What's My PIR Tax Rate?
Calculating your PIR is essential to make sure your KiwiSaver and PIE managed funds are taxed correctly - our guide walks you through everything you need to know
Updated 17 April 2020
Before we go any further, it's essential to understand two acronyms and how they apply to your taxes:
Know this first: All default KiwiSaver schemes are PIE funds and the scheme provider taxes your investment earnings using the prescribed investor rate (PIR) you choose.
- "PIR" - PIR stands for 'prescribed investor rate', which is a percentage tax rate that applies to specific investment funds known as 'PIEs'. Your PIR is based on your annual income; the lower your income, the lower your PIR and the less tax you'll pay (and vice versa).
- "PIE" - PIE stands for portfolio investment entity. This is a managed fund that enjoys special tax rules. It behaves just like any other managed fund, but the tax you'll pay on the profits are lower for higher income earners.
Know this first: All default KiwiSaver schemes are PIE funds and the scheme provider taxes your investment earnings using the prescribed investor rate (PIR) you choose.
Why do I need a PIR, and what do I do with the PIR?
To ensure you're taxed at the correct rate on your PIE fund(s), you'll need to work out your PIR. You'll need to give your PIR to your PIE fund manager, as well as supply your IRD number. The IRD will then monitor your earnings - if your PIR changes (because your earnings change), they will notify you, and you'll need to inform your PIE fund manager. You're still best to check your PIR every year in case the IRD doesn't communicate a change with you. March is the best time for this, which is the end of the personal tax year.
How do I calculate my total PIR income?
To calculate your PIR (tax rate), you need to calculate your 'PIR Total Income' (also known as your total taxable income). This a sum of:
Once you add these two together, you will have your PIR Total Income. The next step is to find out your PIR:
- Your 'Total Taxable Income': i.e. your salary/wages (before tax) from all jobs, plus other taxable income such as interest, dividends and business income. This excludes PIE fund income, which is accounted for in 'Total PIE Income':
- Your 'Total PIE Income'. i.e. the total taxable income generated by your PIE fund(s). At the end of each year, your PIE fund manager(s) will send you a statement of all your PIE income.
Once you add these two together, you will have your PIR Total Income. The next step is to find out your PIR:
What is my PIR?
The table below details the requirements for each PIR. You need to work out your income for each of the last two years. You can then choose the lower PIR for the current year. For example, if you earned $45,000 in Year 1 and $50,000 in Year 2, your PIR would be 17.50%. However, if you earn $50,000 in Year 3, your PIR will increase to 28% at the start of Year 4.
Your Annual Taxable Income (Total Taxable Income + Total PIE Income) |
Most likely PIR |
$0 to $14,000 |
10.50% |
$14,001 to $48,000 |
17.50% |
$48,000+ |
28% |
Be aware:
- If you earned less than $14,000 in any one of the last two financial years, your PIR would be 10.50%
- If you earned less than $48,000 in any one of the last two financial years, your PIR would be 17.50%
- If you earned more than $48,000 in each of the last two financial years, your PIR would be 28%
- If you are an overseas tax resident, your PIR will be 28%.
- Children, in almost all cases, have a PIR of 10.50% because they are unlikely to earn over $14,000 a year.
PIR Frequently Asked Questions
Navigating your way around PIR isn't easy. Our selection of FAQs guides you through the requirements and obligations.
How often do I need to review my PIR?
Every year is sufficient. Ideally, the IRD will detect any change based on your salary and PAYE deductions. However, the best time to review is in March. If it has changed, you'll need to inform your PIE fund manager. By law, they send reminders asking you to review your PIR every year anyway.
If my income changes, when does it affect my PIR?
Your PIR is valid for the following year. For example, if you earned $45,000 in Year 1 and 2, your PIR (17.50%) is valid for Year 3. If, during Year 3, you earned $50,000, your PIR is still 17.50%. This is because your PIR is based on your annual income in whichever of the last two years gives you the lower PIR. However, if you earned $50,000 in Year 4, your PIR would become 28%.
Does my PIE income affect my tax return?
No. The PIE fund manager will deduct the appropriate tax, either 10.5%, 17.5% or 28% of the taxable investment income. This has no effect on your tax return - i.e. you don't pay double tax on PIE fund income.
What happens if I have the wrong PIR?
You may be liable for extra tax and penalties if your PIR is too low. For example, if you tell your PIE fund manager that your PIR is 17.50% when actually is 28%, you will have less tax deducted than you should have. The IRD can ask you to pay the difference, as well as any penalties. This is why it's important to re-review your PIR annually.
Where do I get a PIR advice form?
Your PIE fund will have these available. If you can't find it on their website, you should contact their customer support team.
How do I change my PIR?
If your PIR has changed, you'll need to notify your fund manager. Additional details you need to supply include your date of birth, customer number and IRD number.
What happens if I don't provide a PIR?
If you do not notify your PIE fund manager, income earned from a fund will be taxed at the default rate of 28%.
Who do I ask if I need help about my PIR?
If you have any questions, the first point of contact should be your PIE fund manager's client service team. They will assist with any questions you have. If you invest with more than one PIE fund manager, you can choose any one of them to contact.
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