PIE in one sentence
A PIE is a tax structure, not an asset class. It can hold NZ shares, international shares, bonds, cash, property — any underlying investment. What makes it a PIE is the legal wrapper: registered with IRD under Subpart HM of the Income Tax Act 2007, the wrapper pays tax on your investment income on your behalf at your PIR (capped at 28%) rather than at your marginal income-tax rate.
Why the 28% cap matters
For investors on the 33% or 39% marginal rate, the PIE wrapper saves 5–11 percentage points of tax on every dollar of investment income. On a NZ$100,000 balance returning 7% per year, that's roughly NZ$350–NZ$770 of tax saved annually. Compounded over a 20-year holding period, the savings can run into tens of thousands of dollars. For investors on lower marginal rates (17.5%, 10.5%), the PIE cap doesn't save tax — but it doesn't cost any either, because PIR is set to match.
Who can invest in PIE funds?
Most PIE funds are open to any New Zealand tax resident. A few have minimum investment amounts (typically NZ$1,000–NZ$10,000 initial; NZ$100–NZ$500 regular). Non-residents generally cannot use the PIE wrapper — their income is taxed under different IRD rules. Children can hold PIE units via a parent/guardian; trusts and companies have specific PIR rules (the corporate PIR is 28% with no tiering). Self-employed people, salary earners, retirees, and KiwiSaver members all qualify.
PIR — Prescribed Investor Rate
Your PIR is one of three rates: 10.5%, 17.5%, or 28%. It's set based on your total taxable income in the two prior tax years (the lower of the two). The thresholds: under NZ$14K → 10.5%; NZ$14K–NZ$48K → 17.5%; over NZ$48K (or any year above NZ$70K combined with PIE income) → 28%. You tell each PIE fund your PIR when you open the account; you must update it each tax year if your income changes. The wrong PIR can cost you — too low and IRD reconciles you owe; too high and (since 2020-21) the overpayment is refundable but it's admin you didn't need.
What kinds of funds are PIEs in NZ?
Most NZ retail managed funds: Milford, Fisher Funds, Generate, Booster, Mercer, Smartshares, Pathfinder, Kernel, Simplicity, ANZ Investments OneAnswer, Foundation Series, Castle Point, Devon, Harbour, Salt, Mint, Hunter, Pie Funds Management (the fund manager, not the structure) — all primarily issue PIE-structured funds. Every KiwiSaver scheme fund is a PIE by statute. NZX-listed ETFs from Smartshares and BetaShares are listed PIEs. Some Australian-domiciled funds offered to NZ investors are not PIEs (they're FIF) — those flag this clearly. We tag every fund's PIE status on its page on this site so you can filter.
PIE vs FIF (Foreign Investment Fund)
When a fund offered to NZ investors is NOT a PIE — usually an Australian-domiciled unit trust — it falls under Foreign Investment Fund (FIF) rules. FIF means you pay tax at your marginal rate (up to 39%) on a notional return: typically 5% of opening value under the Fair Dividend Rate (FDR) method, or actual gains/dividends under the comparative-value method (you pick the lower each year). FIF requires you to file an annual IR3 return with the FIF schedule attached. The admin overhead is real. PIE funds avoid all of this — the fund pays your tax, no IR3 needed. Our fund pages flag FIF funds with a distinct badge.
PIE vs holding shares directly
A common comparison: NZ$100K of NZ-listed shares directly vs the same NZ$100K in a NZ-equity PIE fund. Direct shares pay dividends at your marginal rate but most NZ companies attach imputation credits, so the effective rate after imputation is often around 28% in practice (sometimes lower). PIE funds cap tax at 28% on all PIE income (interest, dividends, realised gains) without imputation pass-through. For investors on 33–39% who would lose imputation efficiency, the PIE wrapper is usually similar or better. For investors on 17.5% or 10.5% marginal, direct holding can occasionally be more efficient — but only if dividend income is the main driver and the imputation credits offset the lower PIR.
Are there downsides to PIE funds?
Three real ones to know about. (1) Losses don't flow through to you — if the PIE fund loses money in a tax year, the loss stays inside the fund and offsets future fund income; you can't use it against your other taxable income (unlike direct holdings). (2) PIR mistakes are not always refundable — pre-2020-21 overpayments at a too-high PIR are not refundable. Always check your PIR matches your income bracket each tax year. (3) Buy/sell spreads — some PIE funds charge a 5–25 basis-point spread on entry and exit to cover transaction costs; this is a one-time cost, not an ongoing fee. For most investors these downsides are small relative to the tax saving and admin convenience.
How to start investing in PIE funds
Three common ways. Direct from the manager — most NZ fund managers let you open an account online, set up direct debit, and pick the funds. Via an online platform — InvestNow, Sharesies, Hatch (for US-listed funds wrapped), Kernel's platform — each gives you a single login across many managers but each has its own fee schedule. Via a financial adviser — required only for complex situations (estate planning, FIF combined with PIE, large lump sums); the adviser typically holds an FAP licence and charges an annual percentage or flat fee. For most NZers starting out with NZ$1K–NZ$50K, going direct or via InvestNow is the lowest-friction path.
What records you need to keep
For PIE income with the correct PIR, you don't need to keep tax records — the fund manager files everything. Still: keep the annual PIE Tax Statement (you receive one each May/June from each manager) for at least 7 years in case IRD queries the reconciliation. Keep your fund-account statements as evidence of contributions and withdrawals if you ever need to demonstrate the asset (e.g. mortgage application, accountant queries). For FIF funds, keep transaction confirmations, year-end valuations, and dividend statements — you'll need them for the FIF return.