FIF Revenue Account Method (RAM) NZ: Eligibility & Guide

New Zealand’s Foreign Investment Fund (FIF) rules have long had a reputation problem with new migrants and returning Kiwis: they can tax you on paper wealth you haven’t received a cent of. The default Fair Dividend Rate (FDR) method deems 5% of your offshore shares’ opening market value as taxable income every year — regardless of whether the shares paid a dividend, went up, went down, or can even be sold at all.

For someone arriving in New Zealand with a modest, liquid share portfolio, that’s an annoyance. For a returning tech worker holding illiquid, unlisted startup equity — shares with no public market, no dividend, and no way to cash out on demand — it can be a genuine cash-flow crisis: a tax bill on wealth you cannot access, funded out of your salary or a loan.

From the 2025-26 income year, a new optional method fixes exactly that problem for eligible people: the revenue account method (RAM).

What RAM is, and why it exists

RAM was enacted by the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Act 2026 (Public Act 2026 No 8, royal assent 30 March 2026) and applies retrospectively from 1 April 2025. It adds a new calculation method to the FIF regime — new Income Tax Act 2007 s EX 56B, with eligibility limits in new s EX 46B and the amended method list in s EX 44 — sitting alongside the existing FDR and Comparative Value (CV) methods. It is entirely optional: eligible people can keep using FDR or CV if they prefer.

Under RAM, a qualifying FIF interest is taxed on a realisation basis instead of a deemed basis:

• Dividends derived from a RAM share are taxed in full, at your marginal tax rate, in the year received.
• Gains on disposal are taxed at 70% of the gain (the other 30% is effectively tax-free), at your marginal rate, in the year of sale.
• Losses on disposal are also discounted by 70% (so only 70% of a loss counts), and can only be offset against gains on disposal of other RAM interests — not against dividend income. Excess losses carry forward to future years.

Critically, there is no tax at all until a dividend is paid or the shares are sold. If your unlisted startup equity triples in value over three years but pays no dividend and you don’t sell, your RAM taxable income for those three years is nil. Under FDR, the same shares would generate a deemed 5%-of-value tax bill every single year, win or lose, sold or not.

Who qualifies — the eligibility checklist

RAM taxpayers are natural persons who satisfy both of the following:

• Became a “New Zealand resident” under the Income Tax Act — and are not merely a transitional resident, and are not treated as a non-resident under a double tax agreement (DTA) tie-break — on or after 1 April 2024.
• Were a “non-resident” (including non-resident under a DTA tie-break) for at least 5 consecutive years immediately before meeting the requirement above.

A person who was already a transitional resident before 1 April 2024 is not automatically excluded — if their transitional residency expires (or was earlier used up) on or after 31 March 2024, they can still qualify once that transitional period ends, provided they meet the five-year non-residence test.

A family trust is also eligible if its principal settlor would independently satisfy the two tests above. This is a one-time test applied when the trust first chooses to use RAM — the trust stays eligible even if the settlor’s own eligibility later changes (for example, after they leave New Zealand).

Base RAM: which investments qualify

For most RAM taxpayers (“base RAM”), the method only applies to shares in a foreign company that were acquired before becoming a New Zealand tax resident (or acquired afterwards under an arrangement — such as an employee share scheme — entered into before residence), and that meet all three of:

1. The share is not listed on any stock exchange.
2. There is no effective redemption facility for market value in relation to the share (i.e. you can’t just cash it out on demand at a fair, arm’s-length price).
3. The share is not in an entity that derives 80% or more of its value from shares that fail either test above (this stops RAM being used for index funds and most managed funds that mostly hold listed shares).

What typically qualifies: direct shares in an unlisted foreign startup or private company — including employee share scheme shares in an unlisted employer — acquired before you moved to New Zealand.

What typically doesn’t qualify: shares listed on any stock exchange (US, ASX, or elsewhere); interests in index funds or ETFs that track a listed index (these derive well over 80% of their value from listed shares); shares in a foreign private company acquired after you became a New Zealand tax resident (unless required under a pre-residence contractual arrangement); interests in foreign superannuation schemes or life insurance policies (RAM only applies to shares in companies).

Extended RAM: for people still taxed by another country on citizenship

Some people remain liable to tax in another country on the disposal of shares purely because of their citizenship or a right to work and live there — the clearest example being US citizens and Green Card holders, who the US taxes on worldwide gains regardless of where they live. For these people, an “extended RAM” is available: it can apply to all their FIF interests, including listed shares — not just pre-residence unlisted holdings.

Extended RAM only applies if the person is subject to concurrent taxation in a country with which New Zealand has a double tax agreement, and that country would generally tax them on a sale of the shares (a special one-off exemption in that country for a particular sale doesn’t disqualify them — but a country with no capital gains regime at all does).

This exists to solve a real double-taxation problem: without it, a US citizen in New Zealand could face NZ’s deemed FIF income and eventual US capital gains tax on the same shares, with neither credited against the other. Extended RAM defers the NZ tax point to match the US one (realisation), even though it doesn’t eliminate the underlying double-tax exposure.

Worked example: base RAM on unlisted startup equity

Mia is a New Zealand-born software engineer who spent eight years working for a US startup, well clear of the five-year non-residence test. In 2026 she returns to New Zealand and becomes a full NZ tax resident. She holds unlisted shares in the (still-private) startup, acquired through an employee share scheme years before she considered moving.

Shortly after becoming resident, Mia obtains an independent valuation of her shares as required to establish her RAM cost base: $10,000. She elects to apply RAM to this holding — it’s unlisted, has no redemption facility, and isn’t held through a fund dominated by listed shares, so it qualifies.

If Mia had stayed on ordinary FDR instead: the following year, the startup closes a new funding round that values her stake at $80,000. Even though she hasn’t sold a single share and has received no cash, FDR would deem 5% of that value as taxable income:

FDR income = $80,000 × 5% = $4,000 → tax at her 39% marginal rate = $1,560 owed, with zero cash received

That bill recurs every year the shares are held, funded from her salary. This is exactly the cash-flow problem RAM was designed to remove.

Under RAM, that same year generates $0 of taxable income — no dividend, no disposal, no tax. Three years after arriving, the startup is acquired and Mia’s shares are bought out for $150,000; the company also pays a final $2,000 dividend shortly before completion. Her RAM income for the sale year is:

Gain on disposal = $150,000 − $10,000 (RAM cost base) = $140,000 Taxable portion of gain = $140,000 × 70% = $98,000 RAM income = dividend ($2,000) + taxable gain ($98,000) = $100,000 Tax liability = $100,000 × 39% (her marginal rate) = $39,000

The $39,000 is a materially larger single number than the $1,560 she would have paid in Year 2 under FDR — but it’s paid out of the $150,000 she actually just received, not out of pocket while the shares were still illiquid. That timing difference — tax on realisation, not on paper value — is the entire point of RAM. (Total lifetime tax isn’t automatically lower under RAM; what changes is when it falls due, and it always falls due when there’s cash to pay it.)

RAM vs FDR vs CV: at a glance

See our FDR vs CV comparison guide for how those two existing methods interact for portfolios that don’t qualify for RAM.

RAM and the transitional resident exemption

Most new migrants are also transitional residents for their first four years in New Zealand, during which most foreign-source income — including FIF income — is exempt from NZ tax entirely (see our transitional resident guide). RAM eligibility and the transitional resident exemption interact in a specific order:

1. While you’re a transitional resident, FIF doesn’t apply at all — there’s nothing to elect RAM into yet, because the underlying foreign income is exempt.
2. RAM eligibility is tested against the point you become a full (non-transitional) NZ tax resident — which, for someone who arrives as a transitional resident, is the date your transitional residency ends, not your arrival date. A person can have arrived and become a transitional resident before 1 April 2024 and still qualify for RAM, provided their transitional residency doesn’t end until on or after 31 March 2024.
3. Once your transitional residency ends (or if you never had one), you elect RAM — generally in the first year FIF income arises for you and you exceed the $50,000 de minimis threshold.

In practice: the transitional resident exemption gives you an initial multi-year FIF-free runway, and RAM (if you’re eligible) picks up smoothly once that runway ends, so your unlisted pre-residence shares never face an unrealised annual tax bill at any point.

The exit tax: what happens if you leave New Zealand

If you’ve elected RAM and later cease to be a New Zealand tax resident, you’re treated as having disposed of all your RAM interests at market value immediately before you stop being resident — a deemed exit tax on your accrued (but unrealised) RAM gains.

There’s an important deferral, though: this deemed disposal is disregarded if you don’t actually sell the RAM interests within three years of leaving New Zealand, or if you become a New Zealand tax resident again within that three-year window. In other words, a temporary departure doesn’t trigger the exit tax — only a sale within three years of leaving, or a permanent (3+ year) departure, crystallises it.

How to elect RAM

RAM is elective, not automatic:

• You elect RAM in the first year you have FIF income under the ordinary rules and exceed the $50,000 de minimis threshold — typically the year your transitional resident status ends (if you had one).
• The election applies on a portfolio basis to all your eligible RAM interests — you can’t cherry-pick RAM for one qualifying share and FDR for another qualifying share. Any FIF interests that aren’t RAM-eligible (listed shares, managed funds, etc., unless extended RAM applies) must use a different method.
• If you don’t elect RAM, FDR applies by default under the existing rules.
• You can later elect out of RAM back to an ordinary method (FDR/CV/cost method) — but doing so triggers a deemed disposal at market value of everything RAM applied to, and once you’re back on an ordinary method you cannot switch back to RAM for those interests.
• The default cost base for calculating RAM gains/losses is the market value of the share on the date RAM is first applied to it (obtained via independent valuation, or a time-based apportionment method if a valuation isn’t practical) — this is usually shortly after your transitional residency ends, not necessarily your original purchase price or the exact day you arrived.

Because the election is one-way and applies across your whole eligible portfolio, it’s worth working through the numbers — ideally with a tax adviser — before your first FIF-affected return, rather than defaulting into FDR by omission.

Use our FIF Tax Calculator to model FDR and CV on your listed and fund-based holdings; RAM itself is calculated manually per the mechanics above, as it depends on your specific cost-base valuation and disposal history.