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KiwiSaver: Our PIR Problem

News earlier this year saying about 1.5 million Kiwis were on the wrong tax rate for their investments led to lots of confusion. Claire Connell explains how to check you’re on the right PIR.

5 October 2021

Around 1.5 million Kiwis are on the wrong tax rate, or PIR (Prescribed Investor Rate) for their investments, says the IRD. This includes 550,000 people who paid too little tax on their investments, including many KiwiSaver accounts. These people have to repay the tax they owe.

More concerningly, there were also 950,000 people who paid too much tax. This money is not refunded by IRD. The amount overpaid totalled NZ$42 million. Many people aren’t aware that their tax rate for KiwiSaver and other investments changes with their income. Many people were confused about what a PIR is, and what they need to check.

What is a PIR?

Your PIR determines the tax you will pay on the returns from your KiwiSaver investment. The rate of tax you pay is based on your income over the past two years. If the two years work out to be different rates, pick the lower PIR for this year. PIRs are 10.5, 17.5 or 28 per cent. How often do I need to check PIR? It’s a good idea to check your PIR every March, towards the end of the financial year. If your income has gone up or down, you might be on the wrong PIR. For example, if you’ve had a pay rise, reduced your hours, started a job that pays you less than before, or been on, or about to take maternity leave, your PIR may have changed.

How do I find out what my PIR is now?

If you log into your KiwiSaver account, you should be able to see your PIR on file. If you’re on the wrong rate, you might be able to change it yourself within your KiwiSaver account portal. Otherwise, contact your provider, or the IRD. If you have other investments, such as managed funds, check with that company too.

But it’s not all bad

The good news is that IRD says its staff has started contacting customers who are on an incorrect PIR. New legislation also means that from 1 April 2020, IRD is able to notify a KiwiSaver provider if someone is on the wrong PIR. These two measures, plus an increase in education around PIR from media coverage, should mean more Kiwis are on the correct PIR. This will hopefully mean there are fewer people who overpay tax they can never get back. If you’re in doubt about your PIR, check it out. For more information, visit the IRD’s PIR web page: tinyurl.com/pirird

Published 28 November 2019

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