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Special Bulletin 5 min read · May 2026

Budget 2026 just changed FIF for NZ investors. Here is what you need to know.

The FIF threshold doubles from $50,000 to $100,000 and a new realisation-based calculation method is coming. Here is what it means for your portfolio and what to do before the rules change.

AG
Alan GilbertThe Southern Portfolio · Auckland, New Zealand

Budget 2026, delivered on 28 May 2026, included two significant changes to the Foreign Investment Fund rules that directly affect New Zealand investors. This is a special bulletin rather than a regular issue because the changes are time-sensitive and materially affect how many of you should be thinking about your portfolio right now.

The short version: the $50,000 FIF threshold is proposed to double to $100,000 from 1 April 2026, and a new realisation-based calculation method is being extended to all NZ tax residents. Neither change is yet law. Both are expected to be legislated in August or September 2026.

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Change 1: the threshold doubles to $100,000

The de minimis threshold below which individual investors are exempt from FIF has been $50,000 since 2000. The government has proposed raising it to $100,000 from 1 April 2026, applying to the 2026-27 tax year.

This is the first change to the threshold in 25 years. In real terms, $50,000 in 2000 is worth considerably more today, which is why a threshold designed for relatively wealthy investors has gradually caught a much broader group of ordinary Kiwis with diversified portfolios.

What this means in practice
  • If your overseas investments at cost are between $50,001 and $100,000, you will no longer have a FIF obligation from the 2026-27 tax year onwards - once the legislation passes.
  • If you filed FIF for the 2025-26 year ending 31 March 2026, that was almost certainly your last filing at the old threshold.
  • The threshold remains based on original cost, not current value.
  • If you are above $100,000, FIF still applies as before.
Important caveat

This is a proposal, not yet law. The legislation is expected in August or September 2026. Until it passes, the $50,000 threshold technically remains in force. The 7 July 2026 filing deadline for 2025-26 returns was based on the old rules.

Change 2: the Revenue Account Method extended to everyone

The second change is more significant for long-term investors. The government has proposed extending the Revenue Account Method (RAM) - a realisation-based FIF calculation method - to all NZ tax residents, not just recent migrants.

Under RAM, you only pay FIF tax when you actually realise a gain. Dividends are taxed in full when received, 70% of realised capital gains are included as income when you sell, 70% of realised capital losses can offset RAM income, and unrealised gains while you are still holding are not taxed at all.

This is a fundamentally different approach to FDR and CV, both of which tax you every year regardless of whether you have sold anything. RAM aligns more closely with how most investors intuitively think about tax - you pay when you profit, not before.

FDR vs CV vs RAM - a quick comparison
  • FDR: 5% of opening value taxed every year. Simple but can tax you in bad years.
  • CV: Actual portfolio movement taxed each year. Better in flat or falling markets, floored at zero.
  • RAM: Tax only on dividends received and 70% of gains when you sell. Unrealised gains untaxed while holding.

For a buy-and-hold investor in growth assets, RAM could be significantly better over time. The compounding benefit of not paying tax on unrealised gains each year is substantial over long investment horizons.

RAM is also available from April 2024 to investors who became NZ tax residents on or after 1 April 2024 or who returned after being non-resident for at least five years. If that applies to you, it may already be available as an option.

What you should do right now

A few practical steps worth taking given these changes.

Action list
  • If your cost basis is between $50,000 and $100,000: You are in the group most directly affected. Watch for the legislation passing and confirm with your tax adviser or IRD once it does. You should not need to file FIF from 2026-27 onwards.
  • If your cost basis is above $100,000: FIF still applies. Start thinking about whether RAM might be better for your situation than FDR or CV once it becomes available to all investors. This depends on how actively you trade and how much of your return comes from dividends vs capital growth.
  • If you are a recent migrant or returning Kiwi: RAM may already be available to you. Worth checking with a tax adviser.
  • Do not make major portfolio changes based on proposed legislation. Wait until it passes. The direction of travel is clear but the details could change.

The FIF calculator on this site has been updated to reflect the current rules. Once the legislation passes and the $100,000 threshold becomes law, the calculator will be updated accordingly.

More detail on RAM will follow in a future issue once the legislation is confirmed. For now, the key thing to know is that it exists, it may apply to you, and it is worth understanding before it becomes universally available.

Not financial advice. The Southern Portfolio is an educational newsletter. Nothing here constitutes financial advice under the Financial Markets Conduct Act 2013. Tax rules are subject to change and the changes described in this bulletin are proposals pending legislation. Always consult a licensed tax adviser or IRD directly before making filing decisions.
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