What does a US ETF actually cost a New Zealander?

Far more than the expense ratio. On the worked example a $60,000.00 holding in a fund charging 0.09% costs $1,197.00 a year in total, which is 1.995% of the holding and 22.2 times the expense ratio. The fund fee is $54.00 of that, or 4.51%. The largest component by a wide margin is New Zealand's foreign investment fund tax at $990.00.

Why is the expense ratio so misleading?

Because it is the only cost the fund itself charges, and four of the five costs come from elsewhere. Foreign exchange is charged by the platform, brokerage by the broker, withholding tax by the United States and foreign investment fund tax by Inland Revenue. On the worked example those four together are $1,143.00 against $54.00 of fund fee, so shopping on the expense ratio alone compares 4.51% of the cost.

What is the FIF de minimis threshold?

If the total cost of all your offshore shares is NZ$50,000 or less, the foreign investment fund rules do not apply and you are taxed on the actual dividends instead. Above that they apply to everything you hold, not just the excess. It is measured on original cost, not current value, which means a holding that has grown a long way can still be under the threshold.

How much does crossing the FIF threshold cost?

On the worked example, $849.60 a year on a $60,000.00 holding: $347.40 under the threshold against $1,197.00 above it. It is a cliff rather than a slope, so a portfolio costing $50,001.00 pays $997.52 a year while one costing $50,000.00 pays $289.50. One extra dollar of cost changes the annual bill by $708.02.

How is FIF tax calculated?

Under the fair dividend rate method, you are treated as earning 5% of the opening market value each year and taxed on that at your marginal rate, whatever the fund actually returned. At a 33% rate that is 1.65% of the holding a year. Importantly, the actual dividends are not separately taxable on top of it, because the deemed 5% replaces them.

Do I still pay US withholding tax under the FIF rules?

Yes. It is deducted at source by the United States before the dividend reaches you, regardless of how New Zealand taxes you afterwards. On the worked example that is $117.00 a year, being 15% of $780.00 of dividends. Whether a credit for it can be claimed against your New Zealand tax when the FIF rules apply is a complex question, so this page counts it as a cost rather than assuming relief.

Does the holding period change the cost?

Yes, on the foreign exchange component. Converting into US dollars is a one-off charge, so the calculator spreads it across the years you intend to hold. On the worked example a 0.60% fee over ten years is $36.00 a year. Hold for two years instead and the same fee costs $180.00 a year, which is why short holding periods make foreign exchange charges matter far more.

Total Cost Of Owning A US ETF Calculator NZ 2026/27

Quick answer: On the worked example below, a $60,000.00 holding in a fund charging 0.09% actually costs $1,197.00 a year, which is 1.995% of the holding and 22.2x the expense ratio. The fund fee is $54.00 of that, or 4.51%. New Zealand's foreign investment fund tax is $990.00, and crossing the $50,000 threshold is what triggers it.

United States exchange traded funds are shopped on their expense ratio, and for a New Zealand investor the expense ratio is close to irrelevant. It is the only one of five costs that the fund itself charges. The platform charges you to convert New Zealand dollars into United States dollars. The broker charges you to trade. The United States withholds tax on the dividends before they reach you. And once the total cost of your offshore shares passes fifty thousand dollars, Inland Revenue taxes you on five percent of the value every year under the foreign investment fund rules, regardless of what the fund actually returned. That last item alone is usually many times the fund fee. This page adds all five together and reports one annual figure, expressed both in dollars and as a percentage of the holding, with each component shown as a share of the total so it is obvious where the money goes. It handles the foreign exchange charge correctly by spreading a one-off conversion cost across the years you intend to hold, which means a short holding period makes the same fee far more expensive. It applies the right tax treatment on each side of the de minimis threshold, taxing actual dividends below it and applying the fair dividend rate above it without double counting the dividends, which is a mistake simpler tools make. And it shows the threshold for what it is, a cliff rather than a slope, where one extra dollar of cost can change the annual bill by several hundred.

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Updated Current 2026/27 rates applied.

The de minimis threshold tests every offshore holding you own, together. It is measured on the original cost of all your foreign shares, not on the current value and not on this holding alone. One fund under the threshold plus another that pushes the total over means the foreign investment fund rules apply to everything, not just the excess. It is also a cliff: a total cost of $50,000.00 is exempt and $50,001.00 is not. Enter the combined figure honestly, because getting it wrong changes the answer by more than every other input on this page put together.

Verification & Methodology

Foreign exchange = holding × FX fee, divided by the intended holding period. A one-off conversion cost spread across the years held, so a shorter horizon raises the annual figure.
Brokerage = trades a year × cost per trade.
Fund expense ratio = holding × the fund's stated ratio.
US dividend withholding = dividends × the withholding rate. 15% with a W-8BEN under the United States and New Zealand treaty, 30% without one. Deducted at source before the dividend reaches you.
FIF de minimis: NZ$50,000 of total cost across all offshore shares. At or below it the rules do not apply.
Above the threshold, the fair dividend rate applies: tax = holding × 5% × your marginal rate. Actual dividends are not separately taxed on top, because the deemed 5% replaces them.
At or below the threshold, the actual dividends are taxable at your marginal rate, with a credit for the tax withheld capped at the New Zealand tax on that income.
Withholding tax is counted as a cost even under the fair dividend rate. Whether a foreign tax credit is available in that situation is complex and this page does not assume relief, which makes the figure conservative rather than optimistic.
Excluded: the comparative value method, which individuals may use instead of the fair dividend rate where it produces a lower result; the exit cost of converting back to New Zealand dollars; bid-ask spreads; and any platform or custody fee.
Not tax advice. Last verified: against ird.govt.nz and irs.gov treaty documents.

Your holding Current value

Original cost of all your offshore shares

Every foreign holding added together, at what you paid. This decides whether the FIF rules apply. How long you intend to hold

years

Getting in and trading Foreign exchange fee

Brokerage per trade

Trades a year

trades

The fund Expense ratio

% p.a.

Dividend yield

Your tax W-8BEN filed? Marginal income tax rate

$1,197.00

a year, against $54.00 of fund fees

Total cost

1.995%

of the holding, a year

Expense ratio

4.51%

of what it really costs

Largest component

$990.00

FIF tax, 82.71%

Multiple

22.2x

the expense ratio

Every cost, added up

Cost	Charged by	Rate	A year	Share of total
FIF tax, fair dividend rate	Inland Revenue	1.650%	$990.00	82.71%
US dividend withholding	United States	0.195%	$117.00	9.77%
Fund expense ratio	The fund	0.090%	$54.00	4.51%
Foreign exchange, spread over 10 years	The platform	0.060%	$36.00	3.01%
Brokerage	The broker	0.000%	$0.00	0.00%
Total cost of ownership		1.995%	$1,197.00	100.00%

Four of the five costs are charged by someone other than the fund, which is why the expense ratio tells you so little on its own.

What the FIF threshold does

	At or below $50,000	Above $50,000
How you are taxed	Actual dividends	5% of value, deemed
Foreign exchange and brokerage	$36.00	$36.00
Fund expense ratio	$54.00	$54.00
US withholding	$117.00	$117.00
NZ tax	$140.40	$990.00
Total a year	$347.40	$1,197.00
Difference		$849.60

Same holding, same fund, same everything. The only difference is which side of the threshold your total offshore cost sits on.

The cliff, by total offshore cost

Total cost of offshore shares	Treatment	Cost a year	As a percentage	vs the row above
$25,000.00	Exempt	$144.75	0.579%
$45,000.00	Exempt	$260.55	0.579%	$115.80
$50,000.00	Exempt	$289.50	0.579%	$28.95
$50,001.00	FIF applies	$997.52	1.995%	$708.02
$60,000.00	FIF applies	$1,197.00	1.995%	$199.48
$100,000.00	FIF applies	$1,995.00	1.995%	$798.00

One dollar of extra cost between the third and fourth rows adds $708.02 to the annual bill. This assumes the holding equals the total offshore cost.

Four Of The Five Costs Are Not The Fund's

An expense ratio is what the fund charges. It says nothing about what the platform, the broker, the United States and Inland Revenue take on the way through.

On the worked example the fund charges $54.00 and everyone else charges $1,143.00. Shopping on the expense ratio compares 4.51% of the cost and ignores the rest.

Worked Example: $60,000 In A 0.09% Fund

FIF tax, $990.00. Above the de minimis threshold the fair dividend rate treats you as earning 5% of the value, taxed at your 33% marginal rate. That is 1.65% of the holding whatever the fund returns.

US withholding, $117.00. 15% of $780.00 of dividends, deducted before the money reaches you.

Expense ratio, $54.00. The only cost most people look at.

Foreign exchange, $36.00. A 0.60% conversion charge on $60,000.00 is $360.00 once, spread across ten years.

Total $1,197.00, or 1.995% a year, which is 22.2x the expense ratio.

The Threshold Is A Cliff, Not A Slope

If the total cost of all your offshore shares is $50,000.00 or less, the foreign investment fund rules do not apply and you are taxed on the actual dividends. Above it they apply to everything you hold, not just the amount over.

A portfolio costing $50,000.00 pays $289.50 a year. One costing $50,001.00 pays $997.52. One extra dollar adds $708.02.

Two details catch people out. It is measured on original cost, not current value, so a holding that has grown a long way can still be under. And it counts every offshore holding together, so a small position in one fund can push a larger one over. Our FIF de minimis calculator works out exactly where you sit.

Dividends Are Not Taxed Twice

A mistake worth avoiding: under the fair dividend rate, the actual dividends are not separately taxable in New Zealand. The deemed 5% replaces them.

Simpler calculators add dividend income on top of the 5% deemed income and substantially overstate the tax. This page does not, which is why the New Zealand tax line above the threshold is exactly 5% of value at your marginal rate and nothing else.

The United States withholding still applies, because that is deducted at source before New Zealand's rules touch it. Whether a credit for it is available under the fair dividend rate is a complex question, and this page counts it as a cost rather than assuming relief, which makes the total conservative.

The Holding Period Changes The FX Cost

Converting currency is a one-off charge, so what matters is how many years you spread it across.

On the worked example a 0.60% fee is $360.00 once, or $36.00 a year over ten years. Hold for two years instead and the same fee costs $180.00 a year.

That is the real argument against moving in and out of foreign holdings, and it is separate from the exit conversion, which our repatriation cost calculator covers. Our US share FX cost calculator deals with the entry charge in detail, and our FX spread vs fee calculator covers the part hidden in the exchange rate rather than shown as a fee.

Compare This Against A New Zealand Fund

The obvious comparison is a New Zealand domiciled fund holding the same foreign shares. It is taxed under the same fair dividend rate, but at your prescribed investor rate, capped at 28%, rather than your marginal rate which reaches 39%.

It also removes the currency conversion and the brokerage entirely, since you buy it in New Zealand dollars.

Against that it carries its own fee, which is usually higher than a large United States fund's expense ratio. Whether it wins depends on your marginal rate and how much you are investing, and the only way to settle it is on total cost of ownership. That is what this page produces, and it is the figure to carry into the comparison rather than the expense ratio.

Our US withholding tax on dividends calculator covers the withholding side properly, including the marginal-rate interaction that makes the W-8BEN worth less than it first appears.

Related NZ Offshore Investing Calculators

FIF De Minimis Calculator: exactly where you sit against the threshold.
US Share FX Cost Calculator: the entry conversion in detail.
US Withholding Tax Calculator: what the W-8BEN is really worth.
FIF Calculator, FDR Method: the fair dividend rate worked through.
Currency Hedged vs Unhedged Calculator: the exchange rate risk on top of the cost.

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US Share FX Cost Calculator NZ 2026/27: The Real Cost of USD.
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How to work out what a US ETF really costs a New Zealander

Enter what you hold and what it cost. The current value drives the fees and the deemed income. The original cost of all your offshore shares drives whether the foreign investment fund rules apply at all, and the two are different numbers.
Add up every offshore holding, not just this one. The de minimis threshold tests the total cost of all your foreign shares together. One holding under the threshold plus another that takes you over means the rules apply to everything.
Enter the foreign exchange cost and your holding period. Converting into US dollars is a one-off cost, so it is spread across the years you intend to hold. A short holding period makes the same fee much more expensive per year.
Enter the expense ratio and dividend yield. Both are on the fund's own page. The yield matters more than people expect, because it drives the withholding tax.
Say whether you have filed a W-8BEN. With one, United States dividend withholding is 15 percent under the treaty. Without one it is 30 percent, and the form is free and takes minutes.
Compare the total against the expense ratio. This is the point of the exercise. The expense ratio is the number everyone shops on and it is usually a small fraction of the real cost, particularly once the foreign investment fund rules apply.