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PIE fund · PIE

Portfolio Investment Entity (PIE)

A tax-efficient New Zealand fund structure where investor tax is capped at the investor's Prescribed Investor Rate (PIR), with a maximum of 28%.

A Portfolio Investment Entity, or PIE, is a New Zealand fund structure introduced in 2007 to align retail-fund taxation with direct share ownership. Most NZ retail managed funds and KiwiSaver scheme funds are structured as PIEs.

Inside a PIE, capital gains on most NZ and Australian listed shares are not taxed. Income that *is* taxable (dividends, interest, foreign share gains) is taxed at the investor's Prescribed Investor Rate (PIR) of 10.5%, 17.5% or 28% — capped at 28%, even for investors on a 39% personal income-tax rate. The PIE rules sit under Subpart HM of the Income Tax Act 2007.

Because PIE tax is final at the investor's PIR, investors generally do not need to include PIE income in their personal tax return. There are exceptions — most importantly, if you have used the wrong PIR, the difference is squared up at year end (under-payment recovered, over-payment refunded under recent IRD rule changes).

The 28% cap is the headline benefit. Compared to direct holdings of shares or bonds, where dividend and interest income flows into your personal income at your marginal rate (up to 39%), a PIE wrapper saves up to 11 percentage points of tax on the same underlying income for investors on the top personal rate. Over a long horizon, that compounds materially — which is the main mechanical reason most NZ retail managed funds are offered as PIEs.

Not every NZ-distributed fund is a PIE. Some Australian Unit Trusts available to NZ investors (e.g. certain Vanguard funds) are taxed under the Foreign Investment Fund (FIF) rules instead. ManagedFundsNZ flags FIF-only funds explicitly on each fund page.

Real examples from NZ fund disclosures

Verbatim quotes from NZ retail managed-fund disclosure documents lodged on the FMA Disclose register.

See this in practice

Common questions

Is a PIE the same as a fund?
No — PIE is a tax structure that a managed fund or KiwiSaver scheme fund can use. A PIE is always a fund, but a fund is not always a PIE; some NZ-distributed funds are Australian Unit Trusts taxed under FIF rules.
Why does PIE tax cap at 28%?
When PIEs were introduced in 2007, the top personal income-tax rate was 39%. Capping PIE tax at 28% (then aligned to the company tax rate) was designed to make managed-fund investing tax-competitive with direct share ownership. The 28% cap has been retained even as the top personal rate has changed.
Do I have to declare PIE income on my tax return?
In most cases no — PIE tax is paid by the fund at your PIR and is final. The two main exceptions are (1) if you used the wrong PIR, and (2) PIE losses or income from a multi-rate PIE that you choose to include. Always check IRD guidance for your specific situation.
Are capital gains taxed inside a PIE?
For NZ-listed and most ASX-listed shares, no — capital gains on these holdings are exempt from tax under the PIE rules. For other holdings (e.g. unlisted foreign shares above the FIF threshold) the PIE applies the standard FIF methodology at the fund level, and the resulting income is taxed at investor PIRs. The investor does not separately apply FIF rules to their PIE units.

Primary sources

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