Do I Pay Tax on Overseas Shares in New Zealand?

New Zealand has no general capital gains tax, so a lot of people assume shares bought overseas are tax free until they sell, and that selling is tax free too. Neither is reliably true. There is a separate set of rules for offshore investments called the foreign investment fund rules, usually shortened to FIF, and they can tax you on an amount you never received.

This page sets out when those rules start applying, the one number that decides it, and what changes on the day you cross it. Every figure here was read from Inland Revenue and is cited at the bottom.

What the rules actually cover

A foreign investment fund is an offshore investment that is a foreign company, a foreign unit trust, a foreign superannuation scheme, or an insurer under a foreign life insurance policy.

In practice, for most people reading this, it means shares in overseas companies held directly in your own name, and overseas-domiciled funds and exchange traded funds. A US-listed share sitting on a share trading platform is inside this regime. So is an overseas pension you left behind, in many cases.

What is not in it matters just as much, because it is where the confusion comes from:

• KiwiSaver, and New Zealand-domiciled managed funds. These are portfolio investment entities. The fund holds the overseas shares and deals with the tax on them itself, at your prescribed investor rate. You are not the one holding a FIF interest, so none of this lands on you personally.
• New Zealand shares. Ordinary New Zealand company shares are outside the FIF rules entirely.
• Certain ASX-listed Australian companies. There is a specific exemption, and it is narrower than “it is on the ASX”. The company has to be on the official ASX list, be Australian resident and not treated as resident elsewhere under an agreement, maintain a franking account, and not offer stapled stock. Inland Revenue publishes a tool that answers it for a given company.

One thing that catches people out: Australian franking credits attached to a franked dividend cannot be claimed as tax credits in New Zealand.

The NZ$50,000 line, and the thing most people get wrong about it

If you are a natural person and the total cost of your attributing interests in FIFs stays below NZ$50,000 at all times during the year, you do not have to calculate income under the FIF rules at all.

The detail that matters is in the word cost. The threshold is measured on what you paid, not on what the holding is worth now. That is deliberate, and it works in your favour: a portfolio you bought for $40,000 that has since run up to $90,000 has not crossed the line. You are not required to track a moving market value to know where you stand.

It is also a per-person test, which produces a result worth knowing if you invest as a couple. Interests held jointly by you and your spouse or partner that cost $100,000 in total leave neither of you over the threshold, because neither of you holds more than $50,000 of it. If one of you also holds interests individually on top of the jointly held ones, that person can be over while the other is not.

Below the line: what you actually pay

Being under the threshold does not make the investment tax free. It means the FIF rules do not apply and the ordinary rules do. You pay tax on:

• dividends you receive, at your marginal rate, with credit for overseas tax withheld where a double tax agreement allows it, and
• gains on sale, if you held the shares on revenue account, which broadly means you bought them with the purpose of resale, or you trade often enough to be in the business of it.

That second point is the one people skip past. “New Zealand has no capital gains tax” is a sentence about the default case, not a guarantee about yours. Your purpose at the time you bought is what decides it, and it is decided on the facts rather than on what you say about it afterwards.

Above the line: what changes, and why the first day matters

Cross NZ$50,000 of cost on any day in the year and the FIF rules apply to all of your attributing interests. The first $50,000 is not exempt. There is no tapering and nothing carved out at the bottom. This is a cliff rather than a slope, and it is the single most useful thing to know before you press buy on the trade that takes you over it.

Once you are in, you choose from six methods to work out FIF income: fair dividend rate, comparative value, cost method, deemed rate of return, revenue account method, and the attributable FIF income method. There are restrictions on which ones you may use, and you generally have to keep using the same method for an interest from year to year.

For ordinary listed shares the usual answer is the fair dividend rate method, and it works like this: you are taxed on 5% of the market value of your holdings at the start of the income year. Dividends and capital gains are not then taxed separately. If you both increased and decreased your holding in a share during the same year, a quick sale adjustment adds to that figure.

Read that again, because it is the part that surprises people. Under the fair dividend rate method you are taxed on 5% of your opening value whether or not the shares paid you anything, and whether or not they went up. A flat year still produces taxable income. So does a falling one.

There is relief from the worst version of that. An individual whose result under the comparative value method comes out lower than under the fair dividend rate generally has the option of using the comparative value result instead, with the total for the portfolio reduced to zero rather than going negative. You cannot claim a FIF loss from these investments, and you must apply one method across the whole portfolio rather than picking the better answer share by share.

The two situations that are not the usual situation

If you are a transitional resident, the FIF rules do not apply to you at all. This is the four-year window some new and returning migrants qualify for. It ends, and the year it ends is the year a portfolio that has never been declared suddenly needs to be. That is a date worth putting in a calendar rather than meeting by accident.

The revenue account method is new, and it is narrow. From 1 April 2025, eligible individuals and family trusts may use it. It taxes dividends and gains on disposal when they are realised rather than deeming income every year, and gains and losses are reduced by 30% before being taxed at your marginal rate. To be eligible you must have become a New Zealand resident, and not a transitional one, on or after 1 April 2024 following at least five years as a non-resident, and the qualifying interests are shares in a foreign company acquired before you became tax resident here that are not listed on any stock exchange. If you moved to New Zealand recently and left unlisted shareholdings behind you, this is worth a proper look. If you did not, it is not for you.

Disclosure, and why “they will not find out” is not a plan

In many situations you have to make a FIF disclosure whether or not any FIF income arises. There are penalties for not declaring FIF income and for not disclosing when you were required to, and Inland Revenue can issue default assessments.

The part that has quietly changed the odds is not the penalties. Inland Revenue exchanges financial account information with many countries every year and checks it against returns of income. An offshore brokerage account is not invisible, and it has not been for some years now. If you find you have not met an obligation, a voluntary disclosure is the route Inland Revenue itself points people to, and it is materially better than being asked about it first.

What this means in practice

Most people who ask this question are in one of three places.

1. Well under $50,000 of cost, buying and holding. Declare the dividends, keep the purchase records, and get on with it. The FIF rules are not your problem yet.
2. Approaching the line. This is where a decision actually exists. Knowing the cliff is there turns a tax surprise into a choice: about timing, about which account a holding sits in, and about whether the same exposure is better held through a New Zealand-domiciled fund, where a portfolio investment entity deals with it at your prescribed investor rate instead.
3. Over the line already. Then the question is which method, applied consistently, with records that support it. The gap between the fair dividend rate and comparative value results in a bad year is real money, and the option to use the lower one is not automatic.

None of that is exotic and none of it needs a product sold to you. It needs the cost of your holdings, the dates, and a decision made before the year end rather than after it.

Where these figures come from

Every rule, rate and threshold on this page was read from Inland Revenue on 20 August 2026 and from nowhere else:

• What a FIF is, the six calculation methods, and the disclosure obligation: Inland Revenue, Foreign investment funds (FIFs).
• The NZ$50,000 de minimis exemption and the ASX-listed Australian company exemption: Inland Revenue, Foreign investment fund rules exemptions.
• The 5% fair dividend rate, the quick sale adjustment, the comparative value option, joint ownership, the treatment of the first $50,000 once the threshold is crossed, the revenue account method and the transitional resident position: Inland Revenue, Guide to foreign investment funds, IR461, April 2026.

Thresholds and methods are set in legislation and they do change. A proposal to lift the de minimis threshold has been publicly discussed; the figure above is the one Inland Revenue published on the date shown, and Inland Revenue’s own pages are the authority for the tax year you are in.

This page is general information and not personalised financial advice. What is right for you depends on your holdings, your purpose when you bought them, and the rest of your position.

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