This calculator helps New Zealand investors with overseas shares compare the foreign investment fund tax methods, principally the fair dividend rate and the comparative value method, to see which produces a lower tax result for their situation. The FIF rules are among the most confusing in New Zealand tax, and the method you can use materially affects the tax you pay. You enter your overseas holdings and their values and returns, and the tool estimates the taxable income under each available method. The breakdown shows the calculation for each method side by side and highlights the difference, complementing our existing individual FIF calculators by letting investors compare methods in one place and understand a complex obligation more clearly.
Fair dividend rate taxes 5% of the opening market value. Comparative value taxes the actual change in value plus dividends, and is not less than zero. Individuals can generally use the lower across their FIF portfolio. The 5% rate, the threshold and the rules are set by Inland Revenue and the FIF area is complex, so check current rules or get advice. Estimate only, not tax advice.
Under the fair dividend rate method, your taxable income is a flat 5% of the market value at the start of the year, regardless of the actual return. Under the comparative value method, your taxable income is the actual increase in value over the year plus any dividends, and it cannot be negative. The calculator works out both and applies your tax rate to the lower, which is generally what an individual can use across their portfolio. The two methods favour different years, so comparing them matters.
On a $100,000 opening value, the fair dividend rate income is $5,000. If the holding rose to $112,000 with $2,500 of dividends, the comparative value income is $14,500. The fair dividend rate is lower here, so an individual would generally use that, paying tax on $5,000 rather than $14,500.
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