Tax legislation, its interpretation and tax rates and bases are subject to change. You should seek independent professional advice on the tax implications of your investments based on your particular circumstances. I`m sure most of us are familiar with classic steak and cheesecake, but when it comes to PIE investing, the most common type is known as MULTI-rate PIE (MRP). If you have invested in this type of PPE, i.e. you belong to most KiwiSaver funds, you will inform the provider of the PIR that best matches your marginal tax rate, based on (the lowest of) one of the two previous tax years. A person`s marginal tax rate is the tax rate that applies to the last dollar they earn. If a person earns more than $70,000, their marginal tax rate will be 33% as of April 1, 2021 or 39% if they are above $180,000. However, while marginal tax rates can reach 39%, PPE rates are capped at 28%. The PPE provider pays taxes on your behalf based on the PIR you recommend. The MRP adjusts your investment account by this amount of tax and, most importantly, you don`t have to advance money for taxes owing. If you are a tax resident abroad, your PIR is 28%. The rates of 10.5% and 17.5% do not apply. A trust is able to choose a PIR that is suitable for its beneficiaries.

Rates can be 0%, 17.5% or 28%. For example, for this taxation year, from April 1, 2020 to March 31, 2021, you will review your total taxable income from April 1, 2018 to March 31, 2019 and from April 1, 2019 to March 31, 2020. The PIR you choose should be the lower of the two rates. For several years, the IRD has had its cake and also eaten it when it came to using poorly prescribed investor interest rates (PIRs) for Kiwisaver and other investments made by portfolio investment entities (PIEs). Your exemption is valid for up to 4 years and means that you will not pay a PIR for income you receive from foreign investments as long as: Please note that recent changes in tax legislation allow the tax office to notify us to change your PIR based on their assessment of your taxable income. If you are a tax resident of New Zealand and you are in one of the last two years of income: Your bank or financial service provider will deduct taxes when calculating the interest or dividends you have earned. This happens at least once a year. They pay the tax on your behalf to the tax office and give you a statement of the tax you paid in that fiscal year. However, it is important to note that if your PIR is too low for the year and there are additional taxes to pay, this is included as part of your year-end tax debt, which is payable to IRD along with your final tax, and so you will have to raise the money to pay for this. This is something to keep in mind for those of you who have invested large sums in PIE funds, either through Kiwisaver, Managed Funds, or directly through PIE investment platforms such as Sharesies and InvestNow. If you invested before April 1, 2018 and did not provide your IRD number, any taxable income attributed to you will be taxed at 28%. Finally, it is important to let us know if your PIR changes to ensure that you are not undertaxed or overtaxed.

WARNING Baker Tilly Staples Rodway disclaims all liability for any loss suffered by any person who relies directly or indirectly on any element of this website. It is recommended that you consult your advisor before acting on the basis of this information. To change the tax rate on your interest or investment income, complete a Form IR456 and give it to your financial service provider. Sometimes you can also do this over the phone or online. A registered charitable trust should use a 0% IREP. Your PSR for any year will be calculated based on your total taxable income from the two previous tax years (April 1 to March 31). All funds or schemes managed by BT Funds Management (NZ) Limited are portfolio investment entities (PIIs) for tax purposes. This means that we: Your PIR could be 10.5%, 17.5% or 28%. It is based on your total taxable income (including income from PPE) in one of the last two tax years. Use the taxation year in which your total taxable income (including PPE) was lower to calculate your PSR. You will find the PIR we currently use in each of your statements. You can also check your PIR online if you are registered for internet access, or you can call us (0800 27 87 37) to check this.

Income years usually run from April 1 of each year to March 31 of the following year. www.ird.govt.nz/roles/portfolio-investment-entities If you do not provide us with your PIR, we will have to apply the default rate of 28%. The tax authorities may also ask SuperLife to change your PIR if they believe it is incorrect. New Zealand retirement pension, veteran`s pension and foreign pensions If you received foreign income that was also taxed in another country, you may be entitled to a credit for tax already paid. You will receive a credit for the smallest amount of tax you have paid – either the tax due in New Zealand on that investment or the tax you paid overseas. www.treasury.govt.nz/sites/default/files/2020-01/ria-ird-pies-jan20.pdf You can update your PIR at any time via Westpac One online banking. If we don`t have your IRD number yet, you`ll need to add it as well. To update your PIR, simply log in to Westpac One and follow these steps: you need to review all your taxable income (including all net PPE income) for each year and then choose the year that gives you the lower PIR. In addition to paying taxes on the income you receive, you may also have to pay taxes on the profits made by the foreign fund that provides your pension. If you tell us that your PSR is 17.5% if it should have been 28%, or 10.5% if it should have been 17.5% or 28%, we will deduct the tax at the lower rate.

If it turns out that your IREP is actually higher, this income must be included on your tax return (along with the corresponding tax credits). If you have investments in New Zealand, your supplier will deduct the non-resident withholding tax (NRWT). Certain other foreign income is exempt from tax, including rent, royalties, and capital gains from the sale of real estate. .