FIF Tax NZ: Overseas Investment Tax Rules, Rates & $50k Threshold (2025-26)

If you hold overseas investments — international shares, ETFs, or foreign managed funds — you may need to pay Foreign Investment Fund (FIF) tax in New Zealand. The rules are different from how NZ-based investments are taxed.

What is FIF Tax?

The FIF regime is New Zealand’s way of taxing income from foreign investments. Rather than taxing actual dividends or capital gains, the FIF rules typically tax a deemed return based on the value of your holdings. This ensures NZ residents can’t avoid tax by investing in countries with lower tax rates.

When Does FIF Apply?

FIF applies to:

• Shares in foreign companies listed on overseas exchanges (e.g., US stocks on NYSE/NASDAQ)
• Units in foreign managed funds and ETFs
• Interests in foreign superannuation schemes (with some exemptions)

FIF does not apply to:

• NZ-listed shares and funds on the NZX
• Australian-listed companies on the ASX (most are exempt under specific rules)
• Foreign investments with a total cost of $50,000 or less (the de minimis exemption)

The $50,000 De Minimis Exemption

If the total cost of all your foreign investments is $50,000 or less at any point during the tax year, you are exempt from FIF. Instead, you simply pay tax on any dividends received, just like NZ shares.

Important notes:

• Cost means what you paid, not current market value
• The threshold applies to your total foreign portfolio, not individual holdings
• If you exceed $50,000 at any time during the year, FIF applies for the entire year
• Australian shares (most ASX-listed companies) are excluded from the $50,000 count

FDR Method (Fair Dividend Rate)

The Fair Dividend Rate (FDR) method is the most commonly used. It works by deeming your income to be 5% of the opening market value of your foreign investments on 1 April (the start of the NZ tax year).

Example: Your overseas shares are worth $100,000 on 1 April. Your FIF income is $100,000 x 5% = $5,000. At a 33% marginal tax rate, the tax is $1,650.

Key features of FDR:

• Simple calculation — 5% of opening value, regardless of actual returns
• No tax on gains above 5% — if your investments grow 20%, you still only pay tax on 5%
• No loss offset — if your investments fall in value, you can’t claim a loss (but you can use the CV method instead — see below)
• Dividends are ignored — the 5% deemed return replaces actual dividend taxation

CV Method (Comparative Value)

The Comparative Value (CV) method taxes you on the actual change in value of your investments, plus any dividends received, minus any additional purchases.

Formula: CV income = (Closing value + sales proceeds + dividends) – (Opening value + purchases)

When to use CV: You can choose CV instead of FDR if it gives a lower result. This is most useful when your investments have declined in value or returned less than 5%.

Key rule: If the CV calculation produces a negative result (a loss), the FIF income is treated as zero — you cannot claim a FIF loss against other income.

Choosing Between FDR and CV

You can choose the method that gives the lower tax each year, on a per-investment basis. In practice:

Market Performance	Better Method
Gains > 5%	FDR (capped at 5%)
Gains 0–5%	CV (actual lower gain)
Losses	CV (income = $0)

Most years with positive returns above 5%, FDR is better. In down years, CV produces zero income, which is better than FDR’s 5%.

ETF Implications

Many New Zealanders invest in overseas ETFs (like Vanguard VTI, VOO, or total world funds). These are subject to FIF if your total foreign cost exceeds $50,000.

NZ-domiciled funds (such as those offered by Smartshares, Kernel, or InvestNow’s NZ-domiciled options) are not subject to FIF, even if they invest in overseas assets. The fund itself handles any FIF obligations. This is one reason NZ-domiciled funds can be simpler for tax purposes.

Filing FIF

FIF income is included in your individual tax return (IR3). You need to report:

• Opening market values (1 April)
• Closing market values (31 March)
• Any purchases and sales during the year
• Dividends received
• The method chosen (FDR or CV) for each investment

Frequently Asked Questions

Do I need to pay FIF tax if I use Sharesies or Hatch? If you hold US or other foreign shares through platforms like Sharesies or Hatch, FIF applies once your total foreign investment cost exceeds $50,000. Below that threshold, you only pay tax on dividends received.

Are Australian shares subject to FIF? Most Australian-listed companies on the ASX are exempt from FIF under specific exemptions. However, Australian-domiciled managed funds may still be subject to FIF — check with your tax advisor.

What happens if my investments lose value? Under the CV method, if your investments decline, the FIF income is zero (not negative). You cannot claim a FIF loss against other income. In loss years, CV is always better than FDR.

Can I switch between FDR and CV each year? Yes. You choose the method each year, and you can even use different methods for different investments in the same year. Choose whichever gives the lower tax.

Related Guides

• PIE Funds Tax Rates — How NZ-domiciled PIE funds are taxed differently from direct FIF holdings
• Overseas Income & Double Tax Agreements — DTAs that may affect your foreign investment tax

Estimate Your FIF Tax

Use our FIF Tax Calculator to calculate your FIF income using both methods and see which gives the lower tax bill.