Portfolio Investment Entities (PIEs)

Please note: Due to processing of year-end PIE tax and the timing of Easter this year, ING will be unable to process any fund transactions on Thursday 1 April. That means any transactions received on Wednesday, 31 March will not be processed until the next available business day - being Tuesday, 6 April. Transactions for the Thoroughbred Cash Fund (which do not involve forward pricing) will be processed up to 2pm on 31 March. Non-PIE funds (ANZ Life Bonds, Russell Ascent and Countrywide Funds) will process as usual on 1 April.

• This PIR update form is intended for individuals only. You may also click here to download a form.
• Your email address is required to send you a secure link to complete this update.
• Joint investors form please click here
• Companies, trusts and partnerships form - please click here

No one likes paying more tax than they need to, which is why we want to make sure you’re on the right tax rate – otherwise known as your Prescribed Investor Rate (PIR) for your Portfolio Investment Entity (PIE).

PIRs are changing on 1 April 2010 to align with marginal tax rates, so to ensure you pay the right amount of tax on your investment for the current year and the year ahead, we require your correct PIR and IRD number. If you do not notify us of your correct PIR and IRD number or have not notified these details to us in the past, you will be automatically taxed at the default rate of 30%.

What do you need to do?
You need to ensure your PIR is correct for the tax years ending 31 March 2010 and 31 March 2011.

Things to remember

• If you do not notify us of your correct PIR and IRD number or have not notified these details to us in the past, you will be automatically taxed at the default rate of 30%.
• If your PIR has not changed for the income years ending 31 March 2010 and 31 March 2011 – you do not need to do anything.
• If your previously notified PIR as at 31 March 2010 is 19.5%, it will be automatically changed to 21% on 1 April 2010 (unless you notify us that a different rate applies).
• It is not possible to recover any excess tax paid by the PIE on your behalf once the tax has been paid to Inland Revenue.
• Confirm your PIR each year, and before you withdraw, switch or transfer funds.

PIE stands for Portfolio Investment Entity. A PIE is a type of managed fund that meets certain criteria and elects to be subject to the PIE rules.

Investors in a PIE are generally taxed at their chosen tax rate, referred to as a ‘prescribed investor rate’ (PIR).

In order to pass on this advantage and benefits listed below, most of ING’s retail superannuation schemes and New Zealand resident unit trusts (including those it administers for ANZ National Bank) are PIEs.

NB: the following entities managed by ING are not PIEs – Ascent funds, ING Diversified Yield Fund and ING Regular Income Fund, ANZ Life Bonds, Countrywide Investment Bonds.


How does PIE tax work?

Under the PIE regime, ING meets individuals’ and certain other investors’ tax obligations by selling units in the PIE to reflect the tax payable. We then pay the tax to Inland Revenue. This takes place at the end of each tax year, or when you fully withdraw, switch or transfer.

Tax rebates are paid by issuing additional units.

You are provided with a tax certificate at the end of each tax year, detailing your PIE taxable income, foreign and New Zealand tax credits, and the PIE rebates received or tax paid.


What is my Prescribed Investor Rate (PIR)?

Your PIR refers to the rate at which your PIE tax is calculated.

To ensure you pay the right amount of tax on your investment we require your correct PIR and IRD number.

If you do not notify us of your correct PIR and IRD number or have not notified these details to us in the past, you will be automatically taxed at the default rate of 30%.

Individual investors

An individual investor’s PIR is calculated based on their taxable and PIE income earned in either of the previous two income years.

Taxable income includes gross salary and wages, interest and any other investment income that is taxable to the investor.

For most but not all individuals, their income year will be the period 1 April to 31 March

Joint investors

• Where your investment is held jointly, income is allocated to one investor only referred to as the ‘Tax Payer’. If you both have the same PIRs, either investor can be selected as the Tax Payer. If you have different PIRs, the investor with the highest rate is required to be selected as the Tax Payer. If you do not notify us, the Tax Payer will be the first investor named on your account and income will be allocated to that investor at the default rate of 30%.


• If you have not ever notified us of your correct PIR and IRD number, you will be automatically taxed at the default rate of 30%.
• If your PIR has not changed for the income years ending 31 March 2010 and 31 March 2011, and the Tax Payer name and IRD number is correct - you do not need to do anything.
• If your previously notified PIR as at 31 March 2010 is 19.5%, it will be automatically changed to 21% on 1 April 2010 (unless you notify us that a different rate applies).
• It is not possible to recover any excess tax paid by the PIE on your behalf once the tax has been paid to Inland Revenue.
• Confirm your PIR each year, and before you withdraw, switch or transfer funds.

Companies, trusts and partnerships

Companies - the PIR for New Zealand tax resident companies (including unit trusts) is 0%.
You are required to supply us with your IRD number.

Trusts – the PIR for New Zealand tax resident charities is 0%.

New Zealand tax resident superannuation funds and trustees of trusts (excluding charities and unit trusts) can notify as follows:

• For the income year ending 31 March 2010, you can select a PIR of 0%, 19.5% or 30%.
• For the income year ending 31 March 2011, you can select a PIR of 0%, 21% or 30%. New Zealand tax resident trustees of a testamentary (‘will’) trust can also select a PIR of 12.5% for the income year ending 31 March 2011.

When deciding your rate you will need to consider the different tax impacts for each, such as:

• If your PIR is 30%, you are not required to include the PIE income in your tax return, as this is final tax.
• If a PIR of less than 30% is selected, you are required to include the PIE income in your tax return and claim any PIE tax paid as a credit. However, if you select 12.5% or a 21% PIR and the trust is attributed a loss, the loss cannot be included in the trust’s tax return.

You must supply your IRD number when you notify us of your PIR.

Partnerships - New Zealand tax resident partnerships need to elect the highest PIR of the partners, where all the partners are New Zealand tax resident individuals. Partnerships can split the investments and advise the PIR and IRD number for each partner. If a partnership includes a New Zealand tax resident company or charitable trust, then the partnership investment must be split, as these entities have a PIR of 0%.

Non Residents - the PIR for non-New Zealand tax resident companies, partnerships or trusts is 30%.

The benefits of PIEs

• If your personal income tax rate is higher than 30%, you will only pay tax on PIE taxable income at 30%.
• Attributed PIE income can be taxed at lower rates for some individual investors. In comparison if they are investors in a superannuation scheme or a unit trust that did not elect to become a PIE, their returns will be taxed at a flat rate of 30%.
• PIEs investing in New Zealand and certain Australian shares are not taxed on any gains made when the fund sells these shares. Only the dividend income from these shares is taxable. However, losses are not deductible.
• By giving us your correct PIR and IRD Number, the tax deducted on your investment income will be a ‘final tax’ and will not need to be included in your tax return. However, trusts who have notified a PIR of less than 30% will have to include PIE income in their tax return and claim any PIE tax paid as a credit. Where a trust has chosen a PIR of 12.5% or 21%, and the trust is attributed a loss, the loss cannot be included in the trust’s tax return.
• Redemption gains or distributions received from PIEs are not separately taxable to investors and are not required to be included in your tax return.
• Provided you have notified your correct PIR, income earned from a PIE does not affect your entitlements to family assistance (under Working for Families), student loan repayment and child support obligations.
• It’s important to note that some of these benefits are not available from other forms of saving or investing, such as buying shares directly or investment property income.

ING (NZ) Limited
Tel: 0800 737 575
Email:service@ingnz.com
Post: ING (NZ) Limited, Freepost 324, PO Box 7149, Wellesley St, Auckland 1141

This information has been prepared for investors in investment funds managed by ING (NZ) Limited (“ING”). While care has been taken in the preparation of this information, ING gives no warranty as to the accuracy of the information and takes no responsibility for any errors or omissions. It does not constitute financial or product advice. Individuals are encouraged to seek specialist taxation advice on their own circumstances.