Online Bonus Saver PIE

A serious savings account for serious savers. You can access your money anytime, but if you make at least one deposit and no withdrawals each month you’ll gain a special bonus rate of return. Plus you could have potential tax savings.

It's for you if:

  • you’re a serious saver and make at least one deposit and no withdrawals each month
  • you want the potential to pay less tax on your savings
  • you want a higher rate of return to reward regular saving
  • you have $500 to start your account
Benefits

Highlights of Online Bonus Saver PIE

  • enjoy a bonus return for making just one deposit and no withdrawals in the month
  • potential tax savings for a range of investors
  • minimum $500 opening deposit and account balance
  • returns calculated daily, paid monthly
  • no account maintenance or transaction fees, but service fees may apply if you’re a frequent user of phone banking

More features

  • check balances and transfer money to and from your account anytime via online banking, phone banking, text banking (withdrawals only) and ATMs
  • make convenient deposits using Salary Splitter and/or a Sweep facility
  • use Cash Tank to check balances on the go
  • team up your Online Bonus Saver PIE with Impulse Saver to give your savings an extra boost

Tips

  • if you think you’ll need to access your savings on a regular basis, consider running an Online Saver PIE account alongside your Online Bonus Saver PIE account. This way, you can earn returns on your short term savings and keep earning a bonus return on your longer term savings (provided you make at least one deposit and no withdrawals each month)
  • consider having different Online Bonus Saver PIE accounts for each longer term savings goal. This way, when you make a withdrawal for your first long term goal, you can keep earning a bonus return on your other longer term accounts
Tax benefits

The accounts for the Westpac Cash PIE Fund ("Cash PIE") could be a smart way for you to save. With potentially less tax to pay each month, your savings could grow a little faster in a Cash PIE account than in a regular savings account.

How could I pay less tax through a PIE?

PIE savings accounts and regular savings accounts are taxed at different rates.

In a regular savings account, interest on your savings is taxed at your Income Tax Rate (up to 33%) which is based on your taxable income in the current income year (income years generally run from 1 April in any year to 31 March in the following year).

When you save through a PIE, returns on your savings are taxed at your Prescribed Investor Rate (or PIR) which is capped at 28%. Your PIR is based on your taxable income over the last two income years and can allow additional PIE income to be earned without an increase in your tax rate on your PIE savings.

If your PIR is lower than your Income Tax Rate, you’ll pay less tax on your savings in a PIE than in a regular savings account. To find out if your PIR is lower than your Income Tax Rate, use the ‘Best Returns’ calculator, and click ‘Find my rate’. Alternatively, to work out your PIR see the IRD website and search for 'correct PIR'.

You may pay less tax in a PIE if:

  • You currently earn over $48,000 of taxable income - find out more
  • You’re a trustee or beneficiary of a trust - find out more
  • Your income has recently increased and your income tax rate was 10.5% or 17.5% - find out more
  • You currently earn below, but close to $14,000 or $48,000 and your savings income will push you into the next income tax bracket - find out more

There are some circumstances when a PIE may not be right for you  - find out more.

Investing jointly?

Joint investors are treated as a single investor. The highest PIR of all joint investors applies to the investment so a final tax can be calculated.

To ensure a joint investor isn’t over taxed, you should check that:

  • Each joint investor has a PIR is lower than their Income Tax Rate; and
  • All joint investors have the same PIR.

If a joint investor has a lower PIR than other joint investors, excess tax deducted at the higher PIR cannot be claimed back as PIE tax is a final tax in this situation.

If the PIRs of joint investors are different, joint investors should consider splitting their investment and investing separately in Cash PIE. 

A simpler tax return:

Investing in a Cash PIE can minimise tax administration for you and Inland Revenue.

If you’re an individual and you tell us your IRD number and correct PIR (or a rate higher than your correct PIR), Cash PIE pays a final tax on your return. This means there is no further tax to pay on your Cash PIE returns and you don’t have to bother including your Cash PIE returns in your tax return (if you have to do one).

If a trust notifies a PIR of 28%, PIE returns are treated as excluded income and these also do not need to be included in the trust’s or its beneficiaries’ tax returns.

Individual investors currently earning over $48,000 of taxable income:

Note - includes those holding an account jointly (but see note on investing jointly above).

If you are an individual currently earn over $48,000 of taxable income, your PIR will be capped at 28% and will be lower than your Income Tax Rate – allowing you to save on tax.

Taxable Income*Income Tax Rate
(on deposits in
a regular
savings account)
PIE Tax Rate (PIR)Tax Benefit on your PIE returns
Over $48,000 and up to $70,000 30% 28% 2%
Over $70,000 33% 28% 5%

 

Trustee or beneficiary of a Family Trust:

A trust (excluding a unit trust or charitable trust) that invests in Cash PIE can potentially enjoy the same tax benefits as someone earning over $48,000 of taxable income if it notifies a PIR of 28%.

A trust can either hold income from Cash PIE in the trust or pass the income to its beneficiaries.

If income from a regular savings account is held and taxed within the trust as trustee income, it will be taxed at the trustee Income Tax Rate of 33% (except for certain superannuation funds for which an Income Tax Rate of 28% applies).

Taxable Income*Income Tax Rate
(on deposits in
a regular
savings account)
PIE Tax Rate (PIR)Tax Benefit on your PIE returns
Trustee All income levels 33% 28% 5%
Beneficiary
(individual)
Over $48,000 and up to $70,000 30% 28% 2%
Over $70,000 33% 28% 5%
* Examples of taxable income include salary, wages, commission, NZ Super, rent, interest and dividends, student allowances, parental leave, tips and gratuities. When calculating your taxable income to determine your PIR, you must also include non-New Zealand sourced income for the relevant income year, even if you were not a New Zealand tax resident when it was earned. New residents will be able to elect out of this treatment in some cases (see www.ird.govt.nz). For individuals, taxable income does not include PIE income that has been subject to a final tax from PIE compliant KiwiSaver schemes and managed funds including Cash PIE.

Notes:

  1. If a trustee elects a 28% PIR, PIE tax will be a final tax. This will result in a tax benefit of:
    • 5% if PIE income is retained in the trust and taxed as trustee income (where the trustee Income Tax Rate is 33%); or
    • 2% or 5% if the PIE income is instead passed out to beneficiaries on a 30% or 33% Income Tax Rate and taxed as beneficiary income.

  2. If a 28% PIR is selected, the Cash PIE income does not need to be included in the trust’s or its beneficiaries’ tax returns.  The PIE income is treated as excluded income. 
  3. See also below ‘When is a PIE not right for you?’ 

You're and individual whose taxable income has recently increased and your income Tax Rate was previously 10.5% (under $14,000) or 17.5% ($14,001 to $48,000):

Your PIR is based on your lower taxable income in either of your previous two income years.

If you earn more taxable income in the current income year than either of the two previous income years and this puts you in a higher income tax bracket, tax on your PIE returns can temporarily remain on a lower rate, for up to two income years.

This situation may occur as a result of a salary increase (e.g. entry or return to full time work) or an increase in rental income.

Example

A student who earned $12,000 in each of the previous two income years from part-time work (and with no other sources of income) now graduates and starts earning a full-time salary of $50,000.

The graduate’s PIR would be 10.5% as this is based on the taxable income of $12,000 earned in each of the previous two income years.

The graduate’s Income Tax Rate and tax on a regular savings account would now be 30% based on the current income year’s $50,000 salary (assuming total taxable income does not exceed $70,000).
If the graduate saved through Cash PIE instead, a tax benefit of 19.5% on PIE returns for two years could be enjoyed, assuming earnings stayed within the $48,001 to $70,000 income tax bracket.

You currently earn below, but close to $14,000 or $48,000 and your savings income will push you into the next income bracket:

You can earn some additional income through a PIE without an increase in your tax rate on your PIE savings.

This is most likely to occur if you currently earn near the upper limit of your income tax bracket – that is, below but close to $14,000 with a 10.5% Income Tax Rate or $48,000 with a 17.5% Income Tax Rate.

If you start or continue to save in a regular savings account, it's likely your taxable income will tip over $14,000 or $48,000.  This will increase your Income Tax Rate to 17.5% or 30% (for the portion of your taxable income above $14,000 or $48,000) respectively.  

However, if you save through a Cash PIE account instead, you can save more without an increase in tax on your savings.   Your PIR would still stay at 10.5% or 17.5% respectively if your: 

  • Taxable income stays below $14,000 and your total income (taxable income plus PIE income) is not more than $48,000.  In this case, a 7% tax benefit (17.5% - 10.5%) would apply to your income over $14,000; or 
  • Taxable income stays below $48,000 and your total income (taxable income plus PIE income) is not more than $70,000.  In this case, a 12.5% tax benefit (30% - 17.5%) would apply to your income over $48,000.

Example

A retiree earns $47,500 of taxable income each income year from NZ Super, rental income and company dividends.   Additional cash from a property sale and some of the company dividends are placed in Cash PIE. 

The retiree can earn income from their Cash PIE accounts till their total income (taxable income plus PIE income) reaches $70,000 and still enjoy a PIR of 17.5%.  Compared to investing in a regular savings account (see below), this means up to an additional $22,000 of PIE income (i.e. the portion of total income above $48,000) can be earned and still taxed on a lower 17.5% PIR.  

If the equivalent additional income was earned through a regular savings account instead, it would be counted as taxable income and the portion of taxable income over $48,000 would be taxed at 30%.  By investing in Cash PIE, the retiree in this example enjoys a 12.5% tax benefit on their income over $48,000.

Companies

There is unlikely to be a tax saving if you are another type of entity, such as a company, investing in a PIE.  However, there could be other benefits (such as time value of money) and other disadvantages (such as impact on provisional tax) that should be considered.

New Zealand tax resident companies have to elect a 0% PIR and will have outstanding tax payable at the company Income Tax Rate of 28%.

If there is more than $2,500 of outstanding tax payable at the end of any tax year, provisional tax is payable in the following year.

Companies that currently pay provisional tax can benefit from the time value of money by saving through a PIE.  Provisional tax instalments occur less frequently than the regular, monthly 28% Company Resident Withholding Tax (RWT) deducted from a standard savings account.

Companies that don’t currently pay provisional tax or a low amount of provisional tax may be required to pay more provisional tax as a result of saving through a PIE with a 0% PIR.

Companies that are not New Zealand tax residents have a PIR of 28% - please see comments under ‘Investors who are not New Zealand tax residents’ below.

When is a PIE not right for you?

The advantages of Cash PIE don’t apply to everybody and in some circumstances there can be disadvantages.

If you have a PIR that is higher than your Income Tax Rate, you will pay more tax if you save through Cash PIE than if you save directly in a regular savings account.  Before deciding where to save, please compare your current and projected Income Tax Rate and your current and projected PIR.

These situations include:

  • Investors on significantly different incomes who want to invest jointly.

See Investing jointly?’ in the above section.

  • Individuals with a decrease in earnings in the current income year.

PIE tax is based on your taxable income over the last two income years.  Tax on a regular savings account is based on your taxable income in the current income year. If your taxable income decreased in the current income year (e.g. as a result of stopping work), PIE tax could be temporarily higher than tax on a regular savings account.

Example

After earning $80,000 for a number of years, you take time out for maternity leave during which time your taxable income drops to $10,000.  In this situation, your PIR would be 28% as your taxable income in each of the previous two income years was $80,000.  Tax on a regular savings account would be calculated at a 10.5% Income Tax Rate as this is based on your taxable income in the current income year. This tax disadvantage would last until the next income year assuming no other changes to your financial circumstances.

  • Investors who are not New Zealand tax residents.

The PIR of non-tax residents is 28%.  This rate could be higher than the approved issuer levy (AIL) or non-resident withholding tax (NRWT) rate applicable to interest on a regular savings account (generally 2%, 10% or 15%).  

In this situation, less tax would be paid in New Zealand if a regular savings account was used, rather than a Cash PIE account. 

Note:

If a non-tax resident is engaged in business through a fixed establishment in New Zealand (i.e. a NZ branch), a 28% PIR still applies.  However, the 28% PIR would equal the 28% company Income Tax Rate on interest from a regular saving savings account, if operated by the NZ branch.  In this case, there is no tax disadvantage through investing in a PIE.

Certain trustees of a trust who elect a 28% PIR. 

PIE income will not be able to be offset against any tax loss that may be available to the trust or the trust may have beneficiaries on an Income Tax Rate lower than 28%.

Individuals with tax losses.

If you are an individual in an overall tax loss position (e.g. due to tax losses from rental properties), you will not be able to claim back any PIE tax on your Cash PIE returns as the PIE tax is a final tax.  If you had saved through a regular savings account instead, no tax would be payable on your interest income to the extent it is able to be offset by your tax losses.

Please note:

To ensure you can enjoy the potential tax benefits of PIEs, please provide your correct PIR and IRD number when you open your account. Please review your PIR each year and if your PIR changes due to a change in circumstances, let us know straight away.

The information provided above is general in nature and should not be construed as tax advice. Taxation legislation, its interpretation and the rates, levels and bases of taxation may change. The application of taxation laws depends on your individual circumstances.

Westpac, BT Funds Management (NZ) Limited and Trustees Executors Limited do not accept any responsibility for the tax consequences of your investment in Cash PIE. You should seek independent professional advice as to your particular tax position.

How it works
  • Online Saver PIE and Online Bonus Saver PIE are products of the Westpac Cash PIE Fund (Cash PIE) 
  • Cash PIE accounts are online, on-call cash investments with no fixed term 
  • a $1 investment represents 1 unit. A $500 investment means you hold 500 units 
  • your money in Cash PIE is invested solely in a New Zealand dollar bank account with Westpac NZ 
  • you need to have a Westpac NZ transaction account to operate your Cash PIE account(s) and make withdrawals. If you don’t already have a transaction account, this can be opened at the same time as you open your Online Bonus Saver PIE account 
  • the required opening balance and on-going minimum balance is $500

How do I transfer money in?

You can:

  • transfer funds in using online banking (including Business online banking), phone banking, ATMs and Impulse Saver
  • set up Salary Splitter which automatically divides your regular income between a maximum of six different Westpac accounts, including your Cash PIE accounts
  • set up a Sweep facility into your Cash PIE accounts. Automatically maintain your transaction account at a balance of your choice so you always have enough to cover bills while earning returns on surplus amounts
  • set up automatic payments, direct credits and bill payments from any New Zealand bank account
  • use a branch deposit box to make cash or cheque deposits 

How do I withdraw my money?

You can:

  • withdraw part of your account balance at any time, provided you maintain the minimum account balance of $500. If you wish to withdraw amounts so your account balance falls below $500, you will need to close your account
  • make withdrawals using online banking (including Business online banking), phone banking, text banking, ATMs and an automated Sweep facility (Online Saver PIE only) 
  • withdrawals are paid into your Westpac transaction account or another Westpac account registered on your online banking or Business online banking profile

Term Sheet

For important information about Cash PIE, please download the Westpac Cash PIE Fund Term Sheet (PDF). We recommend you read this before making an investment.

Rates of return

Online Bonus Saver PIE - Rates of return
Your returns are calculated on the daily balance of your account. Returns are paid into your account (less PIE tax) on the last business day of each month.
If your account balance is below the minimum investment of $500, you will not receive any returns.
If your account balance is below $500 for 30 days or more, we will notify you in writing. You can set up a txt and/or email alert to notify you when your account balance falls below $500.
If you make a withdrawal from your Online Bonus Saver PIE account to invest in a Westpac NZ term investment, you will still qualify for the bonus rate of return.
TierBase Rate of ReturnBonus Rate of ReturnPotential Rate of ReturnEffective Return *
Balances $500 and over 0.05% p.a. 2.70% p.a. If you make at least one deposit and no withdrawals by the last business day of the month 2.75% p.a. If you make at least one deposit and no withdrawals by the last business day of the month  If your Income Tax Rate is 30% ** If your Income Tax Rate is 33% ***
2.83% p.a. 2.96% p.a.

* The Effective Return is the rate you would need to receive from a regular savings account in order to achieve the same after tax return from your Cash PIE account, based on a PIR of 28% and an income tax rate of either 30% or 33%.
** Individuals with taxable income of $48,001 to $70,000.
*** Individuals with taxable income of $70,001 and over.

Fees

Online Saver PIE & Online Bonus Saver PIE - Fees
Note: Service fees are charged to your Westpac transaction account.
Fee typeFee amount
Account maintenance and transaction fees
Free 
Phone banking service fee
Third party telephone fees may apply
First five calls each month are free (then 50c per call) 
Txt banking service fee
Txt alerts, txt banking balances and transfer confirmations
Free