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Owning overseas shares and FIF tax

Shares in a company outside New Zealand are taxed on a rule of their own, with three methods and a threshold that catches people out.

13 situations worked through, 13 of them with the sums shown. Each one links to the guide that sets out the rules behind it, and that guide is where any rate or threshold is kept current.

The people in these situations are illustrations written to show how the rules land on somebody, not real customers and not case histories. The arithmetic is real and the rules are real; the names and the circumstances are made up to teach.

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Foreign Investment Funds - Learning Center

Jane - Simple FDR Calculation

Jane has invested in a US S&P 500 ETF. It's been a good year with strong market performance.

  1. Investment: Vanguard S&P 500 ETF (US-listed)
  2. Opening value (1 April): NZ$120,000
  3. Closing value (31 March): NZ$135,000
  4. Actual gain: NZ$15,000 (12.5%)
  5. Dividends received: NZ$3,200
  6. US withholding tax paid: NZ$480

The same calculation on its own, with others like it

Mark - CV Method When Market Falls

Mark invested in European shares. Unfortunately, the market declined significantly this year.

  1. Investment: European stock portfolio
  2. Opening value: NZ$80,000
  3. Closing value: NZ$70,000
  4. Actual loss: NZ$10,000 (-12.5%)
  5. Dividends received: NZ$1,500
💡 CV Loss Protection

If Mark had used FDR, he would have paid $1,320 in tax (on $4,000 FDR income) despite his portfolio losing $10,000! CV method recognised his actual loss and created a $8,500 loss to carry forward.

The same calculation on its own, with others like it

Sarah - Comparing FDR vs CV

Sarah has Asian growth funds and wants to determine the best method for the year.

  1. Opening value: NZ$100,000
  2. Closing value: NZ$108,000
  3. Gain: NZ$8,000 (8%)
  4. Dividends: NZ$1,000

The same calculation on its own, with others like it

David - Multiple Foreign Investments

David has a diversified portfolio of foreign investments and uses different methods for different holdings.

  1. FIF income: $60,000 × 5% = $3,000
  2. Dividends: $800
  3. Total: $3,800
💡 Portfolio Strategy

David's Australian shares (40% of his foreign portfolio) are exempt from FIF, significantly reducing his overall tax burden. This is why many NZ investors maintain a portion of their offshore holdings in ASX-listed companies.

The same calculation on its own, with others like it

Emma - De Minimis Exemption

Emma is building her foreign investment portfolio and wants to understand when FIF rules will apply.

  1. US ETF (cost): $28,000
  2. European fund (cost): $20,000
  3. Total cost: $48,000
⚠️ No Going Back

Once Emma crosses the $50,000 threshold, FIF rules apply from that point onwards, even if her portfolio value later drops below $50,000. The de minimis exemption is a one-way threshold.

The same calculation on its own, with others like it

FIF CM Method Guide - Comparative Value Method

Tech Investor 2024 Bull Market

Investor in US tech stocks during strong year:

  1. Opening 1 April 2024: NZD $280,000
  2. Closing 31 March 2025: NZD $385,000
  3. Dividends: NZD $8,400

The same calculation on its own, with others like it

2023 Bear Market Losses

Same investor during market downturn:

  1. Opening 1 April 2023: NZD $320,000
  2. Closing 31 March 2024: NZD $280,000
  3. Dividends: NZD $6,800

The same calculation on its own, with others like it

Currency Impact

Investment unchanged in USD, but NZD strengthens:

  1. Holdings: USD $150,000 (unchanged all year)
  2. 1 April rate: 0.65 NZD/USD
  3. Opening NZD: $150,000 ÷ 0.65 = $230,769
  4. 31 March rate: 0.60 NZD/USD (NZD stronger)
  5. Closing NZD: $150,000 ÷ 0.60 = $250,000

The same calculation on its own, with others like it

Strategic Method Switching

5-year history showing optimal method choice:

  1. Always using FDR: Total income $58K
  2. Always using CV: Total income $60K
  3. Strategic switching: Total income $21.75K

Saves $36.25K income (or $11,963 tax at 33%)

The same calculation on its own, with others like it

FIF Cost Method Guide

New Investor First FIF

First-time overseas investment:

  1. Purchased Vanguard ETF: September 2024
  2. Cost USD $80,000 = NZD $128,000
  3. 31 March value: USD $86,000 = NZD $145,000
  4. Dividends: NZD $2,800
  5. FIF income = ($145,000 - $128,000) + $2,800 = $19,800
  6. Tax at 33%: $6,534

The same calculation on its own, with others like it

Loss in First Year

  1. Purchased: November 2024, Cost $90,000
  2. Market crash by 31 March: $78,000
  3. Dividends: $1,500
  4. FIF income = ($78,000 - $90,000) + $1,500 = -$10,500
  5. Loss reduces other taxable income by $10,500

The same calculation on its own, with others like it

FIF DRR Method Guide

REIT Income Investor

Retiree with high-income REITs:

  1. Total REIT portfolio: $300,000
  2. Average yield: 6.5%
  3. Annual distributions: $19,500
  4. FIF Income (DRR): $19,500
  5. Tax at 33%: $6,435

The same calculation on its own, with others like it

Low Dividend Portfolio

  1. Tech growth portfolio: $250,000
  2. Yield: 1.2%
  3. Distributions: $3,000
  4. DRR income: $3,000
  5. FDR income: $12,500

DRR better (saves $9,500 taxable income)

The same calculation on its own, with others like it

Other situations
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Situations are taken from the guides listed above and are worked examples for education, not advice. Figures used in an example were current when the guide was written; the guide holds the maintained figure. Last reviewed 2026-09-07. See also the arithmetic on its own, every question the site answers and the guides.