What is the PIE tax treatment for funds that invest in international securities, shares etc?

Each PIE fund calculates its taxable income/loss from its investments, expenses and tax credits for each day in the year. The net taxable income and tax credits are divided up among all of the units of the fund, and a share of the income and credits is attributed to everyone investing in the fund. We then calculate the PIE tax based on each investors PIR.

PIE funds generally do not pay tax on capital gains. For PIE funds which invest in overseas equities, the taxable income is calculated using the Fair Dividend Rate (FDR) method, where the taxable income is deemed to be 5% of the fund’s average value each year. This means that if you are invested in a fund exposed to overseas equities, you can still have a tax liability even if the fund loses value over the year. PIE funds which invest in New Zealand equities receive taxable income in the form of dividends, and also receive imputation credits on those dividends.