Most of TOWER’s managed funds are now Portfolio Investment Entities (PIEs), which means many investors may now be paying less tax than before.
The real benefit of PIEs is that income from investments in PIEs is taxed at the investor’s own tax rate, known as the Prescribed Investor Rate (PIR). The good news is that from 1 April 2008 the maximum PIR has reduced to 30%, which provides a further tax break for many investors.
There are three PIRs: 0%, 19.5% and 30%. Individuals will qualify for either 19.5% or 30% depending on level of income. You need to work out your PIR using the calculator below and provide your PIR and IRD number to TOWER at the same time to ensure you are taxed at the correct rate and benefit from the savings.
For important notes, see comments below. For more detailed information on PIEs and the way they are taxed, please click here
NB: If you don’t provide your PIR and IRD numbers to TOWER at the same time, your PIR is automatically set at 30%
* Where the investment is jointly held all parties must calculate their PIR separately and the highest is used to tax ALL income.
** Income from all sources includes your income from salary and wages, NZ Super and income from other investments such as bank account interest, family trust income that has not been taxed in the trust, rental income from investment properties, dividends, income from shares, self employment income, including income from non-PIE managed funds. (Employer contributions and superannuation schemes do not qualify as income.)
*** If you have a PIR of 0%, you are required to include any investment income in your trust's, estate's, company's or charity's tax return.