- 1 Clear expensive debt And build an emergency fund.
- 2 KiwiSaver Enough for your employer’s and the full government contribution.
- 3 PIE funds Taxed at 28% at most, for goals before retirement.
KiwiSaver
From 1 April 2026 the default is 3.5% of your pay from you and 3.5% from your employer. The government adds 25 cents for every dollar you put in, up to $260.72 a year, unless you earn over $180,000. It’s the best place to start, as long as you won’t need the money before 65 or your first home. See KiwiSaver contributions.
PIE funds
Managed funds set up as portfolio investment entities (PIEs) are taxed at your prescribed investor rate: 10.5%, 17.5% or 28%. If you earn over $53,500, that’s less than your income tax rate. The fund pays the tax, so there’s usually nothing to put in a tax return. Many have low-fee index options, and you can usually take money out within days.
Savings and term deposits
For money you’ll need within about five years, a savings account or term deposit is safer than investing. Your bank takes resident withholding tax at the rate you choose, and the Depositor Compensation Scheme protects up to $100,000 per depositor at each licensed deposit taker. PIE term deposits tax the interest at your PIR instead.
Shares
- NZ shares, and Australian shares on the main ASX index: dividends are taxed, but gains usually aren’t, unless you buy to sell at a profit.
- Other overseas shares and funds: if they cost over $50,000 in total, the foreign investment fund (FIF) rules usually tax you on 5% of their value each year instead of on dividends.
- New migrants and returning Kiwis away for 10 years or more don’t pay tax on most overseas income, FIF included, for their first 4 years.
See capital gains tax explained.
Property
A rental property puts a lot of money in one place, usually with a big loan. Rent is taxable income, and mortgage interest is deductible again from 1 April 2025. If you sell within 2 years of buying, the gain is taxed under the bright-line test. Investors need a bigger deposit than owner-occupiers: see deposit and debt-to-income rules.
How each is taxed
| Investment | How it’s taxed |
|---|---|
| KiwiSaver and PIE funds | At your PIR, at most 28%, paid by the fund |
| Savings and term deposits | RWT on the interest, at your income tax rate |
| NZ and most Australian shares | Dividends taxed; gains usually not, unless bought to sell |
| Overseas shares over $50,000 | FIF rules: usually on 5% of their value each year |
| Rental property | Rent taxed as income; bright-line test if sold within 2 years |
Which order
- Pay off expensive debt and build an emergency fund.
- KiwiSaver, at least enough to get your employer’s contribution and the full government contribution ($1,042.86 a year from you).
- PIE funds for goals before retirement.
The KiwiSaver calculator shows what your contributions could grow to.