![]() ![]() Term PIEs require a little more administration, including an application form for new investments.Īs an example: if $1m was invested in both a term deposit and a Term PIE with the following attributes: Term deposits have some shorter terms available (7 days- 29 days – while the shortest term PIE term is 30 days). Term deposits can be opened and managed online, whereas a Term PIE investment needs to be opened in branch or through your Private Banker. What about the benefits of term deposits? Term deposit interest is paid monthly or at maturity. This means that the investment amount the following months’ returns are calculated on, is higher in value.ĭepending on your investment term, you can choose to have interest from your Term PIE investment paid monthly, quarterly, six monthly, annual or at maturity. Instead, the gross income compounds at each compounding event, rather than the net income. For a compounding investment, that would normally be at maturity at, or around, 31 March (if the investment crosses year end). Instead, it’s paid when a tax event occurs. Unlike a term deposit, BNZ Term PIE doesn’t pay PIE tax each time interest is paid on it. However, the highest PIR is 28%. So, if you earned $100 interest on an investment, under RWT you‘d pay $39 on the interest, whereas with a PIR of 28% you’d pay only $28 on the interest earned. RWT is the tax that is deducted from the interest that you, as a New Zealand resident, earn from term deposits. ![]() Term PIEs have a tax advantage where the PIR is less than the Resident Withholding Tax (RWT) you’d pay. you’re a trust with a trustee tax rate of 33% or 39%, or a trust beneficiary on a 30%, 33%, or 39% income tax rate.you’ve had an increase in salary and you’re now paying a higher rate of income tax.you’ve gone back to work after being away for at least two years. ![]()
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