Please note this is not tax advice as we are not a tax accounting firm and we don’t know your situation.
Understanding how PIE tax is deducted and paid to Inland Revenue
One of the benefits of investing in Kernel Funds, is that the tax calculation, payment and filing for investors is completed by Kernel and its administrator, Adminis. This occurs annually at the beginning of April for the 12 months ending 31 March. If a fund is sold in a material quantity, tax is also paid as part of the redemption process. All this information is filed with Inland Revenue towards your individual tax return.
For most people with simple financial arrangements (i.e. a salaried employee paying PAYE, and holding PIE investments at the correct PIR), Inland Revenue will automatically file your return, and there is nothing for you to do. This process has become much simpler, faster and transparent since Inland Revenue undertook its Business Transformation process completed in 2021.
However, it is still advisable to check your filing on the Inland Revenue website myIR. There you can see the calculation and whether you are due a small refund or requiring any further payment. Kernel investments appear in the name of our custodian, Adminis Custodial Nominees Limited.
If you have slightly more complex income situation (wages or contractor work, changed jobs or multiple jobs and/or material amounts of interest or dividends), you are best to check the filing and if you are unsure, to speak to an accountant. The larger and more widespread your income sources (and associated expenses), the more value an accountant can provide.
Joint accounts
For joint account holders, the income and tax are split equally between investors at the highest rate provided. Therefore if joint investors are on different PIR rates, it is likely that too much PIE tax is deducted for one individual. This can be easily and automatically corrected in myIR and a refund automatically provided.
You may also choose to alter the income attribution from 50/50 (for example, change to 40/60), but this will need to be done through your personal tax return, either in myIR through an IR3 form or via an accountant. See our FAQ on How does tax get calculated on joint accounts? for more
I think the wrong PIR has been used
Kernel allow investors to change their Prescribed Investor Rate (PIR) in their Profile and Settings section at the top right of the Kernel platform. You may make this change at any point in the year, except for approximately two weeks around 31st March. Inland Revenue may also instruct us throughout the year to change your rate, if they believe it is wrong.
If you think the wrong rate has been used (See What is my Prescribed Investor Rate (PIR)?) you can correct this in myIR and amend your tax return. After approximately 24th March, we are unable to change the calculation or amount paid through for the year as processing has commenced.
A current limitation of our joint, trust and company accounts is that you aren't able to update your PIR & RWT rates via the Kernel platform. You will need to email our team at support@kernelwealth.co.nz for us to update this information in our system.
For more information see our blog A Beginners Guide to Tax and Investing or our other Tax FAQs.