A KiwiSaver scheme is either a PIE (Portfolio Investment Entity) or a widely-held superannuation scheme taxed at 28% (your provider’s PDS says which). In a PIE, your investment returns are taxed differently from ordinary income. Your PIR (prescribed investor rate) sets that tax, and an incorrect PIR is the one KiwiSaver tax setting that can cost you money or lead to a tax bill. This section covers KiwiSaver tax; contributions, withdrawals and fund choice are in the main KiwiSaver guide.
How KiwiSaver Tax Works
In a PIE scheme, your investment returns are taxed inside the fund at your PIR: you don’t include them in your personal tax return, and the provider handles the tax automatically.
Two consequences:
- Your KiwiSaver returns are taxed at a capped rate of 28%, even if your marginal income tax rate is higher (e.g. 33% or 39%)
- You don’t need to do anything at tax time for KiwiSaver: it’s handled by the fund
PIR Rates
| Annual taxable income | AND combined income (taxable + PIE) | PIR |
|---|---|---|
| Up to $15,600 | Up to $53,500 | 10.5% |
| Up to $53,500 | Up to $78,100 | 17.5% |
| Above these, or no PIR given | 28% |
Your PIR is based on your income in either of the previous two income years, so a recent lower-income year can mean a lower rate. KiwiSaver PIR Rate Explained has the full two-part test and worked examples.
The Risk of the Wrong PIR
- Too high: You overpay tax inside the fund until IRD’s end-of-year PIE calculation, which turns the excess into a credit against other income tax and refunds any remainder
- Too low: IRD will assess you for the underpaid tax through your end-of-year tax assessment
How to update your KiwiSaver PIR covers changing the rate your provider holds.
Guides in This Section
- KiwiSaver PIR Rate Explained: the two-part income test for each rate
- KiwiSaver PIE Tax Explained, including tax on overseas investments (FIF rules)
- How to Update Your KiwiSaver PIR Rate
- Is KiwiSaver Taxed When You Withdraw?
- KiwiSaver and Your Tax Return