11 February 2018

    Could you be paying too much tax?

    If you need to brush up on how tax is treated on Managed Funds and KiwiSaver then read our quick guide!

    Despite many of us having different perspectives on money, there is one view that most of us share. No one wants to pay more tax than they need to. It sounds obvious but the reality is that you could be doing just that, if you don't know your PIR on your PIE.

    If that sounds confusing, don't let a couple of acronyms intimidate you and keep reading.

    What is a PIE?

    Some investment products including KiwiSaver and certain Managed Funds are registered as Portfolio Investment Entities or PIE's. At Fisher Funds, all of our funds are PIE's. The benefit of a PIE is that it makes it simple for you, because the calculation and payment of any tax on the investment is taken care of for you. This means that you don't have to include this in your annual tax return, which makes life easier!

    How do you make sure you aren't paying too much tax?

    The rate that your PIE tax is calculated on depends on the Prescribed Investor Rate (PIR) that you have nominated (see the chart below). Ultimately being on the right PIR is the key to making sure that you are not paying more tax on your investments than you need to be.

    • There could be many reasons why your PIR may be incorrect.

    • When you first enrolled in KiwiSaver, you may not have actively chosen a PIR, meaning that you are defaulted to the highest rate.

    • Perhaps you weren't quite sure what it meant and you chose the number you thought was about right.

    • We have heard of clients who thought they were choosing the return they were after and they went for the highest number!

    • Maybe your situation has changed and your income is less than what it was in previous years.

    How do you update it?

    If your investment is with Fisher Funds you can see your current PIR in online access or on your transaction statements. If it looks out of date then change it through online access or send us an email and we'll take care of it for you.

    How to calculate your Prescribed Investor Rate (PIR)