What is FIF tax in New Zealand?

FIF stands for Foreign Investment Fund. The FIF rules are New Zealand tax laws that require NZ tax residents to pay annual tax on overseas share investments — even if no dividends were received and nothing was sold. The most common calculation method (FDR) taxes 5% of your opening portfolio value each year as deemed income. FIF has applied since 2007 and replaced the old regime where overseas growth assets could compound indefinitely without NZ tax.

Who does FIF tax apply to in New Zealand?

FIF rules apply to NZ tax residents who hold overseas shares, ETFs, or managed funds directly with a total original cost exceeding NZD $50,000. Investments through NZ-domiciled PIE funds (like Smartshares or Kernel) are excluded because the fund handles FIF internally. Qualifying individual ASX-listed Australian shares are also exempt. KiwiSaver investments are not subject to FIF.

What is the difference between FDR and CV for FIF tax?

FDR (Fair Dividend Rate) taxes 5% of your opening portfolio value on 1 April regardless of actual returns. CV (Comparative Value) taxes your actual portfolio movement — closing value plus income minus opening value and costs. Individuals can use whichever is lower in a given year. FDR is better in bull markets (when returns exceed 5%); CV is better in flat or down years.

Are Smartshares ETFs subject to FIF tax?

No. Smartshares ETFs (such as USF, USG, USH, NZG, TWF) are NZ-domiciled PIE funds that handle FIF tax internally at the PIE rate. Investors do not pay personal FIF tax on these holdings and do not need to include them in their FIF calculations or IR3 returns. The same applies to Kernel funds and InvestNow PIE portfolios.

What is the Revenue Account Method (RAM) for FIF tax?

The Revenue Account Method (RAM) is a new FIF calculation method proposed in legislation introduced in August 2025, expected to take effect from 1 April 2026. It is only available to NZ tax residents who became resident on or after 1 April 2024 — primarily recent migrants and returning Kiwis. Under RAM, only realised gains are taxed (70% of the gain is included as income), and unrealised paper gains are not taxed. Dividends are taxed in full when received.

How do I declare FIF income in my NZ tax return?

FIF income is declared in your IR3 personal tax return filed after 31 March year-end. Log into myIR, complete your IR3, and enter your FIF income in the foreign income section. The filing deadline is 7 July unless you use a tax agent. IRD automatically receives overseas financial account data through the Common Reporting Standard (CRS), so undeclared FIF income risks penalties and use-of-money interest.

What is FIF Tax in NZ? Plain-English Guide 2025–26

What is FIF tax?

FIF stands for Foreign Investment Fund. The FIF tax rules are a set of New Zealand tax laws that apply to Kiwi investors who hold overseas shares, ETFs, or managed funds directly — not through a NZ-based PIE fund.

The core idea is this: if you own international shares, IRD wants to tax some of that investment's growth every year — even if you haven't sold anything and haven't received a dividend. This is called attributed income, and it's what makes FIF feel so counterintuitive to most investors.

Before FIF rules existed, NZ investors could hold overseas growth assets for years, never receive any income, and never pay any tax — only getting taxed when they eventually sold. The FIF regime was introduced to prevent this, and it's been in place since 2007.

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Key point: tax on unrealised gains

Under the most common FIF method (FDR), you pay tax on 5% of your portfolio's value at the start of the year — regardless of whether your investments actually returned that much, or anything at all. In a bad year, you can still owe FIF tax.

The good news: if you invest through NZ-based PIE funds (like Smartshares ETFs, InvestNow funds, or Kernel), the fund manager handles FIF tax for you and you never have to think about it. FIF only becomes your problem when you hold overseas investments directly — through platforms like Hatch, Sharesies (for US/international stocks), or directly with a foreign broker.

The $50,000 threshold: do the rules apply to you?

Most individual investors are protected from FIF by a de minimis threshold: if the total original cost of your overseas investments is NZ$50,000 or less, FIF rules don't apply to you. You only pay ordinary income tax on dividends received.

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The threshold is based on cost, not current value

If you bought $48,000 of international shares and they've since grown to $90,000, you remain below the threshold. Conversely, if you paid $55,000 and the portfolio has fallen to $40,000, you're still above it. Keep your purchase confirmations.

What counts toward the $50,000?

The threshold applies to your entire portfolio of attributable FIF interests — but not everything counts. Here's what does and doesn't count:

Investment type	Counts toward $50k threshold?
US ETFs held directly (e.g. VOO, VTI on Hatch)	Yes
International shares held directly	Yes
UK, European, Asian ETFs	Yes
NZ-domiciled PIE funds (Smartshares, Kernel, InvestNow PIE)	No — excluded
Individual shares listed on the Australian ASX (if qualifying)	No — exempt
Australian ETFs or unit trusts (even if ASX-listed)	Yes
KiwiSaver investments	No — excluded
NZ shares	No — not FIF

One critical nuance: if your cost basis crosses $50,000 on even a single day during the year, FIF rules apply to your entire portfolio for that full income year. You can't rely on your portfolio being below threshold at the end of March if it briefly crossed the line in October.

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The $50k threshold hasn't changed since 2000

It was set at $50,000 in the year 2000, and 25 years of asset price inflation means far more ordinary Kiwi investors are now caught by rules that were originally designed for the relatively wealthy. The government has flagged it may be adjusted — but as of 2025, it remains at $50k.

FIF exemptions: what's excluded?

Even if your portfolio is over $50,000, certain investments are exempt from FIF rules entirely. The most important ones for most Kiwi investors are:

The Australian share exemption

Individual shares in Australian-resident companies listed on the ASX All Ordinaries index are generally exempt from FIF — provided the company maintains a franking account. This means shares in BHP, Commonwealth Bank, ANZ Australia, Fortescue and similar qualifying companies are taxed under ordinary NZ income tax rules (only dividends are taxable) rather than under FIF.

Important caveats: this exemption applies to individual shares, not Australian ETFs or managed funds. An ASX-listed ETF like a Vanguard Australia product is still a FIF interest. Use the IRD's ASX exemption tool to check a specific company.

NZ-domiciled PIE funds

If you invest in international shares through a NZ-based PIE fund — Smartshares US 500 ETF (USF), Kernel's global funds, InvestNow's PIE options — the fund itself handles FIF tax at the PIE rate. No personal filing required, and the tax is final (it doesn't affect your personal tax rate). This is why many NZ investors prefer PIE funds over direct international investing once they approach the $50k threshold.

Foreign superannuation

Interests in foreign superannuation schemes (such as Australian super funds, UK pension pots, US 401(k) plans) are generally exempt from FIF, though different rules apply when you eventually receive the funds. The US-NZ tax treaty specifically exempts IRAs and 401(k)s from FIF treatment.

FDR vs CV: the two main calculation methods

If FIF applies to you, you must choose a calculation method and apply it consistently to all your FIF holdings for the year. For most individual investors with ordinary listed shares or ETFs, the choice is between FDR and CV. Individuals and eligible trusts can use whichever produces the lower result.

FDR: Fair Dividend Rate method

FDR is the simpler and more commonly used method. It assumes your FIF investments returned exactly 5% during the year — no more, no less — and taxes you on that assumed income.

Formula: FIF income = (Opening market value × 5%) + quick sale adjustment

The opening market value is the NZD value of all your FIF interests on 1 April (the start of the NZ tax year). All foreign currency values must be converted to NZD at an IRD-accepted exchange rate.

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When FDR is best

FDR is usually better in bull market years when your portfolio returns more than 5%. If your investments grew 20%, you still only pay tax on 5% of opening value. Your actual gains beyond that 5% cap are tax-free under FDR. You also don't pay tax on dividends received (they're included in the 5% assumption).

CV: Comparative Value method

CV taxes you on your actual portfolio performance rather than an assumed 5%. It compares the value of your investments at the start and end of the year, adds any income received, and subtracts costs.

Formula: FIF income = (Closing market value + gains received) − (Opening market value + costs incurred)

"Gains" means dividends received during the year plus sale proceeds. "Costs" includes your purchase costs (brokerage) and any foreign income tax you paid on the FIF income.

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When CV is best

CV is usually better in flat or falling markets when your portfolio returned less than 5%. If your portfolio dropped 10%, your CV result could be zero or negative. Note: if you could have used FDR but chose CV instead, and the result is negative, it's floored at $0 — you can't use CV losses to offset other income.

Feature	FDR	CV
Based on	5% of opening market value	Actual portfolio change
Best in bull markets (>5% return)	Yes — you win	No — you pay more
Best in flat/bear markets (<5% return)	No — you overpay	Yes — you win
Dividends separately taxed?	No — included in 5%	Yes — included in "gains"
Can claim FIF losses?	No	No (if FDR was available)
Complexity	Simple — one input needed	Moderate — need closing value too

The rule is simple: calculate both, use the lower. The FIF calculator on this site does this automatically in "Compare Both" mode.

The quick sale adjustment (FDR only)

The FDR method has one complication: the quick sale adjustment. This applies when you buy and then sell shares in the same FIF during the same tax year and make a gain on those transactions. Without this adjustment, you could exploit FDR by buying and selling the same ETF repeatedly within a year without any extra tax impact.

The quick sale adjustment is the lesser of two amounts:

Quick sale gain amount — the actual gain you made on the shares you bought and sold within the year (sale proceeds minus purchase cost)
Peak holding method amount — 5% × (maximum shares held during the year − opening shares held) × average cost per share

In practice, for most buy-and-hold investors who don't actively trade within a year, the quick sale adjustment is zero. If you only added to your position (bought but didn't sell), there's also no quick sale adjustment.

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Calculator note

The FIF calculator on this site accepts a pre-calculated quick sale adjustment figure. If you actively traded within the year, use Hatch's detailed FIF calculation guide or Sharesight's FDR worksheet to derive the correct number before entering it here.

Worked examples

Example 1: FDR in a strong year

Sam holds VOO (S&P 500 ETF) directly on Hatch. On 1 April, his holding was worth NZD $80,000. No quick sales. The portfolio grew 18% to $94,400 by 31 March. He received $1,200 in dividends.

Worked example — FDR vs CV

Sam's S&P 500 holding — good market year

Opening market value (1 April)$80,000

Closing market value (31 March)$94,400

Dividends received$1,200

FDR income (80,000 × 5%)$4,000

CV income ((94,400+1,200)−(80,000+0))$15,600

Best method: FDR$4,000 income

Tax at 33% marginal rate$1,320

By using FDR in a strong year, Sam pays tax on $4,000 of deemed income rather than his actual $15,600 gain — a saving of over $3,800 in tax. The $14,400 of returns above 5% are effectively tax-free under FDR.

Example 2: CV in a flat year

Emma holds international ETFs directly. Opening value: NZD $70,000. The market barely moved — closing value: $71,000. She received $500 in dividends and paid $200 in brokerage costs.

Worked example — CV advantage

Emma's portfolio — flat market year

Opening market value (1 April)$70,000

Closing market value (31 March)$71,000

Dividends received$500

Brokerage costs$200

FDR income (70,000 × 5%)$3,500

CV income ((71,000+500)−(70,000+200))$1,300

Best method: CV$1,300 income

Tax at 30% marginal rate$390

In a flat year, CV saves Emma $630 compared to FDR ($1,110 vs $390). The takeaway: always calculate both. The best method changes year to year depending on market performance.

How to legally minimise your FIF tax

1. Use NZ-domiciled PIE funds below $50k

If you're under the $50,000 threshold, investing through NZ PIE funds (Smartshares, Kernel) means your tax is handled at the PIE rate — typically lower than your marginal rate — and you never interact with FIF rules personally.

2. Calculate both FDR and CV every year

Never just default to FDR. In flat or down years, CV can save hundreds or thousands of dollars. The extra 10 minutes to calculate both is always worth it.

3. Time threshold crossings carefully

If you're planning to invest enough to cross the $50,000 threshold, consider timing your purchases so that you don't cross the threshold at the very start of a tax year — this gives you maximum time below threshold before FIF kicks in.

4. Keep records of purchase costs in NZD

The threshold is based on original NZD cost using the exchange rate at purchase date. Keep every purchase confirmation. IRD accepts the exchange rate on the transaction date, or you can use the mid-month rate published on the IRD website for the relevant month.

5. Consider PIE structures above threshold too

Even above $50,000, many investors find PIE funds simpler — the fund handles FIF at source, the tax is final, and there's no personal filing. The tradeoff is slightly less control over timing and fund selection. But for most investors, the simplicity is worth it.

The Revenue Account Method (RAM) — new from 2026

In March 2025, the government announced a new FIF calculation method called the Revenue Account Method (RAM). Legislation was introduced to Parliament in August 2025 and is expected to take effect from 1 April 2026.

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RAM is designed for migrants and returning Kiwis

RAM is only available to people who became NZ tax resident on or after 1 April 2024, or who returned to NZ after being non-resident for at least five years. If you're a long-term NZ resident, RAM is not available to you.

The RAM works differently from FDR and CV in one crucial way: it only taxes realised gains, not unrealised gains. Under RAM:

Dividends are taxed in full when received
70% of any realised capital gain is included as income when you sell
70% of any realised capital loss can offset RAM income in the same or a future year
Unrealised gains (paper gains while you're still holding) are not taxed at all

For eligible investors, this is generally a significantly more favourable treatment than FDR or CV, particularly for growth-oriented portfolios where gains are mostly unrealised. The RAM is an all-or-nothing election — you can't mix it with FDR/CV for different holdings.

How to file FIF income

1

Determine if FIF applies

Check your total cost basis of overseas investments as at any day during the year. If it exceeded $50,000 at any point, FIF applies. Exclude NZ PIE funds, qualifying ASX shares, and KiwiSaver.
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Gather your data

You need: opening market value (1 April) in NZD, closing market value (31 March) in NZD, dividends received in NZD, sale proceeds and purchase costs if applicable. Convert foreign currency using IRD-accepted rates.
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Calculate FDR and CV

Run both calculations. Use the calculator on this site or IRD's own tool. Note: you must apply the same method to all your FIF holdings for the year — no cherry-picking individual investments.
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Complete your IR3 return

FIF income is declared in your personal income tax return (IR3). Log in to myIR, go to your IR3, and enter your FIF income in the Foreign income section. IRD also has an online FIF calculator tool in myIR.
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File by 7 July (or extension)

The standard filing deadline for individuals with a 31 March balance date is 7 July. If you use a tax agent, you may have an extension. IRD receives overseas financial account data automatically through the Common Reporting Standard — undeclared FIF income attracts penalties and use-of-money interest.

Frequently asked questions

It depends. Sharesies: if you hold NZ or Australian shares, FIF doesn't apply. If you hold US or international shares through Sharesies directly (not via a NZ PIE fund wrapper), those count toward your FIF threshold. Hatch: Hatch holds US-listed ETFs and shares, and these are direct FIF interests. Hatch provides a FIF report that calculates both FDR and CV for you. If your Hatch portfolio cost more than $50,000 at any point during the year, FIF applies.

No. Smartshares ETFs (like USF, USG, NZG, TWF etc.) are NZ-domiciled PIE funds. The fund manager pays the FIF tax internally at the PIE rate. You don't declare anything personally — the PIE tax is a final tax. This is one of the main advantages of investing in NZ-domiciled international funds rather than directly in overseas ETFs.

Yes — with one restriction. Individuals and eligible trusts can choose FDR or CV each year based on which gives the better result. However, if you switch from FDR to CV and then back to FDR within a short period (specifically, if you use CV in a year when FDR was available, and then switch back), IRD may require you to use CV for a minimum period. In practice, most investors who switch do so simply because CV was lower in a down year, and they return to FDR in better years.

IRD accepts several methods. The most common for individual investors is the mid-month exchange rate published by IRD — use the rate for the month in which the relevant event occurred (opening value, closing value, dividend payment, etc.). You must be consistent — don't use the IRD mid-month rate for some transactions and a daily rate for others in the same return. Hatch and Sharesight automatically apply the correct rates in their FIF reports.

IRD automatically receives financial account information from overseas institutions through the Common Reporting Standard (CRS) — an international tax information-sharing agreement covering most countries where NZ investors hold assets. This means IRD may know about your overseas holdings even if you don't tell them. Undeclared FIF income attracts penalties, use-of-money interest, and potentially a default assessment using the FDR method (which may be higher than CV). Voluntary disclosure before IRD contacts you significantly reduces penalties.

New migrants to NZ typically receive a transitional tax exemption for up to 48 months from becoming NZ tax resident. During this period, overseas income (including FIF attributed income) is generally not taxable in NZ. Once the transitional period ends, FIF rules apply. Additionally, if you became NZ tax resident on or after 1 April 2024, you may be eligible for the new Revenue Account Method (RAM) which is generally more favourable. Seek advice from a NZ tax adviser given the complexity for migrants.

Generally no — while you're accumulating your Australian super and leaving it in the fund, it's exempt from FIF. Tax becomes relevant when you withdraw the funds or transfer them. There are specific rules about transfers of Australian super to NZ KiwiSaver schemes and lump-sum pension payments — these have their own tax treatment. If you have a significant Australian super balance, it's worth getting specific advice.

Disclaimer: This guide is for educational purposes only and does not constitute financial or tax advice. FIF rules are complex and depend on your individual circumstances. Always consult a qualified NZ tax adviser or contact IRD directly before filing. Calculations on this site are based on IRD guidance IR461 and are updated for the 2025–26 tax year.