Promising FIF proposal for US citizens moving to New Zealand

The New Zealand government is proposing changes to our country’s Foreign Investment Fund (FIF) rules and this one could be big news for you: The opportunity to reduce the current risk of double taxation.

The proposed changes, which aim to address our most onerous FIF tax rules, were announced last week with an Inland Revenue fact sheet that details proposed introduction of a revenue account method for some migrants and investments.

While US migrants would be a notable beneficiary, the amendments would also apply to returning Kiwis and other recent or would-be migrants to New Zealand if they have FIF income from investments in unlisted entities (e.g. start-ups and shares obtained from employee share schemes before becoming New Zealand tax residents).

Further to our 17 December 2025 FIF article, here are the key points to note in the new fact sheet:

• A proposed revenue account method for calculating FIF income. This would essentially act like a capital gains tax on realised gains, as well as taxing dividends.
• Seventy percent of the capital gain would be taxable. Seventy percent of a capital loss would be able to be offset against current or future income arising under this method (i.e. ring-fenced). Dividends would be taxable in the same manner as New Zealand and Australian shares.
• This method would only apply to investments in unlisted entities held by non-US people, and to all FIF investments held by US citizens (who are taxed based on citizenship).
• This method would apply from 1 April 2025 onwards for people who became fully tax resident on or after 1 April 2024. This means people who became transitional residents on or after 1 April 2020 would be able to use this method, with the first tax year it can be used being the income year ended 31 March 2026.
• Returning New Zealanders could apply this method, but only if they have been non-resident for a certain period of time (yet to be determined, but likely less than 10 years).
• An exit tax will likely apply to those applying this method and leaving New Zealand.
• This method is optional.
• Trusts could use this method if the principal settlor is entitled to use this method.

The proposed changes are expected to be included in the 2025 tax bill, with the first reading expected in August. It is worth noting tax bills are usually not passed until March, which means we will not know the full shape of these rules until March 2026.

This is just the framework of the proposals and details are currently scarce, but it will be very relevant to US people who are thinking of migrating to New Zealand. Our tax team is happy to provide further advice on what this could mean for individuals, noting that the rules are not yet law.