FIF tax in NZ: the complete guide for 2025/26 and 2026/27

New Zealand does not tax most foreign shares on dividends and sale gains the way you might expect. Once you are in the foreign investment fund (FIF) rules, you are taxed on a deemed return each year, whether or not you sell or receive anything. This hub explains the whole system in plain terms and points to a detailed guide and a calculator for each part. Every rule is from Inland Revenue's guide IR461 (April 2026) or the Income Tax Act.

What a FIF is

A FIF is a foreign company (including a foreign unit trust, so most overseas ETFs and funds), a foreign superannuation scheme, or a foreign life insurance policy not offered in New Zealand (IR461 p4). Bank accounts, term deposits, overseas rental property and foreign employment income are not FIFs. The rules apply to New Zealand tax residents who are not transitional residents (IR461 p4).

IRD's own summary is worth remembering: "FIF income is attributed to an investor. This may mean an investor has FIF income before actually getting any money" (IRD FIF hub). Our what is a FIF guide covers the definitions, and the is it a FIF? checker answers the common cases.

Out of the rules:

• Qualifying ASX-listed Australian companies are exempt: on the official ASX list, Australian resident, with a franking account, and not stapled (IR461 p7). Most ASX-listed ETFs do not qualify. See ASX shares and the FIF exemption.
• NZ PIE funds are not your FIF interests: the fund handles FIF and taxes you at your PIR of 10.5%, 17.5% or 28%. Compare the two in PIE funds versus direct shares and our neutral FIF or PIE tool.

The $50,000 threshold

Individuals do not apply the FIF rules if the total cost of their attributing interests is $50,000 or less throughout the year (IR461 p5; ITA s CQ 5(1)(d)). Three features catch people out:

• Cost, not value. What you paid, including brokerage.
• Any day. One day over $50,000 makes the whole year a FIF year.
• A cliff. Over the line, "all your attributing interests" are in, and the first $50,000 is not exempt (IR461 p9). A portfolio that cost $55,000 at its peak is fully in.

Read the $50,000 threshold guide and test your figures on our threshold checker. Each person has their own threshold, with joint holdings split (couples and joint accounts), children in their own names have their own (FIF for children), and ordinary family trusts have none (family trusts).

Under the threshold you pay tax on dividends received instead: see dividends under $50,000 and our dividends calculator.

NOT LAW: a bill to raise the threshold to $100,000 from 1 April 2026 lapsed when Parliament dissolved. File on $50,000. Status: the $100,000 proposal and our dated status page.

How FIF income is calculated

There are six methods (IR461 p10). Two cover almost everyone:

• Fair dividend rate (FDR): 5% of the total market value on 1 April, plus a quick sale adjustment if you bought and sold the same shares in the year (IR461 p11; ITA s EX 52). No losses. See FDR explained, the quick sale adjustment and our FDR calculator.
• Comparative value (CV): (closing value + sales + dividends) minus (opening value + purchases) (IR461 p11; ITA s EX 51). For individuals and family trusts a total loss counts as zero. See CV explained and our CV calculator.

Individuals and family trusts can pick whichever is lower each year, but must use it for all their holdings (IR461 pp14 and 16): FDR or CV, which to choose.

Worked example. Your US ETFs were worth $120,000 on 1 April 2025 and $118,000 on 31 March 2026, with $2,400 of dividends and no trades. FDR income is 5% of $120,000: $6,000. CV is $118,000 + $2,400 minus $120,000: $400. As an individual you can use CV. With $95,000 of other income, the extra tax is $132.00 under CV, against $1,980.00 under FDR (2025/26 rates).

The other four are the cost method, deemed rate of return and attributable FIF income (other FIF methods), and the revenue account method for some new residents (RAM).

Exchange rates, dividends and foreign tax

Currency. Convert to NZ dollars using either the actual rate (IRD accepts its mid-month rate for the month) or a rolling 12-month average, applied to all holdings; once on the rolling average you must keep using it (IR461 p13; IRD currency page). Divide the foreign amount by IRD's published rate. See which exchange rate to use and our IRD rates page. Currency moves alone can create FIF income (IR461 p22 note 5).

Dividends. Under FDR and CV, dividends from FIF shares are not taxed separately (IR3G 2026 p21). Foreign tax taken off them can be claimed as a credit, up to the NZ tax on that company's FIF income, with no refund or carry-forward; tax on UK dividends and Australian franking credits are not eligible (IR461 p20). See foreign tax credits and US withholding. US withholding is 15% with a W-8BEN (NZ and US treaty Article 10(2), 2008 protocol) and 30% without (IRS instructions for Form W-8BEN): the W-8BEN form.

Filing and paying

• File an IR3. FIF income goes in Box 17B with other overseas income and the foreign tax paid in Box 17A (IR3G 2026 pp19 and 22): how to file FIF in your IR3.
• Complete the IR1261 overseas income summary, answer Question 40, and make a FIF disclosure where one is required (IR461 p21): IR1261 and the FIF disclosure.
• If the tax to pay is more than $5,000, provisional tax applies the next year (IR3G 2026 p51): FIF and provisional tax.
• Keep cost, 1 April values, trades, dividends and rates for at least 7 years: records to keep.

Selling shares does not create separate tax under FDR or CV. Below the threshold, a gain is taxable only if the shares are held on revenue account (IR461 p9). For the wider question of tax when you sell, our sister site capitalgainstax.co.nz covers NZ's rules.

Your platform

Platforms report on their own holdings only, and your threshold and FIF income are worked out across all of them. Our platform guides explain each one's reports and what to add:

Our FIF calculator combines holdings from any platform, applies IRD exchange rates, and shows FDR and CV side by side. We do not recommend platforms.

New migrants, US and UK retirement savings

Transitional residents (new migrants and New Zealanders back after 10 years or more away) are outside the FIF rules for about 4 years: on IRD's wording, until 4 years after the end of the month they became resident. Details need confirming for your dates: new migrants and transitional residents and our new migrants tool.

Foreign super joined before you arrived is usually taxed when you take a lump sum or transfer it, not every year, using IRD's schedule method after a 4-year exemption (IR1024). IRD has not ruled on 401(k) plans or Roth IRAs by name: US 401(k) and IRA accounts and UK pensions, SIPPs and ISAs.

How we check our figures

Every figure on this site comes from one calculation engine, tested on every build against IRD's own worked examples: Bill Murphy's FDR and CV, IR461's Company A quick sale ($12,200), Peter's cost method, and the TIB currency examples. The methodology page lists each test, its source and its result, and any place where IRD is silent and we had to make an assumption.

This is general information, not tax advice; check with your accountant, especially for trusts, migrants, foreign super and anything unusual. Rules checked 12 November 2026.

Questions

Do I pay FIF tax if my shares fell in value?

Under FDR, yes: it is 5% of the 1 April value. Individuals can use CV instead, and a CV loss counts as zero, so in a falling year CV can mean no FIF income (IR461 p14).

Is the first $50,000 tax free?

No. Once cost is over $50,000 on any day, all your attributing interests are in the rules (IR461 p9).

Is the FIF threshold $100,000 now?

No. It is $50,000. The $100,000 bill lapsed at the dissolution of Parliament and is NOT LAW as at 12 November 2026.

Are dividends taxed on top of FDR?

No. Under FDR and CV, dividends from FIF shares are not taxed separately, although foreign tax on them can be credited (IR3G 2026 p21; IR461 p20).

Do NZ PIE funds count towards $50,000?

No. A NZ PIE is not a foreign company, so units in it are not your FIF interests.