Do I have to file a FIF return?

You only need to consider FIF if you hold non-PIE foreign investments above the NZ$50,000 (cost-basis) de minimis threshold at any point during the year. Investments held inside NZ PIE funds do not count toward your personal FIF threshold — the PIE applies the FIF rules at fund level.

Which FIF method should I use?

For most foreign shares the default is the Fair Dividend Rate (FDR) method — assuming a 5% return on the opening market value of the FIF interest. Individuals can elect the Comparative Value (CV) method on an interest-by-interest basis for each year where it produces a lower result (the "lower of FDR / CV" rule). Always check IRD's current rules or a tax adviser for your facts.

Is FIF the same as PIE?

No — they are different tax regimes. PIE applies to investors in NZ PIE funds with tax capped at the PIR. FIF applies to NZ-resident individuals who personally hold foreign shares or non-PIE foreign funds above the de minimis threshold.

What counts toward the NZ$50,000 FIF threshold?

Cost-basis values of all your non-PIE foreign-share and non-PIE foreign-fund holdings, summed across all of them. Direct ASX-listed Australian shares above certain exemptions are generally outside FIF; check IRD's exemption list for Australian-resident company shares.

FIF rules

Foreign Investment Fund (FIF)

A New Zealand tax regime that taxes NZ-resident individuals on the holding of most foreign shares and non-PIE foreign funds above a NZ$50,000 cost-basis de minimis threshold.

The Foreign Investment Fund (FIF) rules are a NZ tax regime that taxes the *holding* of certain foreign shares and non-PIE funds, regardless of whether income is actually distributed. They were introduced to remove a tax preference for investing offshore via accumulating wrappers.

NZ-resident individuals who hold **less than NZ$50,000 (at cost)** of FIF-type investments at all times during the year are exempt — the de minimis threshold. Above the threshold, FIF income must be calculated under one of four prescribed methods.

The four FIF calculation methods are: **Fair Dividend Rate (FDR)** — the default for most foreign shares; assumes a 5% return on opening market value of the FIF interest, regardless of actual gain or loss. **Comparative Value (CV)** — closing market value minus opening market value, plus distributions, less contributions; used where FDR is not available. **Cost** — 5% of cost; available when market value cannot be obtained. **Deemed Rate of Return (DRR)** — IRD-set fixed return on opening cost; used for certain non-share FIF interests. Individuals can pick the lower of FDR and CV for each FIF interest each year (the "comparative value cap"), provided CV is available.

Funds available to NZ retail investors that are *not* structured as NZ PIEs — for example, certain Australian Unit Trust versions of Vanguard funds — are subject to FIF rules for the NZ investor. ManagedFundsNZ flags these funds explicitly on each fund page with an amber "FIF / Australian Unit Trust" badge.

PIE funds *internally* manage FIF tax on their underlying foreign holdings; the PIE investor does not personally apply FIF rules to their PIE units. The PIE's FIF income flows into the PIE's taxable income and is taxed at the investor's PIR — capped at 28%. This is one of the main practical reasons PIE wrappers are popular for retail offshore-equity exposure in NZ.

Real examples from NZ fund disclosures

Verbatim quotes from NZ retail managed-fund disclosure documents lodged on the FMA Disclose register.

Vanguard International Shares Select Exclusions Index Fund — Australian Unit Trust

"NZ investors hold units in a Vanguard Australian Unit Trust. The investment is not a NZ Portfolio Investment Entity (PIE); NZ-resident individual investors holding above the NZ$50,000 FIF de minimis threshold apply the FIF rules in their personal NZ tax return — typically using the Fair Dividend Rate (FDR) method."

— ManagedFundsNZ structural classification (cross-checked with manager website)

See this in practice

Common questions

Do I have to file a FIF return?: You only need to consider FIF if you hold non-PIE foreign investments above the NZ$50,000 (cost-basis) de minimis threshold at any point during the year. Investments held inside NZ PIE funds do not count toward your personal FIF threshold — the PIE applies the FIF rules at fund level.
Which FIF method should I use?: For most foreign shares the default is the Fair Dividend Rate (FDR) method — assuming a 5% return on the opening market value of the FIF interest. Individuals can elect the Comparative Value (CV) method on an interest-by-interest basis for each year where it produces a lower result (the "lower of FDR / CV" rule). Always check IRD's current rules or a tax adviser for your facts.
Is FIF the same as PIE?: No — they are different tax regimes. PIE applies to investors in NZ PIE funds with tax capped at the PIR. FIF applies to NZ-resident individuals who personally hold foreign shares or non-PIE foreign funds above the de minimis threshold.
What counts toward the NZ$50,000 FIF threshold?: Cost-basis values of all your non-PIE foreign-share and non-PIE foreign-fund holdings, summed across all of them. Direct ASX-listed Australian shares above certain exemptions are generally outside FIF; check IRD's exemption list for Australian-resident company shares.

Foreign Investment Fund (FIF)

Real examples from NZ fund disclosures

See this in practice

Common questions

Primary sources

Related terms