“Know what you own, and know why you own it.”

– Peter Lynch, Fidelity Magellan Fund

IIS and InvestNow have made a range of funds available that include Portfolio Investment Entities (PIE funds) and also Australian Unit Trusts (AUT).  AUTs are taxed under Foreign Investment Fund (FIF) tax rules.  PIE and FIF Funds provide different tax benefits and outcomes for different investors.

A benefit of using PIE fund for a New Zealand-resident individual investor is the different tax rates on investment income determined by their Prescribed Investor Rate (PIR).  The PIR for New Zealand-resident is determined by their taxable income over the previous two years, and in some cases may be a lower rate than the investor’s marginal tax rate.  PIE Funds can also provide administrative benefits for New Zealand tax payers as PIE tax is a final tax.

Foreign Investment PIE Funds cater for non-resident investors.  A Foreign Investment Variable Rate Pie Fund enables non-resident investors to access New Zealand investment opportunities on a tax effective basis.  FIF Funds provide a range of unique benefits to some investors.  Under the FIF tax regime a New Zealand-resident individual can elect different tax treatments for their investments based on factors such as their return.

Note that each investor has a unique and different tax position, and you should seek your own tax advice prior to making any investment decision.  Before you invest you should make yourself aware of the investment risks.  Full information about the investment funds and application process is available in the relevant Product Disclosure Statement.