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How PIEs will change the face of funds

Posted on 02 October 2007 by Lisa Dudson | No comments
Category: Savings
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Income in a PIE will flow through the PIE and the investors will have their share of the taxable investment income taxed at their prescribed investor rate (PIR). An investor's PIR is similar to an individual's marginal tax rate, although there is a key difference - the top rate for PIR is 33%.

In the Budget 2007 the Government announced a reduction of the company tax rate from 33% to 30% effective from 1 April 2008. The Government also announced that the top tax rate for PIEs and the tax rate for most unit trusts and superannuation funds will reduce from 33% to 30%. The benefit for individuals will mean a lower tax rate on their investment and retirement savings and a more consistent tax treatment for different types of managed funds. 

In my opinion the PIE changes are excellent news for NZ investors. What they have done has created a more level playing field.  It means that investing in managed funds is taxed the same as investing directly in shares, whereas before you were better off from a tax perspective investing directly into NZ shares.

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