FIF Tax — Frequently Asked Questions

Sharesies: NZ and Australian shares don't trigger FIF. US and international shares held directly through Sharesies count toward your $50,000 FIF threshold. Sharesies provides an annual FIF report for overseas holdings.

Hatch: All Hatch holdings are US-listed ETFs and shares — these are direct FIF interests. Hatch provides a FIF report calculating both FDR and CV methods for you. If your Hatch portfolio cost more than $50,000 at any point during the year, FIF applies.

No. Smartshares ETFs (USF, USG, NZG, TWF etc.) and Kernel's global index funds are NZ-domiciled PIE funds. The fund manager pays FIF tax internally at the PIE rate. You don't declare anything personally — the PIE tax is a final tax.

This is one of the main advantages of investing in NZ-domiciled international funds rather than directly in overseas ETFs, particularly once you approach the $50,000 threshold.

If the total original cost of your overseas investments is NZ$50,000 or less, FIF rules don't apply. You only pay tax on dividends received.

Key points: the threshold is based on what you paid (cost), not what your investments are worth now. If you bought $48,000 of shares and they've grown to $90,000, you're still below the threshold. If you paid $55,000 and the portfolio has fallen to $40,000, you're still above it.

If your cost basis exceeds $50,000 on even a single day during the tax year, FIF applies to your full portfolio for that entire year.

FDR (Fair Dividend Rate) assumes your portfolio returned 5% and taxes you on that — regardless of what actually happened. It's usually better in strong market years because actual returns above 5% are effectively tax-free.

CV (Comparative Value) taxes your actual portfolio performance — the change in value plus dividends. It's usually better in flat or falling markets when your returns were below 5%.

The rule: calculate both and use whichever is lower. The best method changes year to year. Never just default to FDR without checking CV first — in a bad market year the difference can be hundreds or thousands of dollars.

Yes. Individuals can choose FDR or CV each year based on which gives the lower result. There's one restriction: if you switch from FDR to CV in a particular year and then want to switch back to FDR, IRD may require you to stay on CV for a minimum period before switching back.

In practice, most investors use FDR in strong market years and CV in flat or down years without issue.

Individual shares in Australian-resident companies listed on the ASX All Ordinaries index are generally exempt from FIF — they're taxed on actual dividends only, like NZ shares. This applies to direct shareholdings in companies like BHP, Commonwealth Bank, and ANZ Australia.

Important: this exemption does not apply to Australian ETFs or managed funds, even if they're ASX-listed. A Vanguard Australia ETF on the ASX is still a FIF interest. Use IRD's ASX exemption tool to confirm a specific company qualifies.

IRD accepts the mid-month exchange rate published on the IRD website. Use the rate for the month in which the relevant event occurred — opening value date, closing value date, dividend payment date, etc.

You must be consistent throughout your return. Platforms like Hatch and tools like Sharesight automatically apply the correct IRD rates in their FIF reports, which removes this complexity.

IRD automatically receives financial account information from overseas institutions through the Common Reporting Standard (CRS) — an international tax-sharing agreement covering most countries where NZ investors hold assets. This means IRD may know about your overseas holdings even if you don't tell them.

Undeclared FIF income attracts penalties, use-of-money interest, and potentially a default assessment using FDR (which may be higher than CV). Voluntary disclosure before IRD contacts you significantly reduces penalties.