PIR, PIE and FIF: NZ investment tax in plain English
“Wait, what's a PIR?” is one of the most common questions new Kiwi investors ask. Here are the three tax words you'll keep running into, explained in plain English.
The short answer
A PIE (portfolio investment entity) is a type of fund with its own tax rules. Many NZ managed funds, and most KiwiSaver funds, are PIEs. The fund pays tax on your behalf at your PIR (prescribed investor rate): 10.5%, 17.5% or 28%, depending on your income.
The FIF (foreign investment fund) rules cover most overseas shares and funds you hold directly, like US shares and US-listed ETFs. For individuals, they only apply once the total cost of those investments goes over $50,000 at any point in the tax year.
What is a PIE fund?
A PIE is a fund that pools investors' money and is taxed under special rules. Instead of you declaring the fund's income in a tax return, the fund works out the tax on your share of its income each year and pays it to Inland Revenue for you, at your PIR.1
Two things make PIEs worth understanding:
- The rate is capped at 28%, even for people whose income tax rate is higher.
- It's automatic, as long as you've given the fund the right PIR and your IRD number.
Some ETFs listed on the NZX are PIEs too, although listed PIEs handle tax a little differently from the managed funds and KiwiSaver funds most people hold.
What is a PIR, and how do I find mine?
Your PIR is the tax rate a PIE uses for you. For New Zealand tax residents investing as individuals, it's set by your income in either of the last two tax years, using these thresholds from Inland Revenue:1
| In either of the last 2 tax years, was your… | Your PIR |
|---|---|
| taxable income $15,600 or less, and taxable income plus PIE income $53,500 or less? | 10.5% |
| taxable income $53,500 or less, and taxable income plus PIE income $78,100 or less? | 17.5% |
| neither of the above? | 28% |
Thresholds in use from 1 April 2025, checked against Inland Revenue's PIR questions on 20 October 2026. Different rules apply if you're not a New Zealand tax resident or you've recently arrived.
Inland Revenue's Find your PIR questions walk you through it. If you don't tell a fund your PIR, it uses 28%. If your PIR turns out to be too low, Inland Revenue works out the extra tax you owe after the tax year ends; if it was too high, the extra can come back to you as a credit.2
Tax on $1,000 of income from a PIE fund. Illustrative
- At a PIR of 10.5%$105
- At a PIR of 17.5%$175
- At a PIR of 28%$280
The fund takes this out for you, so you'll usually see it as a tax line on your statement rather than a bill.
What are the FIF rules?
FIF stands for foreign investment fund. Despite the name, it covers more than funds: it's the set of rules for taxing most shares in overseas companies and overseas-based funds that you own directly, such as US shares and ETFs listed in the US. Some Australian shares listed on the ASX are exempt.3
For individuals, the key number is the $50,000 threshold:34
- It's based on cost, meaning what you paid in NZ dollars, not what your investments are worth today.
- If the total cost of your FIF investments stays at $50,000 or less the whole tax year, the FIF rules don't apply. You're taxed on the dividends you receive instead.
- If it goes over at any point, the FIF rules apply to all of them, not just the amount over $50,000.
A change is proposed, but isn't law yet. A Bill introduced to Parliament on 10 September 2026 proposes lifting the threshold to $100,000, backdated to 1 April 2026.5 As at 26 October 2026 it hadn't passed: it was at the select committee stage when Parliament was dissolved on 1 October, so its next steps wait for the new Parliament.6 Until it passes, $50,000 is the rule. Check Inland Revenue for the latest before relying on either number.
How is FIF income worked out?
Usually with the fair dividend rate (FDR) method: 5% of what your overseas investments were worth at the start of the tax year (1 April) is treated as your income for the year, whatever actually happened to their price.3 Individuals can use the comparative value method instead in a year when it gives a lower figure. It's based on what actually happened: the change in value plus any dividends. In a year when your overseas investments fell, that can mean little or no FIF income.
The fair dividend rate on overseas shares that cost over $50,000. Illustrative
- Value of your overseas shares on 1 April$60,000
- Fair dividend rate5%
- FIF income added to your taxable income$3,000
You'd pay tax on that $3,000 at your own income tax rate. This leaves out the “quick sale” adjustment, which applies if you bought and sold within the same year.
One more thing that surprises people: investing overseas through an NZ-based PIE fund, such as an NZ fund that holds US shares, works differently. The fund deals with the FIF rules itself and you're taxed at your PIR, so those holdings don't count towards your own $50,000.
Do I pay tax on my Sharesies or Hatch investments?
It depends on what you hold, not which app you use. In general:
- NZ shares: dividends are taxable income. They often come with imputation credits for tax the company has already paid, and some tax may already have been deducted.
- PIE funds (including most NZ managed funds): taxed by the fund at your PIR.
- Overseas shares and ETFs: dividends are taxable, and the FIF rules apply once your total cost goes over the threshold.
Vestro isn't a tax service. For how this applies to you, use Inland Revenue's guidance or talk to a tax adviser or accountant.
Common questions
What PIR should I use?
Your PIR is set by Inland Revenue's rules, based on your income in either of the last two tax years: 10.5% if your taxable income was $15,600 or less and taxable income plus PIE income was $53,500 or less; 17.5% if your taxable income was $53,500 or less and taxable income plus PIE income was $78,100 or less; otherwise 28%. Inland Revenue's online questions work it out for you.
What happens if I don't give my fund a PIR?
The fund uses 28%. If that's higher than your correct rate, you can update your PIR with the fund, and Inland Revenue squares up PIE tax after the end of the tax year.
Is the FIF $50,000 threshold based on what I paid or what it's worth now?
What you paid. The threshold is measured on the cost of your FIF investments in NZ dollars, not their current market value.
Is the FIF threshold going up to $100,000?
It's proposed. A Bill introduced to Parliament on 10 September 2026 would lift it to $100,000 from 1 April 2026, but it isn't law until the Bill passes, and as at 26 October 2026 it hadn't. Until then the threshold is $50,000. Check Inland Revenue for the current position.
Do Australian shares count for FIF?
Many don't. Shares in Australian companies listed on the ASX can be exempt if they meet Inland Revenue's conditions, such as keeping a franking account. Australian-based ETFs and unit trusts are generally not covered by that exemption.
General information, not financial advice. This page explains how investing works in general. It doesn't take your situation, goals or attitude to risk into account, and it isn't a recommendation to buy, sell or hold anything. Investing involves risk: the value of your investments can go down as well as up, and you could get back less than you put in. Figures are from the sources below on the dates shown, and may have changed since.
Sources
- Inland Revenue, Prescribed investor rates and Find your PIR. Thresholds checked 20 October 2026.
- NZDF Savings, PIR changes effective 1 April 2025: a scheme's notice on the new thresholds and the end-of-year square-up.
- Inland Revenue, IR461 Guide to foreign investment funds (April 2026).
- Inland Revenue Tax Technical, Exemption for natural persons with less than $50,000 of FIF interests.
- Become, The FIF rules: a plain English guide, updated 13 October 2026: the proposed $100,000 threshold.
- Inland Revenue Tax Policy, Taxation (Annual Rates for 2026–27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill: stage “Select committee”, as at 12 October 2026; and New Zealand Parliament, Finance and Expenditure Committee: no select committees since the dissolution of the 54th Parliament on 1 October 2026. Both checked 26 October 2026.
Understand what you own
Vestro explains what's in your portfolio and what it's doing, in plain English. It isn't a tax service, so for your own tax position, check with Inland Revenue or a tax adviser.
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