The Benefits of a PIE Structure

The Benefits of a PIE Structure which is what your Superannuation and KiwiSaver plans are.

If you’re a Senior Medical Officer (SMO) working at Health NZ in Auckland, you’re likely in a high-income tax bracket (33% or 39%)­ — and that’s exactly where Portfolio Investment Entities (PIEs) can be especially useful.

Here’s a clear breakdown of the key benefits, tailored to your situation:

1)       Lower tax rate (biggest advantage)

• PIE income is taxed at your Prescribed Investor Rate (PIR), capped at 28%

• Your salary as an SMO is likely taxed at:

  • 33% ( > $70k ) or,

  • 39% ( > $180k)

 So you can save:

• 5% tax ( 33% - 28% )

• Up to 11% tax ( 39% - 28% )

 Example:

• $10,000 investment income

• Normal tax ( 39% ) = $3,900

• PIE tax ( 28% ) = $2,800

• $1,100 saved annually

2)       “Final tax” – less admin

• PIE providers handle the tax for you

• If your PIR is correct:

  You don’t need to include it in your tax return

• This is especially helpful it:

  •  You already have complex income ( locum work, private practice etc )

  •  You want a hands-off investment structure

3)       No capital gains tax on many NZ/AU shares

•  PIE funds investing in NZ and some Australian shares

  • Don’t pay tax on capital gains

• This is a major advantage vs:

  • Direct investing overseas ( FIF rules )

  • Some non-PIE structures

4)       Useful for high-income professionals ( like SMOs )

PIEs are particularly beneficial if:

• Your income recently increased (e.g. consultant salary jump )

• You’re consistently in top tax brackets

• You’re building long-term wealth outside property

Why?

• Because the tax cap at 28% becomes more valuable the higher your income goes.

5)       Built-in diversification ( easy investing )

Most PIEs are:

• KiwiSaver funds

• Managed funds ( e.g. shares, bonds, property )

So you get:

• Instant diversification

• Professional management

• Less time required ( important for busy clinicians )

Downsides ( worth knowing )

PIEs are not always “best” in every case:

1)       Foreign investments (FIF rules)

• PIEs must use FDR method for overseas shares

• Can be less flexible vs holding investments directly

  • Sometimes slightly tax-inefficient depending on returns

2)       No refunds if PIR too high

• If you accidentally use too high PIR, you don’t get a refund

• If too low – you may owe tax later

Bottom line for Health NZ SMO

For someone in your position:

 Strong advantages

• Lower tax ( especially if earning > $180k )

• Simple tax handling

• Good for long-term investing ( KiwiSaver, Managed funds )

Best use case

• Core portfolio ( KiwiSaver, index funds, diversified funds )

Consider alternatives if:

• You’re investing heavily in international shares

• You want more control over tax strategies

Practical takeaway

For most SMOs in Auckland:

A PIE-based portfolio (e.g. KiwiSaver  + managed funds ) is usually:

• Tax-efficient

• Low effort

• Well-suited to high income earners