Australian shares get special treatment. A shareholding in a qualifying ASX-listed Australian company is not a FIF interest at all: you pay tax on its dividends like NZ shares, and its cost stays out of the $50,000 test. The catch is the word "qualifying". The exemption is for companies that meet four conditions, and it does not automatically cover everything that trades on the ASX, including most ETFs.
The four conditions for ASX shares
Inland Revenue's guide IR461 (p7) and its exemptions page set out the test, which is in section EX 31 of the Income Tax Act 2007. A shareholding in an Australian company is exempt if the company:
| Condition | What it means in practice |
|---|---|
| Is on the official list of ASX Limited | It is listed on the ASX itself |
| Is resident in Australia, and not treated as resident somewhere else under a tax treaty | A foreign company that also lists on the ASX does not qualify |
| Maintains a franking account | The company keeps Australia's franking (company tax credit) account |
| Is not stapled stock | Securities stapled together and traded as one are excluded |
Inland Revenue has an online FIF Australia tool for checking a particular company. Its page (last updated 5 October 2026) says you need the ASX ticker code and the financial year, and that if the shareholding is exempt, the shares are taxed under the same rules as New Zealand shares. Our is it a FIF? checker asks the same four questions but does not rule on individual companies; use Inland Revenue's tool for that.
One wording note. The 2026 IR3 return guide (IR3G p22) still describes the exemption as being for companies "listed on approved indices". IR461 (April 2026) uses "official list of ASX Limited". We follow IR461, which is the more detailed and more recent statement of the rule.
ASX ETFs and unit trusts
The most common misunderstanding we see is "ASX ETFs are exempt". Generally they are not covered by the company exemption, because most ETFs are unit trusts, not companies.
There is a separate exemption for a direct income interest in an Australian unit trust with adequate turnover or distributions, in section EX 32 (IR461 p6). Whether a particular ETF meets it is a question about that fund, and Inland Revenue's Australia tool page does not mention ETFs or unit trusts. Check with the fund manager or your accountant before you leave an ASX ETF out of your FIF figures. If it is not exempt, it is a FIF interest like any overseas fund, and its cost counts towards your $50,000.
Sharesies' help page puts it as ASX-listed Australian companies being "mostly exempt" (single source, 16 September 2026), which is a fair short version.
Other Australian exemptions
- Large holdings. An income interest of 10% or more in an Australian-resident FIF that is subject to Australian tax is exempt (section EX 35). Indirect interests count: IR461's example (p8) has James Stock with 8% directly and 50% of a company that owns 5%, so 8% + 2.5% = 10.5%. This matters for founders and family companies, not most share investors.
- Australian super. Interests in certain Australian regulated superannuation schemes are exempt for natural persons (section EX 33; IR461 p6).
- Australian employer shares. Australia is on the grey list for the employee share scheme exemption (ITA s EX 38; IR461 p25).
Worked example: the $50,000 test with ASX shares
You paid $40,000 for US shares and $30,000 for shares in an ASX-listed bank that meets all four conditions. Your total cost of foreign shares is $70,000, but the exempt ASX shares are not attributing interests, so they do not count (IR461 pp6 and 7).
| If the ASX shares qualify | If they do not (say, an ASX ETF that fails EX 32) | |
|---|---|---|
| Cost counted for the test | $40,000 | $70,000 |
| Over $50,000? | No | Yes, for the whole year |
| How the US shares are taxed | Dividends only | FIF: lower of FDR and CV |
| How the ASX holding is taxed | Dividends, like NZ shares | FIF, in the same calculation |
Now say your US shares were worth $60,000 and your exempt ASX shares $50,000 at 1 April, and your US cost is over $50,000. FDR is 5% of the FIF holdings only: 5% x $60,000 = $3,000. If the ASX holding were a non-exempt fund, FDR would be 5% x $110,000 = $5,500. With $60,000 of other income, that is $900 of extra tax against $1,650. Leaving genuinely exempt shares out matters; leaving out shares that are not exempt is an error. In our calculator tick "Exempt" on qualifying ASX rows and they stay out of every FIF figure.
How exempt ASX shares are taxed
Exempt Australian shares are taxed like New Zealand shares: the dividends are taxable income, and gains on sale are taxable only if you hold the shares on revenue account, for example as a share trader (IR461 p9; IRD FIF Australia tool page). On a $2,000 dividend with $60,000 of other income in 2025/26, the NZ tax is $600 at 30%, before any credits.
Credits work differently from US shares:
- Franking credits (Australian imputation) cannot be claimed in New Zealand (IRD exemptions page; IR461 p20).
- NZ imputation credits. Some Australian companies attach New Zealand imputation credits. These reduce your NZ tax (IR461 p20; IR3G p23).
- RWT. Where NZ resident withholding tax has been deducted from an Australian dividend, it offsets your tax and any excess is refundable (IR461 p20; IR3G p23).
Dividends from exempt Australian shares are still overseas income for the IR3 (box 17B and the IR1261), separate from your FIF figures. See dividends under $50,000 for the mechanics.
Check every year, not once
Inland Revenue's tool asks for the financial year as well as the ticker. On our reading that is because the conditions are about the company's position at the time: a company can stop keeping a franking account, change its tax residence, or restructure into stapled securities. A holding that was exempt when you bought it is not guaranteed to stay exempt. A quick check each year, before you work out your $50,000 test, keeps your figures right.
This matters most when you are near the threshold. Because the test is a cliff, one holding moving from exempt to not exempt can take your counted cost from under $50,000 to over it, and then all your FIF interests are taxed under the FIF rules for that whole year (IR461 p9). In our first worked example, a $30,000 ASX holding that turns out not to qualify moves you from $40,000 to $70,000 of counted cost. The $50,000 test tool lets you try it both ways.
The reverse is also true. If you have been counting an ASX company as a FIF interest and it actually qualifies, you may have been over the threshold on paper when you were under it. If that affected past returns, talk to your accountant about whether to correct them.
A short checklist
- For each ASX holding, ask: is it a company or a fund?
- For companies, check it in Inland Revenue's FIF Australia tool for the right financial year.
- For ETFs and trusts, ask the fund whether it meets the Australian unit trust exemption, or treat it as a FIF interest.
- Leave exempt holdings out of your $50,000 cost and out of FDR and CV.
- Report their dividends as ordinary overseas income.
This guide is general information, not tax advice; check with your accountant if a holding is close to the line. Rules checked 12 November 2026.
Questions
Are ASX ETFs exempt from FIF?
Usually not under the ASX company exemption, because most ETFs are unit trusts. Some Australian unit trusts are exempt under a separate turnover or distribution test (s EX 32). Check the specific fund.
Do exempt ASX shares count towards my $50,000?
No. They are not attributing interests, so their cost is left out of the threshold test (IR461 pp6 and 7).
Can I claim Australian franking credits in New Zealand?
No. Franking credits are not claimable in New Zealand. NZ imputation credits that some Australian companies attach are a different thing and can reduce your NZ tax.
Is a company listed on the ASX but based overseas exempt?
No. It must be Australian resident and not treated as resident elsewhere under a tax treaty.
How do I report dividends from exempt ASX shares?
As ordinary overseas income: the gross dividend in NZ dollars in box 17B of the IR3, with an IR1261. They are not part of your FIF income, and any NZ imputation credits or RWT are claimed as described above.
Sources
- IR461 Guide to foreign investment funds (April 2026)
- IRD: FIF Australia tool (last updated 5 October 2026)
- IRD: Foreign investment fund rules exemptions
- IR3G Individual income tax return guide 2026
- Income Tax Act 2007, ss EX 31 to EX 38
- Sharesies help: Foreign Investment Funds (FIF), 16 September 2026 (single source)
Checked 12 November 2026. General information, not tax advice; check with your accountant. Spotted an error? Email [email protected].