There has been extensive publicity about the ‘’fall-out’’ from IRD’s recent upgrade to its systems.
Somewhere between 450,000 and 550,000 Kiwis are having their PIE KiwiSaver (and other) investments taxed at the wrong rate. Bills for extra tax will be coming! Could this be you?
Most do not know what a PIE is. It is short for ‘’Portfolio Investment Entity’’ and is taxed differently with a flat rate, PIR (Portfolio Investment Entity Rate), applied to income from it.
Each taxpayer has their own PIR which can change over time. The rate was
- intended to be a concession and,
2. was intended to be a final tax (so income did not need to be included in a tax return).
Of course, exceptions apply: –
- If the rate is too low, then the income and PIE tax need to be included in your tax return with more tax to pay,
- If too high – that’s tough – it’s final.
For KiwiSaver investments, if the rate is too low, then you get a personal bill for the short fall as it cannot be taken out of your KiwiSaver after the event.
The correct PIR is determined according to your income in the previous 2 years and is the lower of those years.
We endeavor to check PIR rates are correct for all clients that we know about. However, we may not know about all.
Please contact us as soon as you can after April each year so we can check for you.