PIR / PIE Tax Rate Optimiser NZ

This calculator compares the after-tax return of a PIE fund taxed at your prescribed investor rate against the same income earned in a non-PIE investment taxed at your full marginal rate, so you can see exactly how much tax a PIE structure saves you in New Zealand. The key fact is that income inside a Portfolio Investment Entity is taxed at your PIR, which is capped at twenty-eight percent, while income earned directly, such as interest from an ordinary term deposit or dividends from shares held in your own name, is taxed at your marginal rate, which can be thirty, thirty-three or thirty-nine percent. For higher earners that gap is real money kept rather than paid in tax, which is why so much KiwiSaver and managed fund investing is done through PIEs. You enter the investment income, your PIR, and your marginal tax rate, and the calculator shows the after-tax income inside a PIE, the after-tax income in a non-PIE investment, and the tax the PIE saves you. Use it to decide whether to favour PIE funds and PIE term deposits over their ordinary equivalents. The benefit is largest for those on 33 or 39 percent and minimal for lower earners. This is general information, not tax advice; confirm your PIR is correct first.

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$
$550
tax a PIE saves you on this income
PIE after tax$3,600
Non-PIE after tax$3,050

PIE income is taxed at your PIR, capped at 28%; non-PIE income is taxed at your marginal rate. The benefit is largest for those on 33% or 39%. General information only.

How it works

The PIE after-tax income is the investment income times one minus your PIR. The non-PIE after-tax income is the income times one minus your marginal rate. The tax saved by the PIE is the difference between the two, which is the income times the gap between your marginal rate and your PIR.

Worked example

On 5,000 dollars of investment income, a PIE taxed at a 28 percent PIR leaves 3,600 dollars, while a non-PIE investment taxed at a 39 percent marginal rate leaves 3,050 dollars. The PIE saves about 550 dollars of tax.

Related calculators

Data sources: the rates and thresholds on this page are maintained against Inland Revenue. Figures are checked twice monthly.

Frequently asked questions

Why is a PIE fund more tax-efficient?

A PIE is taxed at your prescribed investor rate, which is capped at 28 percent. If your marginal tax rate is 30, 33 or 39 percent, income inside a PIE is taxed at a lower rate than the same income earned directly, so you keep more after tax.

Who benefits most from a PIE?

Higher earners on a 33 or 39 percent marginal rate benefit most, because the 28 percent PIE cap saves the most tax. For someone on 17.5 percent or below, a PIE offers little tax advantage over a normal investment.

What is a non-PIE investment?

It is an investment whose income is taxed at your full marginal rate, such as interest from an ordinary bank term deposit or direct share dividends. The same return is taxed more heavily than inside a PIE if your marginal rate is above 28 percent.