simply use a PIE
| Investor | PIR available | Tax on PIE income | Is it final? |
|---|---|---|---|
| You, personally | 28.00% | 28.00% | Yes, nothing further to pay |
| Your company | 0.00% | 28.00% | No, it enters the company return and the top-up follows on distribution |
A company is a zero-rated investor, so PIE income flows into its return untaxed and is then taxed at the company rate. The cap that helps you personally is unavailable to it.
The Calculation That Stops Too Early
Comparing 28% against 39% and concluding a company saves eleven points is the single most common error here, and it comes from stopping at the company accounts.
Money in a company is not spendable money. Extracting it triggers the rest of the tax, and the imputation system exists precisely to make sure the total ends up at the shareholder's rate rather than the company's.
On $100,000.00 of income the company pays $28,000.00 and you eventually pay $11,000.00 more. The total is $39,000.00, which is 39% of the income, which is what you would have paid anyway.
Worked Example: $100,000 Of Investment Income
Company tax: $28,000.00, leaving $72,000.00 of retained profit.
Distribution: the $72,000.00 carries a $28,000.00 imputation credit at the maximum 28:72 ratio, making a gross dividend of $100,000.00.
Dividend RWT: 33% of $100,000.00 is $33,000.00, reduced by the $28,000.00 credit, so $5,000.00 is withheld. You receive $67,000.00 in cash.
Your top-up: at 39% you owe a further $6,000.00.
What you keep: $61,000.00. Through a PIE you would keep $72,000.00.
A Cap Beats A Deferral
The PIE does the thing people hoped the company would do, and does it permanently.
Income taxed at a 28% prescribed investor rate is finished. There is no further liability when you withdraw, no top-up in your return, and no distinction between money inside the wrapper and money in your hand.
That is a genuinely lower rate rather than a postponed one, and for a 39% earner it is worth $11,000.00 on every $100,000.00 of income. Our PIE savings vs bank savings calculator works the same comparison against ordinary interest.
What The Company Genuinely Gives You
Timing, and it should not be dismissed.
While profits stay retained, only the 28% has been paid and the remaining eleven points keep working. On $500,000.00 at 6.00% that is worth $17,980.89 after ten years and $65,729.19 after twenty, measured against holding the same portfolio personally at 39%.
The catch is that the benefit requires the money to stay put. Draw on it regularly and the top-up arrives regularly, which returns you to paying your marginal rate as you go.
The Costs That Do Not Depend On Any Of This
A company has to be run whether or not the structure is working for you.
Annual financial statements, a company tax return, an imputation credit account to maintain, an annual return to the Companies Office, and usually an accountant to keep it all correct. Those costs recur every year and do not scale down for a small portfolio.
Set them against a deferral benefit that starts at $924.00 in the first year, and a modest portfolio can plausibly spend more on compliance than the structure returns. Our business surplus cash calculator covers the related case where a company already exists and holds cash.
When A Company Still Makes Sense
Usually when it exists for reasons that have nothing to do with the tax rate on investment income.
An operating business with genuine surplus, a structure needed for liability separation or for several people to co-own something, or profits that will realistically be retained for decades can each justify it. So can succession planning, which no rate comparison captures.
What rarely justifies it is forming a company purely to hold a personal share portfolio, because the alternative is both cheaper to run and taxed at a lower final rate. Our investing through a trust calculator covers the other structure people reach for, which has its own quite different arithmetic.
Check Your PIR Before Assuming Any Of This
Everything above assumes the top prescribed investor rate of 28%, and plenty of people are entitled to less.
If your PIR is 17.5%, a PIE is better still. If your marginal rate is 17.5% then neither structure helps, since you would be paying 28% on income that is only taxed at 17.5% in your own hands, and the last row of the comparison table turns negative.
Our retirement withdrawal sequencing calculator works out the correct PIR from both statutory tests, and it is worth checking before drawing any conclusion from this page.
Related NZ Investment Structure Calculators
- Investing Through A Trust Calculator: the other structure, with different arithmetic.
- PIE Savings vs Bank Savings Calculator: the PIE rate against ordinary interest.
- Business Surplus Cash Calculator: where company cash should sit.
- Retirement Withdrawal Sequencing Calculator: finding your correct PIR.
- PIR Overpayment Recovery Calculator: recovering tax paid at the wrong PIR.