FIF Tax Calculator

The Foreign Investment Fund (FIF) regime is New Zealand's tax framework for taxing income from overseas investments, primarily shares in foreign companies and units in foreign managed funds. The FIF rules apply when a New Zealand tax resident's total cost of overseas investments exceeds NZD $50,000. If your overseas share portfolio (excluding certain Australian shares) cost you more than $50,000 in total, you are required to calculate and pay tax on the income from those investments each year using one of the IRD-approved calculation methods, regardless of whether you received dividends or sold any shares. The FIF rules were introduced to ensure NZ investors in overseas shares pay tax on an ongoing basis, similar to investors in NZ shares. The rules are complex and most investors with significant overseas portfolios work with a tax adviser or use IRD's approved online tools. Source: IRD — Foreign Investment Fund (ird.govt.nz/fif).

The FIF threshold in New Zealand is NZD $50,000, measured at cost (the original purchase price in NZD). If the total cost of all your overseas investments subject to FIF (excluding certain Australian ASX-listed shares) is $50,000 or less, you are exempt from the FIF rules and instead pay NZ tax on actual dividends received (as foreign income). Once your total overseas investment cost exceeds $50,000, the FIF rules apply to your entire overseas portfolio, not just the portion above the threshold. The threshold applies per person, so a couple can each hold up to $50,000 in overseas shares before FIF applies. Note that the threshold is based on cost, not current market value — if your investments have grown significantly in value but you originally paid less than $50,000, you may still be below the FIF threshold. Source: IRD — FIF Exemptions (ird.govt.nz/fif).

IRD provides several approved methods for calculating FIF income, and the choice of method can significantly affect how much tax you pay. The most common methods are: Fair Dividend Rate (FDR) — the default method for most investors, which deems your FIF income to be 5% of the opening market value of your overseas portfolio at the start of each tax year. This is simple to calculate but may result in tax being due even in years where your portfolio fell in value. Comparative Value (CV) method — taxes the actual change in value of your portfolio (gains minus losses) plus dividends. This can result in no tax or even a tax credit in years where your portfolio falls. Cost method — available only when you cannot determine the market value of your overseas investment; bases income on a fixed 5% of cost. For most NZ investors in listed overseas shares, FDR or CV are the main choices, and you may use a different method for different investments. Source: IRD — FIF Calculation Methods (ird.govt.nz/fif).

Most Australian shares are exempt from the FIF rules in New Zealand, which is a significant advantage for NZ investors interested in Australian equities. The exemption applies to shares in companies that are listed on the Australian Securities Exchange (ASX) and are also resident in Australia for Australian tax purposes. This means that shares in major Australian companies such as BHP, Commonwealth Bank, Woolworths, and most ETFs listed on the ASX are FIF-exempt. Instead of FIF treatment, dividends from Australian shares are taxed as ordinary foreign income in New Zealand, and capital gains from selling Australian shares are generally not taxable for NZ investors (unless they are subject to the financial arrangements rules or are trading in shares). Note that not all ASX-listed securities are exempt — some are incorporated outside Australia and may still be subject to FIF. Always verify the status of each investment. Source: IRD — Australian Share Exemption (ird.govt.nz/fif).