Is your PIR (Prescribed Investor Rate) tax rate set correctly?
Your prescribed investor rate (PIR) defines the rate of tax that you pay on your portfolio investment entity (PIE) income, including the AMP KiwiSaver Scheme, AMP Managed Funds, and New Zealand Retirement Trust (NZRT). Setting your PIR tax rate correctly ensures you don’t have to deal with more tax return paperwork or pay more tax at the end of the financial year. Here’s how to make sure yours is set where it should be.
What is a Prescribed Investor Rate (PIR)?
Just like you pay tax on the wages or salary you earn, you also need to pay tax on the income you receive from your investments, such as your AMP KiwiSaver Scheme, AMP Managed Funds, and New Zealand Retirement Trust (NZRT).
The rate of PIE tax you pay is called a Prescribed Investor Rate (PIR) and the rate is largely determined by how much you earn. Current tax rates include 28%, 17.5% and 10.5%. It's a good idea to check you are using the right PIR. Paying tax using the wrong tax rate is like carrying the wrong size hiking pack - you're either carrying too little or too much. To ensure you are paying the right tax, use our simple PIR calculation checklist.
Inland Revenue can directly notify AMP where it considers that you are not on the correct rate for PIR. In this case, we are obliged to update your profile with their suggested PIR. You can subsequently give us a call if you think the Inland Revenue have got it wrong. If this happens, we also recommend you contact Inland Revenue to ensure they have the correct income details for you.
A quick check now can save you later
By doing a quick check that you are on the correct PIR rate – perhaps at the end of every tax year (before 31 March) – you can save yourself from future issues.
- If your PIR is set too high, you may end up paying too much tax on your tax return (you may be able to claim this overpaid tax back from Inland Revenue).
- If your PIR is set too low, you will probably end up having to pay additional tax to Inland Revenue.
If AMP does not have a record of your IRD number and/or PIR, the highest rate (28%) must be applied. If that rate is too high, it is then up to you to claim your money back. A lower PIR may mean you need to pay more tax. By checking your rate today, you can save yourself the hassle.
Calculate your Prescribed Investor Rate
Use our simple guide to calculate your Prescribed Investor Rate (PIR).
Before you start you will need to know what your income (including income from PIE investments) was over the past two years. If you're unsure of your total income we recommend you complete an income tax assessment or contact your employer(s), your tax adviser, your accountant, or Inland Revenue.
1. Are you a New Zealand tax resident?
Yes, I am an NZ tax resident: Go to question two.
No: The PIR for non-NZ tax residents is 28%.
2. In either of the last two income years, was your taxable income $14K or less (excluding PIE income) and $48K or less (including PIE income)?
Yes: Your PIR is 10.5%.
No: Go to question three.
3. In either of the last two income years, was your taxable income $48K or less (excluding PIE income) and $70K or less (including PIE income)?
Yes: Your PIR is 17.5%.
No: Go to question four.
4. In both of the last two income years, was your taxable income either $48K+ (excluding PIE income) or $70K+ (including PIE income)?
Yes: Your PIR is 28%.
It’s important to note that special tax rules apply to trusts, which are able to select a PIR – 0%, 17.5%, 28% – that suits their beneficiaries.
The 0% rate is reserved for companies, incorporated societies, PIEs and charitable trusts that choose the rate to best suit their beneficiaries. If you choose a PIR of less than 28%, you will need to include PIE income in the trust’s tax return. A tax credit will be available for any PIE tax paid.
How do I change my Prescribed Investor Rate?
If you’d like to change your rate today, head to MyAMP to update it online.
- Once logged in, click on 'My Details' in the menu bar at the top of the page and then 'Tax Details' in the left hand menu.
- The Tax Details page shows the IRD number we have on file for you, along with your current PIR.
- Choose your new PIR rate and click the 'Save Changes' button.
If you have trouble accessing these settings, you can call us at 0800 267 005 Monday to Friday, 9am-5pm.
If you'd rather use a form, you can download one here.
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