Has your tax status changed?

Thinking male(copy)(copy)Now is the time to check your taxable income to ensure you are on the correct PIR. Your PIR or prescribed investor rate is the rate at which banks, New Zealand fund managers and other financial institutions deduct tax on your behalf and pay it to the IRD. Getting this wrong can have significant ramifications for you, especially if you have under-estimated your income.
Use the information below to identify the different PIR rates and which rate applies to you.

Determining PIR (based on NZ taxable income received in previous two tax years)
In either of the two income years before the current tax year
If your taxable income was … And your taxable income and PIE income… From 1/10/2010, your PIR is
$14,000 or less $48,000 or less 10.5%
$48,000 or less $70,000 or less; and you do not qualify for 10.50% rate 17.5%
If you do not qualify for 10.5% or 17.5% rate 28%
No notification of IRD number 28%
No notification of PIR 28%
If you are… …and… Your PIR is
an investor who has become a NZ resident you have not previously invested in a PIE Your PIR is determined as if you were a NZ tax resident individual investor however you must include your ‘worldwide’ income in the calculation of taxable income in determining your PIR, in the year you become NZ tax resident.
a NZ resident invested in a PIE you cease to be a resident 28% rate would apply for the whole year, unless the investor withdraws and re-invests. (PIE systems may not be able to cope with residence rate change during the year.)
If you are a… …and… Your PIR is
Non-resident individual, company, partnership or trust - 28%
Company, incorporated society, PIE or portfolio investor proxy (PIP) - These entities must all choose 0% and therefore include the PIE income in their tax return. However please note a PIE does have the ability to elect either 28% or 17.5%.
Trustees (excluding charitable trusts) and Super funds. - Trustees can choose a PIR of 0%, 17.5% or 28%. If they choose 0% or 17.5%, they must include PIE income and pay any applicable tax themselves and will receive a credit for tax satisfied by the PIE. However, these trustees cannot include PIE losses in their trust’s tax return. Note: A testamentary trust can choose a PIR of 10.5%.
Registered charitable trust - 0%     Tax exempt (provided a tax exempt certificate is obtained). Do not have to declare PIE income.
Joint investment, partnership or unincorporated society
Each partner has the same individual PIR (for example 17.5%) 17.5%
All partners have different individual PIRs 0%, 10.5%, 17.5% or 28%. Split investment and provide individual PIRs and IRD numbers to the PIE.

Financial institutions will not know if your taxable income has changed to the extent that it alters your PIR. It is up to you to advise them and it is important you do it early in the financial year so they are progressively deducting tax at the correct rate for the entire period.
If you have identified that your PIR has changed then you need to notify the following:
Banks with whom you have money deposited.
Your financial adviser so he/she can inform the fund managers and other financial institutions.
Any other financial institution which deducts tax from earnings on your behalf.