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Share Investing Guide — Dividend Tax, Capital Gains, and FIF Rules in NZ

the share investing taxation in New Zealand. The guide covers the dividend imputation credits, the capital gains tax treatment on the share sales, the Foreign Investment Fund (FIF) rules for the overseas shares, and the PIE managed fund investments.

Dividends and Imputation Credits

New Zealand operates the dividend imputation system — the dividends paid by the NZ-resident companies come with the imputation credits representing the tax already paid at the company level. The gross dividend (the cash dividend plus the imputation credits) is included in the shareholder's income, and the imputation credits are offset against the tax liability. The supplementary dividend system applies for the dividends paid to the non-residents. The dividends from the overseas companies do not carry the NZ imputation credits and are fully assessable at the marginal rate, with the foreign tax credits available under the tax treaties. See our Dividend Guide → for the detailed rules.

Capital Gains and FIF Rules

New Zealand has no capital gains tax on the share trading for the private investors. The profits from the share sales are generally capital in nature and not taxable unless the person is in the business of the share trading (the frequent trading, the short-term holding, the intention of the profit). However, the Foreign Investment Fund (FIF) rules apply to the overseas share portfolios exceeding the $50,000 cost threshold. The FIF rules require the annual attribution of the foreign investment fund income using one of the permitted methods (the Fair Dividend Rate, the Comparative Value, the Cost, the Deemed Rate of Return). The investors with the foreign shares below the $50,000 threshold are exempt from the FIF rules, and the realised gains are generally not taxable. See our FIF Guide → for the full FIF rules.