Share Trading Tax in NZ: Traders, Investors and the FIF Trap

The short version

• NZ has no capital gains tax, but that does not make share profits tax-free.
• Whether you're taxed on your gains comes down to intention: buy-to-resell = income; genuine long-term hold = usually not taxed on the gain.
• Dividends are always taxable, whether you're a trader or a long-term holder.
• Foreign shares are the sting in the tail: the FIF rules can tax you on offshore holdings once they cost over NZ$50,000 — even in a year you sold nothing and received no dividend.
• Everything foreign — sale proceeds, dividends, opening values — converts to NZD at the RBNZ rate.

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I get asked about shares more than almost anything else, and it's usually the same two people. One's an active trader flipping NZX and US names through the week and assuming it's all tax-free "because New Zealand has no CGT." The other bought some US index shares on Hatch or Sharesies, never sells, and has no idea they might already owe tax under a regime they've never heard of.

Both are in for a surprise. Let me walk through how shares actually get taxed here, because it's genuinely different from everywhere else — and it's the one area the big overseas crypto tools don't cover at all.

First myth: "no CGT means shares are tax-free"

New Zealand doesn't have a general capital gains tax. True. But there are several ways your share gains still get taxed as ordinary income, and for a lot of people at least one of them applies.

The one everyone forgets is dividends. Those are income, full stop, no matter how long you've held or how passive you are. More on those below.

The bigger question for gains is what IRD calls your purpose or intention when you bought.

Trader or investor? Intention decides everything

There's no bright line, no "hold for 12 months and you're safe" rule like Australia has. IRD looks at why you acquired the shares.

You're likely taxed on your gains as income if:

• You bought with the intention (even partly) of reselling at a profit. This is the big one — and for anyone who'd call themselves a "trader," it's hard to argue you weren't planning to sell.
• You're in the business of dealing in shares — frequent buying and selling, a systematic approach, significant time and capital.
• You bought as part of a profit-making scheme.

You're generally not taxed on the gain if you genuinely bought to hold long term for dividends or steady growth, and you sell years later because your circumstances changed. The gain there isn't income — it's a capital receipt, and NZ doesn't tax those.

The catch: intention is judged at the time you buy, on the evidence. Selling three months later "because the market moved" looks a lot like resale intent. If you're actively trading, assume your gains are income and move on — trying to dress active trading up as passive investing is a fight you'll lose with IRD.

Worked example — an active NZX trader

Say you've got a $70,000 salary and you actively trade NZX-listed shares on the side, clearly buying to resell. Over the year to 31 March you're up $12,000 net after your losing trades.

That $12,000 is income. It stacks on your salary, so you're taxed on $82,000. Using the 2025–26 brackets:

| Slice | Rate | Tax |

|---|---|---|

| $0 – $15,600 | 10.5% | $1,638.00 |

| $15,601 – $53,500 | 17.5% | $6,632.50 |

| $53,501 – $78,100 | 30% | $7,380.00 |

| $78,101 – $82,000 | 33% | $1,287.00 |

| Total | | $16,937.50 |

Your trading profit falls in the top slices (30% and 33%), so roughly $3,700 of that bill is tax on the shares. And because there was no PAYE taken off the trading income, that's real money you need to have set aside.

Dividends: taxed no matter what

Even a pure buy-and-hold investor pays tax on dividends.

NZ company dividends usually come with imputation credits attached — the company's already paid tax on the profit, and you get credit for it so you're not taxed twice. You declare the gross dividend and claim the credits; resident withholding tax is typically deducted to top you up to your marginal rate.

Foreign dividends are messier. They're taxable here, often with foreign withholding tax already deducted at source. You may get a foreign tax credit for that — but note that Australian franking credits are not claimable in New Zealand, which trips people up constantly. And if your foreign shares fall under the FIF rules below, dividends usually get absorbed into the FIF calculation rather than taxed separately.

The FIF rules — the part that catches people out

This is the big one, and it's where I see the most expensive mistakes.

If you hold shares in foreign companies — US, UK, European, most things bought through Hatch, Stake, IBKR, or the US side of Sharesies — you're potentially inside the Foreign Investment Fund (FIF) regime. And FIF doesn't care whether you're a trader or an investor. It can tax you on a plain buy-and-hold portfolio.

The $50,000 threshold

You're exempt from the FIF rules if your foreign shares cost less than NZ$50,000 in total. That's the cost you paid (converted to NZD), not the current market value. Stay under $50k of cost and you just treat dividends and any trading gains normally.

Cross $50,000 of cost, and FIF kicks in on the whole lot. This threshold hasn't moved since 2000, so more people cross it every year without realising.

One important exemption: many ASX-listed Australian companies are outside FIF (they must be on the ASX, Australian-resident, keep a franking account, and not be stapled stock). So a portfolio of ordinary ASX blue chips can sit outside FIF even above $50k — but you have to check each holding, because plenty of ASX-listed names don't qualify.

How FIF income is calculated

Once you're in, you don't tax actual gains — you use one of the FIF methods. For individuals with under 10% of a company, the two that matter are:

Fair Dividend Rate (FDR). You're deemed to earn 5% of the opening market value of your foreign shares each year, and that 5% is taxed at your marginal rate. It doesn't matter whether you sold, or whether you got a cent of dividends — hold the shares on 1 April and you're taxed on 5% of what they were worth.

Comparative Value (CV). This is closer to actual performance: roughly closing value plus dividends and sale proceeds, minus opening value and purchases. In a good year CV can be higher than FDR; in a bad year it can be zero.

Here's the bit worth knowing: as an individual you choose FDR or CV for your whole foreign portfolio each year — you can't cherry-pick method share by share, but you can switch year to year. In practice people run both and use whichever gives the lower income that year.

Worked example — a US shareholder in FIF

You hold US shares that cost you NZ$80,000 — over the threshold, so FIF applies. On 1 April their market value was NZ$90,000.

Good year, using FDR: 5% × $90,000 = $4,500 of deemed income. If your marginal rate is 33%, that's $1,485 of tax — even if you never sold and got no dividends. That surprises everyone the first time.

Bad year — this is why CV exists: say the shares slid to NZ$78,000 by 31 March and paid NZ$1,000 in dividends. FDR would still deem you $4,500 of income. But CV roughly nets to $78,000 + $1,000 − $90,000 = −$11,000, which floors at $0. So for that year you'd elect CV across your foreign holdings and pay FIF tax on nothing. Choosing the right method in a down year is real money.

Every one of those figures — the $80,000 cost, the $90,000 opening value, the dividends — has to be in NZD, converted at the RBNZ rate for the relevant date. That's not optional; it's the number IRD expects.

The migrant exception (RAM)

If you moved to NZ (or came home) recently, there's a newer option called the Revenue Account Method, taxing dividends plus 70% of realised gains rather than the deemed 5%. It's narrow — broadly for people who became NZ tax resident on or after 1 April 2024 after five-plus years away — and applies from 1 April 2025. If that's you, it can be a much better deal, but it's specialist territory. Get an accountant on it.

NZ direct shares — the simpler case

Shares in NZ companies aren't in the FIF net. If you're a genuine long-term holder, your gains aren't taxed; you just pay tax on dividends (with imputation credits helping). If you're actively trading NZX names to resell, your gains are income, exactly like the trader example above.

Converting foreign amounts to NZD

Whatever regime you're in, foreign figures go into your return in NZD. Sale proceeds and dividends convert at the RBNZ rate on the day they happened; FDR opening values convert at the rate on 1 April. Not your broker's FX, not the rate on the day you happened to file — the Reserve Bank's published rate for the right date. Across a busy US portfolio that's a lot of individual lookups, which is exactly the grind the tool automates.

What to actually do

1. Split your holdings into NZ shares, ASX-exempt shares, and other foreign shares.
2. Add up the cost of the non-exempt foreign shares in NZD. Over $50,000? You're in FIF — work out FDR and CV and use the lower.
3. For NZ and directly-traded shares, decide honestly whether you're a trader (gains = income) or a genuine investor (gains not taxed), and tax dividends either way.
4. Convert everything foreign to NZD at the right-date RBNZ rate.
5. Put it on your IR3, and check provisional tax if last year's residual income tax topped $5,000.
6. Keep your records for seven years.

Where TradeLog NZ fits

To be straight about it: TradeLog NZ handles the share-trading income side well — import your trades, it converts each one to NZD at the correct RBNZ rate, nets your P&L, carries losses forward and folds it into your marginal-rate estimate alongside any forex or crypto activity. That's the multi-asset picture no crypto-only tool gives you.

The FIF calculation itself (the FDR-vs-CV election on a buy-and-hold foreign portfolio) is a specialist regime, and the app flags where it may apply rather than pretending to file it for you — that's a conversation for your accountant, and IRD has a free FIF calculator too. Where we can do the number for you, we do; where it needs an accountant, we say so.

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This is general information, not tax advice. Everyone's situation is different and the rules change. Talk to a qualified NZ accountant before filing — FIF in particular is easy to get wrong. TradeLog NZ takes no responsibility for errors in your return.

Links: IRD on foreign investment funds | FIF exemptions | IRD on share investments | RBNZ exchange rates