Tax on shares in NZ: share gains, traders and the FIF rules

Most New Zealanders who buy shares to hold pay no tax on the gain when they sell, only tax on dividends. A share gain is taxable if you bought the shares for the dominant or main purpose of selling them, are in a share dealing business, or hold them in a profit-making scheme. Foreign shares are different: if your foreign shares cost more than $50,000 in total, the foreign investment fund (FIF) rules usually apply, and most people then pay tax on a deemed 5% of the opening market value each year, whatever the shares do. Rules checked 10 November 2026.

When share gains are taxed

This guide is general information, not tax advice. Share taxation has many edge cases, so check Inland Revenue's share investments page or talk to an adviser before relying on it.

Inland Revenue says the amount you get from selling shares is taxable if any of these apply:

• you bought the shares "for the dominant or main purpose of selling them"
• you have a share dealing business
• you hold the shares as part of a profit-making scheme

If none apply, the gain is not taxed. As with property, it is your purpose when you bought that decides. And the rule cuts both ways: you can claim a loss only on shares whose sale would have been taxable.

Dividends are a separate matter. They are taxable income whatever your purpose, with imputation credits and resident withholding tax counting towards the tax.

Inland Revenue's detailed view is in IS 24/10 Share investments.

Why the test for shares is different from land

The purpose test for shares is narrower than the one for land. Land is taxed if selling was any firm purpose when you bought (section CB 6). Shares are taxed only if selling was your dominant purpose (section CB 4).

So someone who buys a diversified portfolio of New Zealand shares for dividends and long-term growth is usually outside the tax net on gains. Someone who buys to catch short-term price moves is usually inside it. The land intention test and our crypto tax guide explain the other two columns.

Traders and shares bought mainly to sell

There is no fixed number of trades that makes you a trader. The questions are your purpose when you bought each holding, and whether your activity amounts to a share dealing business. Inland Revenue's IS 24/10 sets out the factors it weighs.

When gains are taxable, the profit on each sale is the sale price less the cost, and it is added to your other income and taxed at your marginal rate. There is no separate rate for share gains.

Say you earn $70,000 in 2026/27 and make $9,000 of profit from shares bought mainly to sell. Using this site's engine:

If those same shares had been bought to hold, with no dominant purpose of sale, the $9,000 would not be taxed at all. Our guide to how gains are taxed covers the bracket arithmetic in more detail.

The FIF rules for foreign shares

Most foreign shares and offshore funds count as interests in a foreign investment fund. If the FIF rules apply to you, you are taxed each year on a calculated amount of income, instead of on dividends and gains as they happen.

The $50,000 threshold

Inland Revenue says that if your foreign shares cost more than NZ$50,000 in total, the FIF rules may apply; below that, the general rules for shares apply. Key points from Inland Revenue's FIF exemptions page and its article on the rules:

• The threshold applies to individual investors.
• It is measured on cost, not market value. A portfolio bought for $45,000 that has grown to $80,000 is still under it.
• Once total cost goes over the threshold, the rules apply to all of your FIF shares, not just the excess.
• The exemption is not available to anyone who has included FIF income or loss in their tax return.
• Below the threshold, dividends from foreign shares are still taxable income.

Australian shares

Shares in many Australian listed companies are exempt from the FIF rules and are taxed under the ordinary rules instead. Inland Revenue's conditions are that the company is on the official ASX list, is resident in Australia and not treated as resident elsewhere under a tax agreement, maintains a franking account, and its shares are not stapled. Australian franking credits cannot be claimed as tax credits in New Zealand.

The 5% fair dividend rate method, in outline

Most individuals over the threshold use the fair dividend rate (FDR) method. Inland Revenue's summary of the rules is that "tax is paid on 5 percent of the share portfolio's opening market value each year". The opening value is the market value at the start of the tax year, 1 April.

• A deemed return. The 5% figure does not depend on what the shares actually did, so a year of big gains and a year of no gains are both taxed on 5% of the opening value.
• No losses. Inland Revenue says no FIF losses can be produced under the FDR method.
• Quick sales. Shares bought and sold in the same year are taxed on the lower of 5% of their cost or the actual gain on them.
• The comparative value option. Individuals and family trusts can instead use the comparative value method in a year when their total return, dividends plus gains, is less than 5%. They then pay tax on the lower amount, and nothing if the shares made a loss.

Here is how it works on a portfolio of foreign shares worth $120,000 on 1 April 2026, for someone with $95,000 of other income in 2026/27. Using this site's engine:

All three rows are taxed at 33%, because this person's income sits between $78,100 and $180,000. The FIF income is added to their other income like any other income, and goes in an IR3 return. This is an outline only: the full rules, including other methods, currency conversion and record keeping, are more detailed, and an adviser or Inland Revenue's guidance is the place to check them.

A proposed change to the threshold (not law)

Not law. The $50,000 threshold above is the current rule.

A tax bill introduced on 10 September 2026 proposes "improvements to the foreign investment fund rules", according to Inland Revenue's tax policy page, which showed it at select committee as at 12 October 2026. KPMG reports that the bill would raise the threshold from $50,000 to $100,000, applying from 1 April 2026 once enacted, and would widen access to the revenue account method. KPMG also notes the bill lapses at the 2026 election unless the next government reinstates it. We have not seen the $100,000 figure on an Inland Revenue page, so treat it as reported.

Separately, Labour's proposed capital gains tax would exclude shares, according to Labour's release of 28 October 2025. That is also a campaign proposal, not law, and our guide to Labour's proposal explains it.

Records and next steps

Whatever your situation, keep:

• contract notes or platform statements for every purchase and sale, with dates and amounts in New Zealand dollars
• dividend statements showing imputation credits, foreign tax and withholding tax
• for foreign shares, a running total of cost, so you know where you stand against the FIF threshold
• market values on 1 April each year if the FIF rules apply
• anything that shows why you bought, such as notes or advice at the time, in case your purpose is questioned

To check whether a gain is likely to be taxable, try our Is my gain taxable? checker. It asks about your purpose and, for foreign shares, whether your cost is over $50,000. For a wider view of what New Zealand does and does not tax, see our overview of capital gains tax in New Zealand.

Questions people ask

Do I pay tax when I sell NZ shares I have held for years?

Usually not, if you bought them to hold for dividends and growth. The gain is taxable only if selling was your dominant purpose when you bought, you deal in shares, or it is a profit-making scheme.

Is the $50,000 FIF threshold based on cost or value?

Cost. Inland Revenue measures the total cost of your foreign shares, not what they are worth now. Many ASX listed shares are exempt and do not count.

How much tax is there under the fair dividend rate?

You are taxed on 5% of the opening market value at your marginal rate. On $120,000 of foreign shares, with $95,000 of other income in 2026/27, that is $6,000 of income and $1,980.00 of tax.

Can I claim a loss on my foreign shares?

Not under the fair dividend rate method. Individuals can use the comparative value method in a poor year, which means no tax if the shares made a loss, but no loss to claim either.