Legal and Taxes
Use legal and tax structures to your advantage
The PIR applies only to income from PIE investments. It does not change your marginal tax rate on salary or other income.
In New Zealand, the tax you pay on investment income depends on your prescribed investor rate (PIR) and your taxable income.
The PIR is set by your previous two years’ income and determines the rate at which portfolio investment entity (PIE) income is taxed.
Most individuals fall into one of these PIR bands:
10.5% PIR — for annual income up to $14,000
17.5% PIR — for annual income over $14,000 and up to $48,000
28% PIR — for annual income over $48,000
Using a PIE can reduce the effective tax on investment income compared with your marginal tax rate, particularly if you pay tax at 33% or 39% on other income. Once set, your PIR applies until it is updated to reflect your recent income.
Wills and estate administration
One of the simplest and most important legal documents is a valid, up-to-date will. Despite this, it is often the task people put off the longest.
If you die without a will, you die intestate. Your assets are then distributed under the Administration Act, according to a set formula that may not reflect your wishes. This process can also be slower and more expensive, with additional legal costs paid from your estate.
Having a clear, current will helps ensure your assets go to the people you intend, in the way you intend, and reduces uncertainty and stress for those you leave behind.
Enduring Powers of Attorney (EPA)
We strongly recommend that adults of any age have Enduring Powers of Attorney in place.
There are two types of EPA:
Property — allowing someone you trust to manage financial matters if you lose capacity, such as paying bills, managing investments, or dealing with insurance claims.
Personal Care and Welfare — allowing someone to make decisions about your care, treatment, and living arrangements.
These documents are not just for older people. Illness, injury, or accidents can happen at any stage of life. Without EPAs in place, family members do not automatically have the legal authority to act on your behalf, and the courts may need to be involved. This can take time, cost money, and add stress at an already difficult point.
Family trusts
Family trusts have been widely used in New Zealand, but their role and value have changed over time.
The Trusts Act 2019 has increased trustee responsibilities and transparency requirements. Trusts now require proper governance, regular administration, and accurate record-keeping. There is also no guarantee that assets held in a trust will be protected from future relationship property claims or asset testing.
There can still be valid reasons to use a family trust, such as protecting assets for vulnerable beneficiaries, managing inter-generational wealth, or addressing specific family circumstances. However, trusts generally offer limited income tax advantages, and they are not appropriate for everyone.
If a trust is relevant to your situation, it is important that it is established for the right reasons and administered correctly, with minutes, resolutions, accounts, and documentation kept up to date.
Legal structures should support your broader financial plan, not add unnecessary complexity. The right approach depends on your circumstances, not on habit or outdated assumptions.
Moneyworks NZ Ltd
P: 0800 225 621
E: contact@moneyworks.co.nz
7c Hall Street, Cambridge 3434
Licensed Financial Advice Provider - FSP 15281
Regulatory Information: Moneyworks is a Licensed Financial Advice Provider (FSP15281), and AML Reporting Entity and is supervised by the Financial Markets Authority.