Expansion of Foreign Investment Fund (FIF) relief

The FIF regime applies special tax rules to specific types of offshore investments.

Very broadly, where a NZ taxpayer has foreign investment fund income, that income is attributed to them (i.e. they may be liable to pay tax on such income before actually receiving any money). There are different exemptions that taxpayers can access, but if no exemption is available, FIF income is worked out using one of a range of different – and often complicated – methods.

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The de minimis exemption

Currently, NZ individuals with foreign shares that cost less than NZ$50,000 (excluding certain listed Australian shares) do not have to apply the foreign investment fund (FIF) rules, instead being taxed on actual dividends received. This is based on the purchase price of the investment, not the current value of them.

This de minimis threshold was last set in 2000. Since then, inflation has eroded the value of this threshold, bringing a greater number of investors into the FIF regime than originally intended.

Because of this, the 2026 NZ Budget announced that the FIF de minimis threshold would be increased to NZ$100,000, in a move intended to greatly reduce the number of individual investors who are required to apply the FIF rules.

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RAM expansion

Last year, at the 2025 NZ Budget, the Government introduced a new method to calculate a recent migrant’s Foreign Investment Fund (FIF) tax on unlisted shares, known as the Revenue Account Method (RAM). Effective from 1 April 2025, it allows eligible FIF interests to be taxed on a realisation basis, meaning only dividends received from the interest and 70% of gains on disposal are taxable.

However, RAM is subject to restrictions: it can only be used by recent migrants and returning New Zealanders with a minimum 5-year period of non-residence.

At the 2026 NZ Budget, the Government announced a significant expansion of the method. Going forward, RAM will be able to be used by all New Zealand residents for their unlisted foreign shares, ensuring tax is paid only on realised gains and actual dividends.

Additionally, an “extended RAM" was announced for any New Zealand resident who is subject to double taxation due to citizenship or a right to work in another country. This measure, which primarily affects migrants from the United States, covers both listed and unlisted foreign shares.

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Other minor changes

In addition to the above changes, the 2026 NZ Budget also announced that it would expand access to the attributable FIF income method for certain taxpayers, while also introducing clarifying legislation to ensure the 10-year FIF exemptions continue to apply for corporate migration.

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Commencement and next steps

Although these changes have yet to be legislated, they are proposed to apply retrospectively from 1 April 2026 for the 2026–27 tax year, which is welcome news for taxpayers with offshore investments.

If you would like to learn more about the Budget announcements, or want to know whether you may qualify for exemption from the FIF regime, speak to a member of our team today.

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