The term PIE stands for Portfolio Investment Entity.
PIEs were introduced in New Zealand on 1 October 2007, and apply a specific set of investment and tax rules.
A superannuation scheme, unit trust or KiwiSaver scheme can choose to be a PIE, if it meets new tax rules for investors and investments. Not all funds will be eligible or will nominate to be a PIE.
A PIE pays tax based on its investors’ PIE tax rate (PIR). Your tax rate for income from the PIE may be lower than the rate applying to your other income, or your marginal tax rate.
What is PIR?
PIR stands for Prescribed Investor Rate and may also be referred to as PIE tax rate.
Your PIR will be applied to any investments you have invested in a PIE.
There are four rates: 0%, 10.5%, 17.5% and 28%. This may differ from your income tax rate (marginal tax rate).
When do you need your PIR?
Your PIR (Prescribed Investor Rate) is required to ensure you are taxed appropriately on your PIE income. If you are investing in one of Craigs Investment Partners Defined Portfolios unit trusts (PIEs) through our kiwiSTART® Defined scheme then you might be eligible for a tax reduction. This is because your income generated from your PIE investment, will be taxed based on your PIR.
What if you submit the wrong PIR or your PIR rate changes?
If you confirm a PIR at 10.5% or 17.5%, but it should in fact be 28%, then you will have to file a tax return and pay the additional tax to the Inland Revenue (IRD penalties may apply).
If you are entitled to a PIR of 10.5% or 17.5% but have been using the 28% PIR, then the additional tax you have paid is not reimbursed. You must notify Craigs Investment Partners of your PIR or if your PIR changes.
What if I don’t supply my PIR to Craigs Investment Partners?
If you do not supply your PIR to Craigs Investment Partners, and you are investing in one of our Defined Portfolios unit trusts (PIEs) though our kiwiSTART® Defined scheme, then your PIR will automatically be set at 28%.
Information to help you determine the correct PIR is available from Inland Revenue, or view the question below ' How to work out your PIR'?
You can contact your Craigs Investment Partners Investment Adviser for guidance, however we are not tax specialists. We recommend you confirm your PIR with the Inland Revenue Department.
Please view the pdf to help identify your PIReffective 1 April 2011 - click here.
Please contact your Investment Adviser for guidance.
Craigs Investment Partners is not tax a specialist and we recommend you confirm your PIR with the Inland Revenue Department.
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The tax rates on PIE returns for individuals are as low as 10.5%, and are currently capped at 28%.Many investors will find their PIE tax rate will be lower than their marginal tax rate.
PIEs pay no tax on gains from the sale of New Zealand and most listed Australian shares. Previously, managed funds were taxed on these gains. Those tax-free gains may be distributed to investors without any further tax being payable.
The new Fair Dividend Rate (FDR) tax on overseas shares will be calculated and paid for you by your PIE fund.
Balanced SRI Fund explanatory statement
Objective
The objective of the Balanced SRI Fund is to grow the value of capital, relative to inflation, over the medium to long term. The Fund will generally hold a diversified portfolio of growth and income assets.
The Balanced SRI Fund has been developed and is managed by Craigs Investment Partners Investment Management Limited (CIPIML), a wholly owned subsidiary of Craigs Investment Partners.
Philosophy
The guiding philosophy of the Balanced SRI Fund is to endeavour to hold a diversified portfolio of investments that the Manager considers to be environmentally and socially responsible, whilst still applying Craigs Investment Partners’ traditional portfolio investment criteria.
Currently, the Manager does not actively screen for investments that have positive or negative governance practices. However, this consideration is taken into account in the overall assessment of the financial viability of an investment.
In selecting individual shares, funds and other investments for the Balanced SRI Fund, the Manager will use a combination of positive and negative screening criteria. The criteria adopted will change over time as standards relating to corporate reporting and accountability and codes of conduct advance.
Negative screens
The Manager will use its best endeavours to ensure that the Balanced SRI Fund will NOT be invested in companies engaging in the following activities:
- Tobacco
- Alcohol
- Gambling
- Armaments
- Pornography
- Nuclear weapons and the nuclear power industry
The Manager will also use its best endeavours, using publicly available information (including annual reports issued by investment companies), social responsibility indices compiled by independent market observers (e.g. FTSE4Good industry series), along with any additional information from our in-house research resources, to ensure that no investment within the portfolio is engaged in poor labour practices, cruelty to animals, or excessive environmental pollution. No formal definition, criteria or weightings are used in assessing these elements and each investment is screened separately.
Positive screens
Companies that will be considered are those that in the view of the Manager:
- Make a positive social contribution
- Seek to minimise adverse environmental effects from their operations
- Have strong governance practices, ethical standards and track records
- Embrace triple bottom line reporting
The Manager will use its best endeavours, using publicly available information (including annual reports issued by investment companies), along with any additional information from our in-house research resources, to ensure that investments within the portfolio do meet these criteria. There are no pre-determined relative weightings to these criteria. Available investments within this portfolio must meet the Craigs Investment Partners existing investment selection criteria.
In a practical sense, for international equity investments, managed fund and index funds, the Manager will primarily focus on:
- Companies that are members of recognised SRI indices such as the FTSE4GOOD index or the KLD Social Index
- Managed funds that invest on an SRI basis, employing positive and/or negative screens
- Exchange-traded funds based on an SRI index
In the event that a stock included within the portfolio is found to be in breach of the fund’s investment criteria, that holding will be divested as soon as practicable, and for the best price practically achievable.
The perception of the ethics of a company or industry can change from investor to investor, as well as over time. The Manager aims to keep abreast of new technology and trends, as well as changes in public opinion, and will adapt as required. The Manager retains the right to invest in companies that, at first glance, may not appear fit the above criteria if it deems that the negative effects of the company are outweighed by the positive.
The Craigs Investment Partners research team constantly monitors companies within the Balanced SRI Fund and adjusts holdings on a needs basis. The Balanced SRI Fund is formally reviewed on a regular, six monthly basis.
For further information please refer to the relevant investment statement available on this website for kiwiSTART® Select, kiwiSTART® Defined, superSTART®, mySTART® and the Defined Portfolios.
A PIE will pay tax and claim tax rebates on behalf of individual investors. Therefore individuals will not be required to file a tax return for income generated from their investments (assuming the correct PIR an individual is entitled to has been advised).
Craigs Investment Partners Investment Management Limited Defined Portfolios are unit trusts that have been registered as PIEs (Portfolio Investment Entities). The New Zealand Guardian Trust Company Limited is the Trustee for the Defined Portfolios.
PIE’s offer a convenient way to invest in professionally managed diversified funds.
The Defined Portfolios unit trusts, managed by Craigs Investment Partners Investment Management Limited, are constructed based on our extensive research extensive in-house research, and provide a range of funds across a range of risk profiles.
Diversification
By investing in a pooled fund, investors gain exposure to investment opportunities that may not be possible on an individual level. Investors don’t have to invest large sums of capital to enjoy the diversification offered by our Defined Portfolios, you may only require as little as $1,000 which can be accumulated through a regular savings option.
Investing made Easy
PIEs make investing simple for investors, reducing the administration often associated with investing directly. The funds are priced daily and investors can withdraw their investments at any stage.
Tax Efficient
Individual investors in PIEs are taxed at their personal tax rate capped at 28%. In addition, income from a PIE is ‘tax paid’ and does not generally need to be included in personal tax returns.