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Managed Funds Guide — PIE Funds, Tax Reporting, and Investment Taxation in NZ

the managed fund taxation in New Zealand. The guide covers the PIE fund structure and the 28% maximum tax rate, the unit holder tax reporting obligations, the fund fee structures, and the investment strategy selection for the managed funds.

PIE Fund Taxation

The Portfolio Investment Entity (PIE) funds are the most common managed fund structure in New Zealand. The PIE funds pay tax on behalf of the investors at the prescribed investor rate (PIR) — the maximum 28%. The PIR is based on the investor's income from the last 2 years: the 10.5% for the income under $14,000, the 17.5% for $14,000 to $48,000, the 28% for $48,000+ (the joint investors) or $70,000+ (the single investors). The PIE income is not included in the personal tax return, and no further tax is payable. The fund manager issues the annual tax statement showing the PIE income and the tax paid. See our PIE Guide → for the comprehensive PIE rules.

Investment Strategy and Fees

The managed funds range from the passive index-tracking funds (the low fees of 0.2% to 0.5%) to the actively managed funds (the fees of 1.0% to 2.0%). The KiwiSaver managed funds offer the additional benefit of the member tax credits. The exchange-traded funds (ETFs) held through the PIE structure combine the low fees with the PIE tax advantage. The investors should consider the total expense ratio (TER) and the performance fees when selecting the managed fund. The investment strategy should align with the risk tolerance and the investment horizon. See our Investment Tax Guide → for the broader investment tax comparison.