Wellington, June 3 NZPA - Kiwibank today launched new savings accounts that will allow some savers to take advantage of the Portfolio Investment Entities (PIE) legislation that limits tax on interest to 30 percent.

With conventional accounts, tax on interest is 33 percent or 39 percent depending on the customer's income.

The new accounts, including term deposit accounts, offer an effective interest rate of more than 10 percent for those in the highest tax bracket.

Chief executive Sam Knowles said the PIE schemes effectively change the face of bank deposits in New Zealand.

"These new accounts give people the safety of having their money in the bank, but the added advantage of paying less tax on the money they make."

The Government passed the PIE legislation to give people a greater incentive to save.

Kiwibank is offering a premium term deposit for 150 days that can provide an effective interest rate of more than 10 percent.

"While the quoted rate is 8.85 percent, this is equivalent to a before-tax rate of 10.15 percent on an ordinary term deposit for 39 percent taxpayers," Mr Knowles said.

The PIE options also include an online call account with an interest rate of 8.30 percent (provided no withdrawals are made during a month). This equates to a rate of 9.50 percent to an investor in the 39 percent tax bracket.

The new accounts are technically different to regular deposits but the security is the same as any other deposits with Kiwibank. The PIE schemes are unit trusts, managed by a wholly owned subsidiary of Kiwibank and invested in Kiwibank deposits.

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