Portfolio investment entity tax overview

A portfolio investment entity (PIE) is an investment that pays tax on behalf of investors based on their prescribed investor rate (PIR). The IOOF Integral Master Trust (IMT) is a PIE entity and as such investors earning more than 28 per cent may benefit from tax effectiveness.

Please note, this is a general summary to provide you with some guidelines on PIE tax, based on current New Zealand tax laws. As these laws may change from time to time, and we have only provided a summary of the rules, we recommend that you consult your financial adviser in relation to your particular situation.

When an investment earns income it is generally paid to the investor after the investment has paid the applicable tax. A PIE is different in that it calculates the income earned, but that income is taxed at each investors' PIR, rather than the tax rate of the investment entity. This can provide a tax benefit to investors where their PIR is lower than the rate the investment fund would pay or the investor would pay at their marginal tax rate. For example, an investor with a marginal tax rate higher than 28 per cent would pay less tax on a given amount of income if they invested through a PIE because the highest PIR is 28 per cent.

The IMT is a PIE. As an investor in the IMT, tax will be deducted from the investment when either of these two events occurs:

  • On the sale of units - A sale of units occurs when you withdraw some or all of your units, or switch between investment funds. Any accrued tax liability on the sold units at the time of sale will either be deducted from the proceeds of the sale, or additional units will be sold if you request the withdrawal of a specific amount. The amount deducted to pay the tax liability will be forwarded to Inland Revenue on your behalf.
  • At the end of the tax year - At the end of the tax year (31 March) the IMT will automatically calculate any remaining tax liability on your IMT fund(s) and will pay this amount by selling units. We will sell units from the fund you nominate as being the fund for fee deductions. The amount deducted to pay the tax liability will be forwarded to Inland Revenue on your behalf.

Please note that where a rebate exists we will credit this back to your investment.

Before the end of June, each year, we will send you an annual tax certificate. This certificate will advise you of the amount of income earned, the PIR rate used and the amount of tax paid on your behalf.