It is your responsibility to advise your KiwiSaver provider of the PIR that applies to your circumstances. It is important that you get your PIR right. Choosing an incorrect PIR can have significant consequences.
If you do not provide a PIR to your KiwiSaver provider, your provider will apply the maximum rate of 28%. If you pay too much PIE tax, you cannot claim the extra tax back but if you pay too little –by choosing a PIR that is too low – you will be required to file a tax return including your PIE income and you will be subject to tax on that income, at your marginal tax rate (which can exceed the top PIR of 28%). You could also be subject to penalties. So it is important you let your provider know the correct PIR for your investment income.
If you do not nominate a PIR on your application form, your provider will set it at the default rate of 28%.