New Zealand has a reputation as a country without a capital gains tax, and for most assets held by its residents that is broadly fair. Foreign shares are the large exception. Under the foreign investment fund (FIF) rules, a New Zealand resident can owe tax every year on foreign shares they have not sold and that have paid no dividend. For people moving to New Zealand with a stake in a start-up, a family company or a private equity investment, that rule has long been the most expensive surprise of the move.
In 2026 New Zealand changed it for a defined group. The Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026, Public Act 2026 No 8, received Royal assent on 30 March 2026 and added a new way of calculating FIF income, the revenue account method, or RAM. Inland Revenue's Act commentary, issued on 12 May 2026, sets out how it works. It applies from 1 April 2025, so it already covers the 2025–26 income year. And a second bill, introduced on 10 September 2026, proposes to widen it considerably.
The problem the new method solves
The FIF rules exist to remove a tax incentive to invest abroad rather than in New Zealand companies. The usual way they do that, as the commentary describes it, is to tax foreign shares at 5% of their value at the start of the year, or, for shares held by individuals and family trusts, on the change in value during the year plus any dividends. If the shares cannot easily be valued, the 5% can be applied to an adjusted cost value instead. Inland Revenue's calculation page lists the methods.
Inland Revenue itself names three problems with this for migrants:
- Cash. The tax is due whether or not any money came in. For shares that cannot be sold, there may be no way to pay it except from other savings.
- Valuation. A migrant needs a valuation of foreign shares at the start of the first year the FIF rules apply. For a start-up, that is expensive and often guesswork.
- Double tax. If another country taxes the eventual sale, the tax paid under the FIF rules on paper gains and the foreign tax on the real gain may not be creditable against each other. The commentary singles out United States citizens and green card holders, who remain taxable in the US on worldwide income wherever they live.
How the revenue account method works
The RAM taxes qualifying shares on a realisation basis: you pay tax when something actually happens.
- Dividends received are taxed at your marginal rate in the year you receive them.
- Gains on sale are reduced by 30% before tax, so only 70% of the gain is taxed, at your marginal rate, in the year of sale.
- Losses on sale are reduced in the same way and can only be set against dividends and gains from other RAM shares. Unused losses carry forward.
Inland Revenue's own example: a taxpayer receives a dividend of $100 and sells a qualifying holding for a net gain of $5,000. The taxable FIF income is $100 plus 70% of $5,000, which is $3,600. At a marginal rate of 33%, the tax is $1,188.
For someone holding illiquid shares, the difference is not the rate. It is the timing. Under the old methods, a ten-year wait for an exit meant ten years of tax on value nobody could spend. Under the RAM, the tax arrives with the money.
Which shares qualify
The RAM is not a general option for every foreign investment. A holding qualifies only if it consists of shares in a foreign company acquired before you became New Zealand tax resident (counting the start of transitional residence, or the date a treaty tie-breaker first pointed to New Zealand), and the shares:
- are not listed on any stock exchange;
- have no effective redemption facility at market value; and
- are not in an entity that derives 80% or more of its value from shares that fail the first two tests.
The commentary's examples make the boundaries clear. Shares received as salary from a foreign start-up that is not listed and offers no redemption qualify. Shares in listed companies do not. An index fund tracking the S&P 500 does not, because it derives its value from listed shares. An interest in a foreign superannuation scheme or a life insurance policy never qualifies. Shares bought after arrival do not qualify, with one exception: follow-on investments you were contractually required to make under an arrangement entered into before you moved, including an employee share scheme you joined before arrival.
Who can use it
The method is limited to "RAM taxpayers". A natural person qualifies if they:
- became a New Zealand resident, not a transitional resident and not treaty-resident elsewhere, on or after 1 April 2024; and
- had been non-resident for at least five years before that.
People who arrived earlier but were still transitional residents on that date are also covered. Transitional residence is the regime that exempts most foreign investment income of newcomers for their first years in the country; the New Zealand country page explains it. In Inland Revenue's example, a migrant who arrived on 1 July 2022 and whose transitional status ended on 31 July 2026 can use the RAM from 1 August 2026.
A family trust qualifies if its principal settlor does. The test is applied once, when the trust elects, so the trust keeps the method even if the settlor later moves away.
Returning New Zealanders who have been away for at least five years are covered on the same terms. If they leave again and come back after a shorter absence, the shares that already qualified keep the RAM, but shares bought during the shorter absence do not.
The extended method for US citizens
For people who remain taxable somewhere else on their share sales because of citizenship or a right to live and work there, the Act goes further. An eligible person in that position can apply the RAM to all their foreign shares, listed or unlisted, under what the commentary calls the extended RAM.
Three conditions limit it. The other country must actually tax gains on shares, so citizenship of a country without a capital gains tax does not qualify. The other country must have a tax treaty with New Zealand. And a special exemption on a particular sale in the other country does not disqualify the person. Inland Revenue's example is a US citizen whose shares qualify for a full US exclusion on certain gains: he remains eligible, because the US generally taxes share disposals. The Brief has explained why the US keeps taxing its citizens abroad in its piece on citizen-based taxation; this is one of the few places where another country has written its rules around that fact.
Leaving New Zealand again
The method has a tail. If you elect the RAM and later become non-resident, you remain taxable in New Zealand on RAM shares you sell within three years of leaving. For anyone who sees New Zealand as one stop in a longer plan, that three-year window belongs in the exit timetable, alongside the residence questions every move raises, discussed in the Brief's piece on how countries decide where you live for tax.
What is proposed next
The RAM in its current form was built for recent arrivals. In Budget 2026, the government announced it wants to go further. Inland Revenue's information sheet of 28 May 2026 lists the proposals:
- extend the RAM to all New Zealand resident individuals for their unlisted foreign shares, regardless of when they arrived;
- extend the extended RAM to every resident who faces concurrent tax in another country through citizenship or a right to work there;
- raise the FIF de minimis threshold from $50,000 to $100,000 of foreign shares at cost, a threshold last set in 2000;
- let founders and other active investors keep the attributable FIF income method when their stake is diluted below 10%;
- fix the 10-year FIF exemption for New Zealand companies that list abroad through a SPAC.
These measures are in the Taxation (Annual Rates for 2026–27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill, which, according to Inland Revenue's bill commentary, was introduced to Parliament on 10 September 2026 and is now before a select committee. The information sheet says they would apply from 1 April 2026, for the 2026–27 tax year, and warns that the proposals may change as the bill goes through Parliament. Until it is passed, they are proposals, and returns should be prepared on the law as it stands.
What to do before the move
For anyone planning to move to New Zealand with foreign shareholdings, the new rules suggest a short list:
- Sort the portfolio into three piles: unlisted shares acquired before the move (likely RAM), listed shares and funds (ordinary FIF rules unless you have US-style citizenship taxation), and pensions and insurance (their own rules).
- Keep cost records. The RAM taxes 70% of the real gain, so the original cost of each holding matters more than any valuation.
- Time new commitments. Shares bought after arrival do not qualify, but contractually required follow-on investments agreed before the move do. Sign before you go, not after.
- Check your five years. Eligibility depends on five years of non-residence before arrival. Returning New Zealanders should count carefully.
- Plan the exit as well as the arrival. Sales within three years of leaving stay taxable in New Zealand.
New Zealand still does not have a general capital gains tax, as the Brief's list of countries with no capital gains tax notes with the usual caveats. What it now has, for a growing group of residents, is a FIF regime that waits for the sale. For people weighing a move, including those on the investor visa route, that is a material change in the arithmetic.
Work with Sebastian
If you are planning a move to New Zealand with shares in private or foreign companies, and want to know how they will be taxed in the first years and after, that is the kind of cross-border planning Sebastian works on with internationally mobile clients. Book a consultation.
