The comparative value (CV) method for FIF, with buys, sells and dividends

Comparative value (CV) measures what your FIF holdings actually earned over the income year. The formula is (closing market value + gains) minus (opening market value + costs), where gains include sale proceeds and dividends and costs include purchases (IR461 p11; ITA s EX 51(1)). Individuals and family trusts may use it instead of FDR in any year, usually a poor one, but a CV loss cannot be claimed. Getting the formula right matters, because several short versions online leave out trades.

The formula, piece by piece

For each FIF interest, CV income is (closing value + gains) minus (opening value + costs) (IR461 p11; ITA s EX 51(1)). Each part has a definition:

Dividends go in gross, before the foreign tax taken off them, because foreign withholding tax and credits are part of “gains” (IR461 p11). The foreign tax is then claimed separately as a credit; see foreign tax credits.

A simple way to remember it: everything that came out of the holding or is still in it at the end, minus everything you put in or that was already there at the start.

Worked example with a sale, a purchase and dividends

Your FIF holdings were worth $50,000 on 1 April 2025. On 1 July you sold some shares for $8,000. On 1 November you bought more for $10,000. You received $1,200 of dividends (gross). On 31 March 2026 the holdings were worth $55,000.

Here FDR gives lower income, so an individual would return $2,500. Notice what happens if you leave out the trades, as some online formulas do: closing plus dividends minus opening gives $6,200, which overstates the gain by $2,000 because the extra $10,000 you invested is counted as profit while the $8,000 you took out is ignored. Our CV calculator takes purchases and sales for each holding.

Who can use CV

For ordinary foreign shares, CV may be used by (ITA s EX 46(6); IR461 p11):

• natural persons (individuals);
• trustees of eligible trusts (type B), which in practice is the ordinary family trust: the settlor is a natural or deceased person, the trust is a complying trust, and it is mainly for people the settlor has natural love and affection for, or for a charity (IR461 p24);
• share users under returning share transfers.

Anyone holding non-ordinary shares (such as fixed-rate or guaranteed-return shares) must use CV for those, or the deemed rate of return where CV is impractical (IR461 p16). Companies and other entities otherwise stay on FDR (IR461 p16).

Individuals and type B trustees can “switch freely between the FDR and CV methods in different income years (but not within an income year)” (IR461 p16). But it is one method for all holdings in a year: if you choose CV for one ordinary share, you cannot use FDR for another (ITA s EX 46(8)(b); IR461 p14). See FDR or CV: which to choose.

The zero floor: no CV losses

For individuals and type B trusts who could have used FDR, a total CV loss across those holdings is reduced to zero (ITA s EX 51(7) and (8)). Inland Revenue is blunt: “You cannot claim a FIF loss from these investments” (IR461 p14).

Inland Revenue’s example, Bill Murphy (IR461 p14), shows how the total works. He holds three companies, each worth $100,000 at the start of the year, with no dividends and no trades:

FDR would be 5% of $300,000, which is $15,000. Bill can return $15,000 under FDR or $0 under CV. “The CV loss cannot be offset against any other income” (IR461 p14). The losses and gains within the portfolio do net off against each other; it is only the overall loss that is lost.

Non-ordinary shares are different: a CV loss on those can be claimed (IR461 p16 and p19).

Currency under CV

Every amount is converted to New Zealand dollars using one exchange rate method, applied consistently to all holdings (IR461 p13). One detail is easy to miss: under CV the opening value is converted using the exchange rate that applied for the previous year (ITA s EX 51(5)). That is our reading of the Act; IR461 does not spell it out. So if you use the rolling average, last year’s rolling rate converts this year’s opening value.

Because CV compares two values at different exchange rates, a currency movement alone can create CV income or reduce it. IR461 p22 note 5 makes the same point: FIF income can arise even when shares perform poorly. Our exchange rates guide sets out the methods.

Why CV sometimes feels unfair

CV taxes the year’s gain, not your position since you bought. If your portfolio was down $1,000 overall at the start of the year and down only $500 at the end, CV shows $500 of income even though you are still behind on what you paid. The tax follows the income year, not your entry price. In that situation FDR may well be higher, so the choice still helps, but neither method looks at your original cost.

The other side is that in a strong year CV can be far above FDR. A portfolio that rises 20% has CV income of about four times its FDR income, which is why most individuals end up on FDR in good years and CV in poor ones.

Common CV mistakes

These are the errors we see most often in spreadsheets and online calculators:

• Leaving out trades. The formula needs purchases and sale proceeds, not just opening value, closing value and dividends (ITA s EX 51(1)). Without them, new money looks like profit and money taken out disappears.
• Using net dividends. Gains include foreign withholding tax (IR461 p11), so the dividend goes in gross and the tax is claimed as a credit.
• Flooring each holding at zero. The zero floor applies to the total across the holdings that could have used FDR (ITA s EX 51(7) and (8)). A loss on one holding reduces the gain on another, as in the Bill Murphy example.
• Mixing methods. CV for the losers and FDR for the winners is not allowed (ITA s EX 46(8)(b)).
• Using cost instead of market value. CV uses the market values on 1 April and 31 March. Cost only matters for the $50,000 test.
• Converting the opening value at this year’s rate. Under s EX 51(5), the opening value uses the rate that applied for the previous year (our reading).

If you only remember one thing: CV is everything you took out plus everything still in, minus everything in at the start and everything you added.

Records you need for CV

CV needs more information than FDR:

• the 1 April and 31 March market values of each holding, in NZ$;
• every purchase in the year, with the date and the amount including brokerage;
• every sale, with the proceeds;
• every dividend, gross, with the foreign tax withheld;
• the exchange rate method you used.

Platform reports can help. Sharesies and Hatch both say their annual FIF reports include CV inputs (single platform sources each, not confirmed by IRD), but each covers only that platform. If you hold in more than one place, you add them up. The record keeping guide has a fuller list.

Rules checked 12 November 2026. General information, not tax advice; check with your accountant.

Questions

Can I use CV for some holdings and FDR for others?

No, not for ordinary shares in the same year. If you choose CV for one, you must use it for all of them (ITA s EX 46(8)(b); IR461 p14).

Do dividends go in before or after foreign tax?

Before. Gains include foreign withholding tax (IR461 p11), so use the gross dividend. Claim the tax as a credit separately.

Can I carry a CV loss forward?

No. For an individual or family trust on ordinary shares, a total CV loss is reduced to zero and cannot be used against other income (IR461 p14).

Can a company use CV?

Generally no. Companies stay on FDR for ordinary shares (IR461 p16). Anyone must use CV for non-ordinary shares.