In the 2007 Budget, the Government announced that the top tax rate for PIEs, along with the tax rate for most unit trusts and superannuation funds was reduced from 33% to 30%. In October 2010, the rate was further reduced to 28%.

The PIE's income is attributed to its investors, based on their shares of the PIE, and is taxed at each investor's prescribed investor rate ("PIR"). The PIE regime creates tax advantages for many PIE investors, mainly because the maximum PIR is 28%. The PIE regime therefore provides tax benefits to investors who are on a 33% or 30% tax rate and invested in a PIE.

Also a PIE managed fund is not taxed on gains derived from the sale of the following:

  shares in New Zealand resident companies;

   units in certain Australian unit trusts that have a Resident Withholding Tax Proxy and meet minimum turnover or distribution requirements; and

  shares in Australian resident listed companies included in an approved index of the ASX.

Income attributed to investors from certain types of capital gains such as from the sale of shares and units as described above or from the sale of property held on capital account, such as rental properties, are not taxable in the hands of investors.