If you are a KiwiSaver member or invest in PIE investments, every April you need to re-calculate your PIR and make sure that your provider has the correct rate on record.
Your Prescribed Investor Rate (or PIR) is your tax rate for KiwiSaver and other investments that are structured as multi-rate Portfolio Investment Entities (PIEs). There are three PIR rates: 10.5%, 17.5% and 28%.
If you should be on a higher PIR than you are, you may have to pay penalties, and if you overpay, you cannot get it back.
Your PIR is based on your income for each of the two previous financial years (ending 31 March), on the following basis:
Note: if your income changed during the last two financial years, you can use the lower PIR rate for the current year.
You can calculate your PIR rate via your myIR login, which is very helpful, considering that for most income earners, all their taxable income details are already recorded.
Then, you will need to contact your KiwiSaver or investment manager and ask them to update their records. Some providers allow you to do this online.