Doctors are no strangers to acronyms. You might have no trouble understanding this:
“Pt admitted under Gen Med with AKI on CKD, likely due to ACEi + NSAID combo, Cr 280.”
Or even this:
“Pt with PMHx of HTN, DM, and IHD, now with STEMI on ECG, loading with DAPT, for PCI ASAP.”
But if you’re trying to set up an investment account or looking at your KiwiSaver tax return and read about the PIR for your PIE, which is different from RWT… you might feel completely lost.
When I first started learning about investing, I turned to resources from the UK and US — and quickly got overwhelmed. What’s a Roth IRA? A traditional IRA? A 401(k)? A LISA? HSA? The Americans seemed to have a million different account types, each with different tax rules. It was enough to make me want to bury my head in the sand and give up entirely.
But here’s the good news: New Zealand’s system is actually much simpler. And even better? Our PIE structure is more beneficial for high-income earners like doctors. See, I told you it was magical.
So let’s break it down — so you can confidently add three more three-letter acronyms to your stash.
What’s a PIE fund?
PIE = Portfolio Investment Entity
You pay tax on any income you earn – including investment income. The top tax rate for your salary and non-PIE investments is 39%.
But there’s a special type of fund called a PIE (Portfolio Investment Entity), where tax is calculated differently — and the top rate is only 28%.
KiwiSaver accounts are PIEs.
Other examples include:
- Some index funds (like Smartshares or Kernel)
- Some managed funds (like Simplicity or some InvestNow funds)
- Some term deposits (yes, you can get PIE term deposits!)
That lower top tax rate can make PIE funds more tax-efficient for high earners — like doctors.
What is a PIR?
PIR = Prescribed Investor Rate
This is the tax rate applied to your PIE income. Your PIR is based on your taxable income from the past two income years.
PIR rates based on your last 2 years’ income:
- 10.5% if you earned ≤$14,000 taxable income AND ≤$48,000 PIE income
- 17.5% if you earned ≤$48,000 taxable income AND ≤$70,000 PIE income
- 28% for everyone else — including most full-time doctors
Why it matters:
- Choose a PIR that’s too low → IRD may require you to top up the tax at the end of the year
- Choose a PIR that’s too high → You’ll overpay, and can’t get a refund
- You can update your PIR through your provider or IRD
Doctor Tip: If you’re working full time and earning over $70,000 (e.g. in a hospital role), your PIR is likely 28%. If you’ve had time off (e.g. parental leave) or are working part-time, you might qualify for 17.5%.
Check your PIR using IRD’s tool (link at bottom)
What is RWT?
RWT = Resident Withholding Tax
RWT is the tax deducted from income earned on non-PIE investments, such as:
- Interest from regular (non-PIE) savings accounts and term deposits
- Dividends from shares held directly outside of a PIE fund (e.g., buying Air NZ or Apple shares yourself)
- Interest from bonds held outside of PIE structures
You usually choose your RWT rate when setting up your account. The rate should reflect your total income level.
RWT rates based on your total annual income:
- 10.5% for income up to $14,000
- 17.5% for income $14,001–$48,000
- 30% for income $48,001–$70,000
- 33% for income over $70,000
- 39% for income over $180,000
- 45% if you don’t provide your IRD number
Why would someone have non-PIE investments?
For many high income doctors PIE structures can offer tax efficiency, but you’ll encounter non-PIE investments when:
- Your savings account – Most bank savings accounts aren’t PIE structures (though PIE term deposits exist!!) — another reason why you can’t save your way to retirement!
- Buying individual shares directly – If you purchase specific company shares like Fisher & Paykel Healthcare, Air NZ, or international shares like Apple through platforms like Sharesies or Hatch, these aren’t held in PIE funds
- You want access to specific companies – PIE index funds don’t let you pick individual stocks
- Inherited investments – You might inherit shares or bonds that aren’t in PIE structures
- Some international investments – Not all offshore investment options are available in PIE format
The key: Check whether your term deposit or investment account is PIE or non-PIE structured, because it changes which tax rate applies.
Doctor Jane’s Investment Example
Jane earns $190K and is comparing:
- A PIE index fund (PIR = 28%)
- Shares held directly outside a PIE (RWT = 33%)
She earns $100 in investment income from each (same returns, just different tax structures):
- PIE fund: keeps $72 after tax
- Non-PIE shares: keeps $67 after tax
Not a huge difference short term — but over time, it adds up. That’s why PIR vs RWT matters!
This post is general information only. It doesn’t take into account your personal financial situation. If you’re unsure, speak to a licensed financial adviser.
IRD PIR calculator tool