You'll have a portfolio investment entity (PIE) calculation on your annual income tax assessment if:
- you're a New Zealand tax resident
- you get income from investment in a multi-rate PIE. (Your KiwiSaver scheme might be a multi-rate PIE.)
This is to work out if you’ve used the correct prescribed investor rate (PIR) and paid the right amount of tax for the year.
Working out your tax
The PIE calculation is separate to the calculation of tax on your taxable income.
We'll work out the correct PIR you should have used for the full tax year. Then we'll work out if there is a difference between the tax that was paid on your PIE income and the tax that should have been paid.
If you have paid too much tax on your PIE income, you'll have a PIE credit. This can be used to reduce any income tax you might have to pay. Any remaining credit is refunded.
If you have not paid enough tax on your PIE income, you'll have a PIE debt. This debt will be added to any income tax you have to pay on your taxable income.
If your residual income tax including any PIE debt is more than $5,000, you will have to pay provisional tax for the following tax year.
Working for Families and student loans
If your PIE income is from a locked-in fund, it is not included as income for Working for Families or student loan calculations.
A locked-in fund is a retirement savings scheme that stops you from easily accessing your funds until you reach the retirement age. A KiwiSaver scheme is an example of a locked-in fund.
If you’re not sure, you need to speak with your scheme provider.
If you get PIE income that is not from a locked-in fund or is a distribution from a listed PIE, you need to include it as income for Working for Families and student loans.
You can adjust your income for Working for Families and student loans in myIR or complete the 'Adjust your income - IR215' form.
Adjust your income for Working for Families and student loans
McKenzie told her KiwiSaver fund to use a PIR of 28% for the tax year ending 31 March 2024.
McKenzie’s KiwiSaver fund has returned income of $1,345 and tax deductions of $376.60 for the year.
She should have used a PIR of 17.5% for that year.
We work out that if McKenzie had used the correct PIR (17.5%) she should have had $235.38 deducted, not $376.60. This results in a PIE credit of $141.22.
However, she has not paid enough income tax for the same year and has a $70.23 income tax debt.
The PIE tax credit of $141.22 is offset against the income tax bill, but there is still a credit of $70.99, which is refunded to McKenzie.
Cherise used a PIR of 10.5% for the tax year ending 31 March 2024.
She got $575 from her PIE investment and had $60.38 of tax deducted for the year.
Cherise should have used a PIR of 28% for that year.
We worked out that the tax she should have paid using the correct rate was $161. This means she had a $100.62 PIE debt.
Cherise has an income tax bill of $2,300 from her self-employed income. The PIE debt is added to the final calculation and her total bill is $2,400.62.
Gabriela is a member of the Smartfund KiwiSaver scheme and used a PIR of 28% for the tax year ending 31 March 2024.
She thought if she paid more tax than she needed to on her PIE income, she would get a refund. Her correct PIR was 17.5%.
In the 2024 tax year, Gabriela's KiwiSaver investment made a loss of $3,120.00. Smartfund gave her a tax credit of $873.60 (28% of $3,120.00).
When Gabriela gets her 2024 income tax assessment from us, it shows her PIE loss and that she has a PIE debt of $327.60.
The $327.60 of debt is added to her tax on taxable income.
Gabriela should have received $546 (17.5%) in additional units. However, because she used a higher PIR of 28%, she received $873.60, which was more than she was entitled to.
This means she needs to pay $327.60 back to us ($873.60 - $546.00 = $327.60).