Portfolio investments are financial assets purchased with the aim of earning a return or increasing in value. Depending on an investor’s risk tolerance and time horizon, this could include stocks, bonds, real estate, international securities, options and more.
Portfolio investment entities (PIEs) are special kinds of investment funds that operate under special tax rules. These regulations may provide benefits to certain trustee investors.
ANZ PIE Fund
Portfolio investment entities (PIEs) are managed funds that benefit from special tax rules. Under these provisions, investors pay tax based on their own marginal rate which is generally slightly lower than your income tax rate.
People on higher tax rates may benefit from this tax benefit. But it’s essential to comprehend how it works, as not all investments that take advantage of the PIE regime are comparable.
Most PIEs are multi-rate PIEs, meaning they tax their investors according to the prescribed investor rate (PIR). This makes it difficult to estimate how much you’ll save if you invest in a PIE and your income is high or low; so seeking professional advice is recommended.
Listed PIEs offer additional tax benefits, though not to the same extent as multi-rate PIEs. They’re commonly used for long-term investments like KiwiSaver and pay dividends that you don’t need to include in your income tax return.
Calculating how much you could save is easy with our Deposit Calculator. It allows you to compare the savings that investing in a PIE fund could yield with your interest rate on term deposits.
If your tax rate is 30% or 33%, investing in a PIE fund instead of term deposit or another fund that doesn’t use this regime can provide substantial savings. Even those on 10.5 or 17.5 per cent can still benefit from using a PIE fund.
Another advantage of investing in a PIE fund is that you won’t suffer financially if the exchange rate between New Zealand and Australia drops. That’s because PIEs don’t need to worry about currency fluctuations, allowing them to invest in the most affordable currencies.
KiwiSaver members with lower income tax rates have an advantage, as a PIE can cap their rate at 28%. This allows investment earnings to grow faster and you’ll pay less tax in the long run.
Jasper PIE Fund
Jasper PIE Fund is a portfolio investment entity (PIE) that allows investors to purchase fractional ownership stakes in commercial properties. As one of the pioneers in this space, Jasper takes a technology-led, product-first approach to commercial property investing.
The company strives to lower the barriers of entry in real estate investing for everyday New Zealanders by offering a platform that enables individuals to purchase fractional stakes of commercial properties and multi-asset real estate funds.
Investors have the freedom to select assets, geographies and asset classes to build a portfolio tailored to their risk and return objectives. Furthermore, they may select specific investment properties and hold an ownership interest in them.
Jasper’s team of knowledgeable property specialists perform thorough analysis and due diligence on all underlying investments to guarantee the funds they manage meet the investment criteria of their customers. This includes inspecting properties, their leases, as well as their current performance.
They provide advice to their customers on how they may increase the success of a portfolio investment or how to manage their portfolio should something go awry. Moreover, they provide regular monthly reports on performance to enable investors to make informed decisions and stay compliant.
Jasper is led by experienced real estate industry professionals with deep expertise in global commercial property management. Mark Campbell, for instance, spent several years leading a commercial property fund in Europe before returning to New Zealand and founding Jasper.
He boasts an impressive real estate and finance background, having managed assets worth NZ$12 billion across seven European countries. Additionally, he’s supported by numerous venture capital firms such as Icehouse Ventures and M7.
Jasper stands out among other crowdfunding platforms by investing alongside investors in each deal. This ensures they have a stake in each property’s potential to produce substantial returns.
Fees charged by TCWs are a fraction of those charged by REITs or other commercial property syndicates. These cover the cost of arranging tenancies, managing the underlying property and assuring legal observance.
Kiwibank PIE Fund
Portfolio Investment Entity (PIE) accounts are accounts that banks offer that will reduce taxation on your savings. Doing so means you save money on taxes and can put that extra money to work for you instead of sitting idle.
In New Zealand, a PIE can be either a term deposit or managed fund like the Kiwibank PIE Fund. This tax-efficient way to grow your money may be especially advantageous if you are subject to high income tax rates or anticipate changes in personal circumstances.
When selecting a PIE product, it’s essential to ensure you’re on the correct Prescribed Investor Rate (PIR), as an incorrect one could mean extra tax and no refund. A free PIE tax calculator can help calculate the accurate PIR for your individual situation.
The PIE regime was instituted to help high-income earners save more money, and has become a key driver of investment confidence in New Zealand over the last decade. According to Ms Berry, when sharemarket and finance company collapses hit, people’s appetite for risk became even more cautious, leading them to demand products like PIEs.
Investors with a PIE can benefit from higher interest rates, as well as additional flexibility. For instance, you can ladder your PIE Term Deposit over time to maximize returns and avoid penalties for early withdrawals.
A PIE term deposit pays interest over an agreed-upon period, usually between six months and two years. You cannot withdraw your money before the end of the term; however, some banks may provide you with the option to break up the deposit before it expires.
For those who must access their money quickly and require a guaranteed return, this option could be ideal; however, be aware of potential penalties associated with PIE term deposits. Though generally low risk, they do come with their own risks.
There are various PIE term deposits available, such as Westpac’s PIE Notice Saver Fund. You can learn more about it and its terms and conditions online or pick up a copy at your nearest branch.
Portfolio Investment Entity (PIE) is a type of fund that invests money from investors into various passive investments, such as NZ managed funds, unlisted managed funds and Smartshares exchange-traded funds (ETFs).
PIEs are designed to assist low and middle income savers by offering tax advantages. To do this, investment income is taxed at a rate lower than the investor’s personal income tax rate.
PIEs offer tax savings that may not be applicable to everyone, but are particularly advantageous those with higher or low marginal tax rates. This is because PIEs operate under special rules that ensure their tax rate is lower than the investor’s personal income rate – meaning income earned from a PIE investment is subject to less taxation than from non-PIE investments.
Portfolio investments range from stocks and bonds, real estate, options, international securities, bank certificates of deposit (CCDs) to more esoteric options like derivatives. The composition of a portfolio depends on an investor’s risk tolerance and time horizon.
Investors have a range of options available to them, from young professionals with children to mature retirees seeking an income supplement. The key to making an informed decision is understanding your objectives and which options will provide you with the greatest returns.
A PIE (Prescribed Investor Rate) fund operates under special regulations and has a maximum tax rate of 28% on investment returns. The amount of taxation that you pay on your income from investments depends on your Prescribed Investor Rate or PIR (see below for more details on your PIR).
Your Personal Income Tax Rate (PIT) can be increased at any time to reflect changes in your situation. Therefore, it’s essential that your PIR remain up to date so that you can take advantage of all tax benefits associated with a PIE.
If you’re thinking about investing in a PIE, the Link website is your go-to place. There, you’ll find details about various PIEs and the Link PIE Fund which gives people an opportunity to make an impact through various initiatives. With access to almost everyone – companies, trusts and organisations alike – this fund offers great possibilities – start saving today!