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Investor Benefits for Operating under the PIE Scheme

Wednesday 30 May 2018, 10:07PM

By Beckie Wright

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A portfolio investment entity (PIE) is a type of investment entity that has great advantages for investors who operate under this scheme because it has special tax rules: the prescribed investor rate (PIR) is limited to 28% instead of 33%.

Investments that operate under the PIE scheme have three PIRs to choose from – 10.5%, 17.5% and 28%. The PIR is dependent on either of your last two years of taxable income and is fixed at this tax rate for two years. PIE tax is generally a ‘final’ tax, which means investors pay tax on investment income only based on PIR.

Investing in PIEs yield great benefits, especially for those who pay income tax at the higher tax bracket, have just returned to the work force after being out of work for at least two years, or have had a recent increase in salary.

There are a number of investment types in New Zealand that are PIEs, such as KiwiSaver and other saving schemes, fixed-term investments, managed investment schemes, and commercial property investments.

Choosing to invest in PIEs will save investors on paying extra tax at the 33% rate, capping at the PIR interest rate of 28% instead.

The Maat Group, commercial property investment specialists, believes that investments that operate under the PIE investment scheme provide great benefits for Kiwi investors, which is why their current offer for 306 Cameron Road, Tauranga will be registered as a PIE investment, limiting the top resident tax rate to 28%.

The Maat Group provides investment property syndicates for purchasing commercial property, with a focus on maximising return to investors.

For more information on their current PIE investment offer, visit the Maat Consulting website today.