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Foreign Investment Guide — Overseas Assets, FIF, and Tax Rules in NZ

the foreign investment tax rules in New Zealand. The guide covers the overseas share portfolios under the FIF rules, the foreign property investments (the rental properties, the holiday homes), the foreign dividend taxation, and the currency exchange rate considerations.

Overseas Share and Property Investments

The NZ residents investing in the overseas shares must consider the Foreign Investment Fund (FIF) rules — the annual attribution rules apply if the cost of the foreign shares exceeds the $50,000 threshold. The investors may use the Fair Dividend Rate method (the 5% of the opening value) or the Comparative Value method (the actual gain or loss). The overseas rental properties are taxed on the worldwide basis — the gross rental income less the allowable expenses, with the foreign tax credits for the tax paid in the property's country. The exchange rate conversion using the IRD-approved exchange rates is required for the income and the expense reporting. See our FIF Guide → for the full FIF rules.

Foreign Dividends and Tax Credits

The overseas dividends are fully assessable in New Zealand. The foreign tax credits (FTCs) are available for the withholding tax deducted in the source country — the FTC is the lower of the foreign tax paid and the NZ tax payable on the dividend. The underlying foreign tax credits (UFTCs) may be available for the dividends from the companies in the countries with the Double Tax Agreements, allowing the credit for the corporate-level tax. The investors must maintain the records of the foreign tax paid and the exchange rates used. See our Dividend Guide → for the dividend taxation rules.