PIE funds are the most important tax structure for NZ investors to understand. They’re the mechanism that makes index fund investing more tax-efficient than direct share ownership for most New Zealanders.
A PIE fund (Portfolio Investment Entity) is a NZ tax structure that caps your tax rate on investment returns at 28% — regardless of your income tax rate. If your marginal rate is 33% or 39%, you save 5–11% tax each year on returns from PIE funds. Almost all major NZ investment platforms (InvestNow, Kernel, Simplicity, KiwiSaver providers) use the PIE structure. Your PIR (Prescribed Investor Rate) determines how much tax the fund deducts on your behalf.
What Is a PIE Fund?
PIE stands for Portfolio Investment Entity. It’s a specific tax status granted by Inland Revenue to qualifying investment funds.
Key characteristics:
- Invests in shares, bonds, or other assets on behalf of investors
- Files its own tax return with IRD
- Deducts tax on investor returns at each investor’s PIR rate
- Tax is final — investors don’t need to include PIE income in their personal income tax return (with minor exceptions)
Most NZ managed funds, index funds, and KiwiSaver funds are structured as PIEs.
PIR Rates — How the Tax Works
Your PIR (Prescribed Investor Rate) is the tax rate applied to your PIE fund returns. It’s based on your taxable income from the two prior income years.
| PIR | Applicable household income |
|---|---|
| 10.5% | Household taxable income ≤ $14,000 |
| 17.5% | Household taxable income $14,001–$48,000 |
| 28% | Household taxable income > $48,000 |
The PIE cap is 28%. Even if you earn $200,000/year (marginal rate 39%), your PIE fund returns are taxed at only 28%. This is a 11% tax saving on all investment returns through a PIE fund.
PIR vs marginal rate: the saving
| Income | Marginal rate | PIR | Tax saving on $10,000 investment return |
|---|---|---|---|
| $80,000 | 33% | 28% | $500/year |
| $120,000 | 39% | 28% | $1,100/year |
| $50,000 | 30% | 28% | $200/year |
| $40,000 | 17.5% | 17.5% | $0 (PIR = marginal rate) |
At $120,000 income with $100,000 in a PIE fund earning 8%: the PIR advantage saves $880/year ($1,100 × 8% return) vs direct share ownership.
How to Check and Set Your PIR Rate
- Log into MyIR (ird.govt.nz) or call IRD (0800 775 247)
- Check your income for the last two tax years
- Apply the PIR table above
- Update your PIR on each investment platform (Kernel, InvestNow, Sharesies, etc.)
Setting a PIR that’s too low: IRD can recover the shortfall — you’ll need to declare the under-withheld tax in your income tax return.
Setting a PIR that’s too high: You’ve overpaid. IRD refunds the excess (filed through your personal tax return). It won’t cause a penalty, but you’ve lost the time value of the overpaid tax.
→ See: PIR Rate NZ — Full Guide and Calculator
PIE Funds vs Direct Share Ownership: Tax Comparison
| Scenario | PIE Fund | Direct Shares |
|---|---|---|
| Tax rate on returns | PIR (max 28%) | Marginal rate (up to 39%) |
| FIF tax (overseas shares >$50k) | ❌ Not applicable to PIE | ✅ Applies — 5% × opening value |
| Dividend tax | Handled within fund at PIR | Taxed at marginal rate |
| Tax return filing | Not required | Required if FIF applies |
| Tax certainty | High — final withholding | Lower — depends on IRD treatment |
For most NZ investors with income over $48,000, PIE funds are significantly more tax-efficient than directly owning shares.
Types of PIE Funds Available in NZ
Retail PIE funds (accessible to individual investors)
The most common type. Includes managed funds, index funds, and ETFs offered by:
- InvestNow (Foundation Series, other providers)
- Kernel
- Simplicity
- Smartshares
- Milford, Fisher Funds, Booster, SuperLife, and other fund managers
KiwiSaver PIE funds
All KiwiSaver schemes are PIE funds. The same PIR tax treatment applies.
Listed PIE funds (NZX-listed)
Smartshares ETFs listed on the NZX are PIEs. You buy them through a broker just like shares, but they carry the PIE tax status.
Unlisted PIE funds
Accessed directly via the fund manager or platforms like InvestNow. Not traded on an exchange — priced at NAV daily.
Best PIE Funds for NZ Investors (2026)
Lowest cost global growth
| Fund | Provider | Fee | Type |
|---|---|---|---|
| Simplicity Growth Fund | Simplicity | 0.10% | Diversified growth |
| Foundation Series International Shares | InvestNow | 0.20% | Global shares |
| Foundation Series Total World | InvestNow | 0.25% | All-world shares |
| Smartshares Total World Fund (TWF) | Smartshares/NZX | 0.20% | All-world ETF |
| Kernel High Growth Fund | Kernel | 0.25% | Global growth |
| Kernel S&P 500 Fund | Kernel | 0.25% | US shares |
Balanced / conservative
| Fund | Provider | Fee | Allocation |
|---|---|---|---|
| Foundation Series Balanced | InvestNow | 0.29% | 60/40 shares/bonds |
| Simplicity Conservative | Simplicity | 0.10% | 35/65 shares/bonds |
| Kernel Cash Plus | Kernel | 0.25% | Short-duration bonds |
PIE Fund FAQs
Do I need to file a tax return for PIE fund income? Usually no — PIE income is final withholding. However, if you had PIE income and your PIR was set too low, you may need to file to pay the difference. New Zealanders who only earn salary/wages and PIE fund income typically don’t need to file an IR3.
Are overseas PIE funds available to NZ investors? The PIE structure is specific to NZ. You can’t invest in a US or Australian fund and receive PIE tax treatment — you need a NZ-registered PIE fund. However, NZ PIE funds commonly invest in overseas assets (global shares, international bonds) on your behalf.
Can I invest in shares directly AND use PIE funds? Yes. Many investors hold both. A common approach: use PIE funds for the bulk of investments (tax efficiency), and hold a small direct share portfolio on the NZX (for fun, engagement, or specific company exposure). Note that direct NZX shares don’t receive PIE tax treatment.
Is the PIE cap always 28%? The 28% cap applies to retail investors. Certain categories of investors (corporates, trusts) may have different PIR settings. For individual investors, 28% is always the maximum.