A portfolio investment entity (PIE) is a type of entity (such as a managed fund) that invests the contributions from investors in different types of investments.
The PIE tax rules allow investment funds to pay tax on each investor’s share of the fund’s investment income, at each investor’s Prescribed Investor Rate (PIR).
The top PIR for individuals is 28% and many investors will find that their PIR is lower than the tax rate applying to other taxable income such as salary, wages and interest income. It’s important you check and let us know your correct rate.
We collect each investor’s share of the tax payable from their investment account and we pay IRD. Sometimes we are able to claim a tax rebate from IRD, for instance if your share of tax credits is more than your share of tax payable.
We send you a tax statement at the end of each year, and generally there’s no need for an individual to include their share of the fund’s investment income in a personal tax return.
From 1 April 2020, the Inland Revenue may automatically calculate any underpaid or overpaid PIE tax. If you should have been on a lower PIR and have overpaid tax, the Inland Revenue may give you a refund. If you should have been on a higher PIR, additional tax may be payable by you.
Please note that for tax years ending on or before 31 March 2020, if you provided us with the wrong PIR you may have overpaid tax that is not refundable or have additional tax to pay which you will need to include in your tax return.
Which of AMP's products are PIEs?
Tell me more about my PIR
Your Prescribed Investor Rate (PIR) is the rate at which your PIE tax is calculated on the PIE taxable income or loss from your investment.
The rates for individuals are 10.5%, 17.5% and 28%, and the rules for these rates are different to the rules for other income tax rates.
The top PIR for individuals is 28% and many investors will find that their PIR is lower than the tax rate applying to other taxable income such as salary, wages and interest income. The main difference is that your PIR for the current tax year depends on how much you earned in the previous two tax years, rather than how much you expect to earn this year. Each New Zealand tax year runs from 1 April to 31 March and it’s your responsibility to tell us your correct rate.
You can use our simple guide to calculate your PIR.
Or you can visit the IRD website, or ask your financial adviser or accountant for help.
If your company or trust invests in a PIE, a PIR of 0% may apply. This is because the company or trust will pay tax on its share of the PIE’s investment income by filing an income tax return directly with IRD.
Why do you need my PIR?
We need your PIR so that we can pay the correct amount of tax on your investments to IRD. If you don’t provide us with your PIR, your tax will be deducted at the default rate of 28%.
For tax years ending on or before 31 March 2020, if you were eligible to elect a lower PIR and notified a higher PIR to us in error, or failed to advise a change to a lower PIR, Inland Revenue will not refund any excess tax paid for those years. From 1 April 2020, Inland Revenue may return any excess tax paid.
For tax years ending on or before 31 March 2020, if you notified a lower PIR to us in error, or did not advise a change to a higher PIR, you may be required to file an income tax return on the shortfall for the relevant tax year, and tax may be payable at your marginal tax rate plus any interest and penalties. From 1 April 2020, the Inland Revenue may automatically calculate any additional tax you may owe. If a tax return is required to be filed, you will receive a tax credit for tax paid by investment funds on your behalf.
The same PIR thresholds apply to adults and children. So if your children belong to the AMP KiwiSaver Scheme make sure you have let us know their PIR.
How do I update my PIR with you?
If you invest in the AMP KiwiSaver Scheme or The New Zealand Retirement Trust you can update your PIR by logging on to My AMP and visiting the My Details section. Otherwise you can call us on 0800 808 267 between the hours of 9am-5pm Monday to Friday.
From 1 April 2020, Inland Revenue (IR) can directly notify AMP where it considers that an incorrect PIR is being used for an investor. IR uses an investor’s total taxable income for the previous two tax years to calculate their PIR.
If you do not agree with the IR calculated PIR and do not think IR holds your most up to date income details you can contact AMP to change your PIR. AMP also recommends that you should contact IR so that your income details can be updated on IR’s system.
When is PIE tax collected?
PIE tax is collected from you at the end of each tax year and at the time of full withdrawal, based on the year‐to‐date accrual. Tax may also be collected during the year if there is a risk you will have an insufficient remaining balance to pay your year‐to‐date tax accrual. We will test this risk every month, as well as when you make withdrawals or update your PIR.
A tax position will also be finalised for a NZRT member when you transfer between a Workplace Savings plan and My Super, and tax is either collected or rebated to you.
It is important to check you have provided us your correct PIR as overpaid tax is not refunded by the Inland Revenue. From 1 April 2020, Inland Revenue may return any excess tax paid.
When your PIE tax position is finalised, tax will be collected or rebated based on set debit ordering rules. The debit order rules will vary between products but what this generally means is tax is collected or rebated from the most liquid investment (the most easily converted into cash) and, if exhausted, deducted from other investments in a prescribed order.
Any PIE tax accrued during the year will also be displayed against an investment based on the set debit ordering rules.
How are the fees AMP charges treated under the PIE rules?
Most fees we charge are for the ongoing management and administration of your investments. We take a deduction for these fees when we calculate and pay your PIE tax to IRD. This means that you don’t need to separately include these fees in your tax return.
However, sometimes our customers and their financial advisers will agree that fees for specific additional services can be paid out of the customer’s investment account. If this is the case we don’t include these fees in your PIE tax calculation, as we leave you to discuss deductibility with your accountant or tax adviser and include the fees in your personal tax return. Your PIE Tax Statement will point out which types of fees have not been deducted for PIE tax.
Will AMP provide me with a tax certificate or PIE statement?
We will send you, or make available to you, an annual PIE Tax Statement by 30 June each year, covering the tax year that ends on 31 March. We may send you a PIE Tax Statement during the year if you close your account.
Important informationShow more
This document sets out a list of frequently asked customer questions (FAQ) and their suggested answers in relation to the Portfolio Investment Entity (PIE) tax regime (as outlined in the Income Tax and Tax Administration Act 1994 and is provided by AMP Services (NZ) Limited (AMP). Whilst AMP provides this FAQ in good faith, AMP (including its employees and related companies) does not accept any liability arising from any error or omission that may be contained herein. This FAQ is based on legislation as at 1 April 2020 and such legislation may be subject to change. The legislation provides for certain options which AMP may elect to follow for certain managed funds, it is therefore important to note that the answers in this FAQ are provided solely in relation to the options that AMP has elected to follow and may differ to the options preferred by other PIE fund providers. This FAQ is intended as a non-exhaustive summary and generic guide, and you should not base a financial decision on this information. The information in this FAQ is not a substitute for obtaining independent advice from your taxation or investment professional. The information in this FAQ does not constitute specific advice to any person. This FAQ does not relate to any particular current or proposed investment product of AMP, nor does it purport to give an indication of future performance of any investment product. AMP retains the copyright of this FAQ. It may not be used, copied, modified, published, reposted, or reused to create a derivative work without the express written permission of AMP.