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 30%, 33%, or 39%. The 17.5% PIR runs out once your taxable income excluding PIE income passes $53,500 or your combined income passes $78,100 (2026-27) — a separate instrument from the PAYE brackets, even where the cutoffs now coincide — so a PIE is tax-efficient for anyone whose marginal rate is above 28%, not just top-bracket earners. 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.
How it works
Not every managed fund is a PIE, and the ones that are come in different shapes. Most KiwiSaver funds, many bank term deposits marketed as 'PIE term deposits', and a wide range of unit trusts and managed funds are structured as multi-rate PIEs, where each investor's share of the fund's income is taxed at that individual investor's own PIR rather than at a single rate for everyone in the fund. That's why two people holding units in the exact same fund can end up with different effective tax outcomes on an identical underlying return.
Because PIE tax is a final tax deducted by the fund itself, it doesn't sit inside your personal income tax return the way RWT-taxed bank interest does. This has a real practical effect: PIE income generally can't be adjusted after the fact the way other withheld tax can, so if your PIR was too low for the year, IRD collects the shortfall through your income tax assessment, but if it was too high, there is no equivalent refund mechanism built into PIE tax itself.
For anyone whose marginal income tax rate is 30%, 33%, or 39%, holding investments through a PIE structure caps the tax on that fund's income at the top PIR of 28%, which is a genuine, structural tax saving rather than a timing benefit. For someone still in the 10.5% or 17.5% brackets, PIE funds don't offer the same rate advantage, but they still simplify tax reporting since the income doesn't need to be separately declared.
Example: PIE tax cap versus your marginal rate
Suppose you earn $5,000 of income for the year from a PIE-structured managed fund, and your correct PIR is the top rate of 28%. Tax deducted by the fund is 28% x $5,000 = $1,400.
If that same $5,000 had instead been earned as ordinary income taxed at a 33% marginal rate, the tax would have been 33% x $5,000 = $1,650 — a $250 difference purely from using the PIE structure.
Now suppose an investor mistakenly used a 17.5% PIR instead of the correct 28% on $10,000 of PIE income. Tax actually deducted was 17.5% x $10,000 = $1,750, but the correct amount was 28% x $10,000 = $2,800 — leaving a $1,050 shortfall that IRD collects through the investor's income tax assessment.
Frequently asked questions
What counts as a PIE investment?
KiwiSaver funds, PIE-linked term deposits offered by some banks, and many managed or unit trust funds are structured as PIEs — check your fund's investment statement or ask your provider directly if you're unsure whether a specific product is PIE-taxed.
What rate applies if I never give my fund provider a PIR?
Providers must apply a default rate if you don't supply your own PIR, which is generally the top PIR of 28% — supplying your correct, lower PIR (if applicable) avoids being taxed more than necessary.
Why can't I get a refund if I used too high a PIR, when RWT does square up at year end?
PIE tax is a separate final-tax mechanism from RWT and isn't one of the credits IRD reconciles in your annual income tax assessment, so it pays to actively update your PIR with your provider whenever your income changes rather than waiting for year end.
Related Terms
KiwiSaver
KiwiSaver is New Zealand's voluntary workplace savings scheme designed to help you build a retirement fund.
PIR
Your Prescribed Investor Rate (PIR) is the tax rate applied to income earned from Portfolio Investment Entities (PIEs), including KiwiSaver funds, PIE term deposits, and managed funds.
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