Some of you may be asking what’s a PIR and what does this mean for me? Your PIR is your Prescribed Investor Rate. For KiwiSaver schemes, this is the tax rate that applies to investment earnings allocated to your KiwiSaver account.
There are three PIR rates: 10.5%, 17.5% and 28%. As a general rule if your taxable income is above $48,000 then your PIR should be 28%.
It’s important to have the correct PIR. If your PIR is too high then you will be paying more tax than you need to. If your PIR is too low then you could be facing a tax bill.
Has Inland Revenue been in touch with you about your PIR? In 2019 Inland Revenue identified 450,000 New Zealanders who they determined were on the wrong PIR. Inland Revenue contacted those who appeared to have a PIR that was too low and advised how much tax they owed.
Inland Revenue replaced their computer system and that means it can now check your PIR against your personal taxable income. Your PIR is based on your income. If your income changes (up or down), this might mean a change in your PIR. Your residency status can also affect your PIR. Inland Revenue can also now let your KiwiSaver provider know if it looks like you are one the wrong PIR rate.
We have put a one-page guide together that may help you in calculating your PIR rate.