FIF Tax in NZ: What You Owe on Overseas Shares

The short version

• If you hold overseas shares — US stocks, global ETFs, most non-NZ/non-ASX companies — you may be under the FIF (Foreign Investment Fund) rules.
• Once the total cost of your foreign shares tops NZ$50,000, FIF applies and you're taxed on a deemed return, not your actual gains.
• The common method (FDR) taxes you on 5% of the value at the start of the tax year — whether or not you sold anything or got a dividend.
• Certain ASX-listed Australian shares are exempt and taxed like NZ shares.
• It catches a lot of everyday Sharesies/Hatch/IBKR investors who don't realise they've crossed the line.

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This is the one that surprises people. You buy some US shares through Sharesies or Hatch, they tick along, and you assume there's nothing to think about until you sell — and even then, "no capital gains tax, right?" Then you cross a threshold you didn't know existed, and suddenly IRD wants tax on a gain you haven't even taken.

The FIF rules are genuinely one of the more confusing corners of NZ tax. Here's the plain-English version.

What the FIF rules actually are

FIF stands for Foreign Investment Fund. The rules exist because NZ doesn't have a capital gains tax, and without them, people could park money in offshore shares and never pay tax on the growth. So instead of taxing the gain when you sell, FIF taxes you each year on a deemed return from holding the investment.

They apply to NZ tax residents holding "attributing interests" in foreign companies — in practice, overseas shares, global ETFs and offshore managed funds. US shares are the classic case. NZ company shares aren't caught (they're taxed under normal rules), and some Australian shares get an exception (below).

The $50,000 threshold — when FIF even applies

Here's the important gate. If you're an individual and the total cost of all your foreign shares stays at or under NZ$50,000 across the year, the FIF rules don't apply to you at all. This is the "de minimis" exemption, and it's based on what you paid (in NZD), not what the shares are worth now.

Under that threshold, you're taxed the ordinary way: dividends are taxable, but the gains themselves generally aren't — unless you're a share trader rather than an investor, which is a separate question covered in trader vs investor.

Heads up: the government has proposed lifting this de minimis threshold to $100,000 from the 2026–27 tax year (from 1 April 2026). If your holdings sit between $50k and $100k, confirm the current threshold with IRD or your accountant before relying on being under it — this one's in flux.

Cross the threshold, though, and FIF applies to your whole foreign shareholding — and the maths changes completely.

How FIF income is worked out

Once you're in, you don't tax your actual sale gains. You calculate a deemed income figure using one of two methods, and as an individual you can use whichever gives the lower result each year:

Fair Dividend Rate (FDR) — the common one. Your income is 5% of the market value of your shares at the start of the tax year (1 April). That's it — 5%, flat, regardless of whether the shares went up, down, or sideways, and regardless of dividends (they're already baked in).

Comparative Value (CV) — based on the actual economic result: the change in value over the year plus any dividends and sale proceeds. In a booming year CV can be much higher than FDR (so you'd pick FDR); in a flat or down year CV can be lower or even nil (so you'd pick CV).

Here's it in practice. Say your US ETF is worth $80,000 on 1 April (and cost more than $50k, so FIF applies):

• FDR: 5% × $80,000 = $4,000 of deemed income, added to your other income and taxed at your marginal rate. On the 33% bracket that's $1,320 — even if you didn't sell a single share.
• If the ETF had a monster year and rose $15,000, you'd still only pay on $4,000 under FDR. FDR effectively caps the pain in good years.
• If it fell, CV could give you a lower figure (even zero), and you'd use that instead.

The upshot: in strong markets FDR is your friend; in weak ones CV saves you. You don't have to guess — you run both and take the lower.

The Australian shares exception

Not all overseas shares are caught. Shares in certain ASX-listed companies are exempt from FIF and taxed like ordinary shares — dividends taxable, gains generally not (unless you're trading). To qualify, the company broadly needs to be on the official ASX list, be an Australian tax resident, keep an Australian franking account, and not be stapled stock.

One catch: you can't claim Australian franking credits against your NZ tax. But being outside FIF is usually the bigger deal.

What this means if you use Sharesies, Hatch or IBKR

Most Kiwis buying overseas shares do it through Sharesies, Hatch, Tiger, or Interactive Brokers — and all of them make it easy to quietly build a US portfolio past $50,000 without noticing. The moment your combined cost across every platform crosses the threshold, FIF applies to the lot. It's the total that matters, not each account separately.

If you're anywhere near $50k across your foreign holdings, that's the point to start tracking cost and 1-April values properly — in NZD, at RBNZ rates — because you'll need them for the calculation.

Common mistakes

• Not realising FIF exists. "No capital gains tax" is true, but FIF taxes the deemed return instead — different rule, same wallet.
• Counting market value instead of cost for the $50k test. The threshold is based on what you paid.
• Treating each platform separately. It's your total foreign holding that counts.
• Only using FDR. In a down year, CV can save you real money — check both.
• Forgetting the NZD conversion. Costs and values go in at RBNZ rates, not your broker's.

What to do next

FIF is fiddly, but it's mechanical once you've got clean records: cost in NZD, market value at the start of each tax year, dividends, and sales. TradeLog NZ keeps your holdings and NZD conversions in order so the numbers are there when you (or your accountant) work out your FIF income for the IR3. It's free to start.

Worth reading next: the NZ share trading tax guide and, if you trade actively rather than invest, how IRD decides trader vs investor.

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Do I pay tax on US shares in New Zealand?

Often, yes — but not the way people expect. If the total cost of your foreign shares (including US shares) is over NZ$50,000, you fall under the FIF rules and are taxed each year on a deemed return, not on your actual sale gains. Under $50,000, you're taxed the ordinary way: dividends are taxable, but gains generally aren't unless you're a share trader.

What is the FIF $50,000 threshold?

It's the "de minimis" exemption. If you're an individual and the total cost (in NZD) of all your overseas shares stays at or under NZ$50,000 across the year, the FIF rules don't apply to you. It's based on what you paid, not the current market value. The government has proposed raising this threshold to $100,000 from the 2026–27 tax year, so confirm the current figure if you're near the line.

How is FIF income calculated?

Most individuals use the Fair Dividend Rate (FDR) method: your income is 5% of the market value of your shares at the start of the tax year, taxed at your marginal rate regardless of actual performance. You can instead use the Comparative Value (CV) method — based on the real change in value plus dividends — and as an individual you use whichever of the two gives the lower result each year.

Are Australian shares subject to the FIF rules?

Many aren't. Shares in certain ASX-listed companies that are Australian tax residents, maintain a franking account and aren't stapled stock are exempt from FIF and taxed like ordinary shares. Note that Australian franking credits can't be claimed against your New Zealand tax.

Do I still pay tax if my overseas shares lost money?

Under the FDR method, yes — it charges a flat 5% of the opening value regardless of performance, so a down year can still produce taxable income. But individuals can switch to the Comparative Value method, which reflects the actual result and can produce a lower figure, or nil, in a losing year. You use whichever method gives the lower income.

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This summary is a guide only and does not constitute formal tax advice. FIF is a complex area and individual circumstances vary. Review with a qualified NZ tax accountant before filing. TradeLog NZ accepts no liability for errors in your tax return. For the official rules, see IRD on foreign investment funds.