Portfolio Investment Entities (PIE) are a special type of investment vehicle in New Zealand designed to provide tax advantages for investors. PIE funds can hold dividend-paying stocks and other investments while offering preferential tax treatment.
Key Benefit: PIE funds apply a Prescribed Investor Rate (PIR) that may be lower than your marginal tax rate, potentially saving you money on dividend income.
| Taxable Income | PIR Rate |
|---|---|
| $0 - $14,000 | 10.5% |
| $14,001 - $48,000 | 17.5% |
| $48,001+ | 28% |
If you earn over $180,000 (39% tax bracket), PIE funds cap your investment tax at 28% — a potential difference of 11% on dividend income compared to direct shareholding. Tax outcomes depend on individual circumstances.
Example: $10,000 dividend income
Major NZ fund managers offer PIE-structured dividend funds:
NZX-listed PIE funds including the Smartshares NZ Dividend ETF (DIV). Low fees, easy to trade like shares, focus on high-yielding NZ companies.
Offers actively managed PIE funds with exposure to NZ and Australian dividend stocks. Known for strong research and stock selection.
Range of PIE funds including conservative and growth options. Large provider with comprehensive fund offerings.
Actively-managed PIE funds investing in dividend-paying companies across NZ and Australia.
Low-cost provider with competitive PIE fund fees. Good for cost-conscious investors wanting passive exposure.
| Income Level | Marginal Rate | PIR Rate | Advantage |
|---|---|---|---|
| $0-14,000 | 10.5% | 10.5% | Equal (but PIE simpler) |
| $14,001-48,000 | 17.5% | 17.5% | Equal (but PIE simpler) |
| $48,001-70,000 | 30% | 28% | PIE saves 2% |
| $70,001-180,000 | 33% | 28% | PIE saves 5% |
| $180,000+ | 39% | 28% | PIE saves 11% |
Important: While PIE funds cap tax at 28%, direct shareholding offers full imputation credit benefits which can result in tax refunds for lower-income earners. Always calculate both options for your situation.
Investors interested in PIE funds may consider these factors:
Consider direct dividend stocks if you:
Whether you choose PIE funds or direct investing, research the underlying dividend stocks to make informed decisions.
Official IRD guidance on PIR rates and PIE fund taxation
Regulatory oversight and investor protection for PIE funds
Browse NZX-listed PIE funds including dividend ETFs
Understand how PIR rates compare to direct dividend taxation
Learn how imputation credits work in PIE funds vs direct shareholding
Yes, PIE funds that invest in NZ dividend-paying stocks receive imputation credits, which reduce the tax payable by the fund. However, individual investors don't directly receive these credits like they would with direct share ownership.
Your PIR is based on your taxable income over the previous two years. Check with your fund provider or IRD to ensure you're using the correct rate to avoid over or underpaying tax.
Yes, many KiwiSaver funds are structured as PIEs. You can also hold PIE funds outside of KiwiSaver for additional retirement savings with tax advantages.