New Zealand FIF Revenue Account Method for New Residents: What Advisers Should Check

Published 3 November 2026 by Steffan Kharmaaiarvi, founder

Since 1 April 2025, a person who became a New Zealand resident on or after 1 April 2024, after at least five years as a non-resident, can choose to have some foreign shares taxed when they are sold rather than every year. The revenue account method (RAM) taxes the dividends received and 70% of realised gains. For most new residents it covers only unlisted shares they held before arriving; for US citizens and others taxed on their share sales by another country because of citizenship, it can cover listed shares too. A bill now before Parliament would open it to every resident. This note sets out what the law says today, what is only proposed, and what to check with a client. It is decision support for a professional conversation, not tax advice.

What changed and from when

The RAM was added to the foreign investment fund (FIF) rules by the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026 (2026 No 8), which received assent on 30 March 2026. The sections that insert the method into the Income Tax Act 2007, new s EX 46B (limits on choosing the RAM) and new s EX 56B (the method itself), came into force on 1 April 2025 (s 2(28) of the Act). In practice the RAM is available from the 2025–26 income year (Inland Revenue Act commentary, pp. 35–52).

Inland Revenue gives the reason: the FIF rules tax deemed income whether or not any cash comes in, which is hard to fund for migrants holding illiquid shares bought before they knew of the rules, and the FIF tax and a foreign tax on the eventual sale may not be creditable against each other. The commentary names US citizens and Green Card holders as the main case of that double tax.

A second change is only proposed. Budget 2026 announced that the RAM would be opened to all New Zealand residents, and the Taxation (Annual Rates for 2026–27, FBT Simplification, Foreign Investment Funds, and Remedial Measures) Bill was introduced on 10 September 2026. Inland Revenue's bill page showed it at select committee as at 12 October 2026. It is covered in its own section below; none of it is law yet.

Who it applies to

Two tests have to be met: the person must be a "RAM taxpayer", and each holding must be a qualifying interest.

The person

• A natural person who became a New Zealand resident, neither a transitional resident nor treated as non-resident under a double tax agreement, on or after 1 April 2024, and was a non-resident for at least five years before that. This covers new migrants and New Zealanders returning after five years or more away.
• Transitional residents. A person whose transitional residence ends on or after 31 March 2024 is eligible even if they became resident before 1 April 2024 (Act commentary, Example 16). While someone is still a transitional resident they have no FIF income, so the RAM matters from the year their transitional residence ends.
• A family trust qualifies if its principal settlor meets the test. It is tested once, when the trust chooses the RAM.

The holdings

For the ordinary RAM, a qualifying interest is a share in a foreign company that was acquired before the person became a New Zealand tax resident (including before they became a transitional resident) and that:

• is not listed on any stock exchange,
• has no effective redemption facility for market value, and
• is not in an entity that derives 80% or more of its value from shares that fail either test above.

That is aimed at start-up and private-company shares, including shares received after arrival under an employee share scheme entered into before arrival. It does not cover listed shares, ETFs or index funds: the commentary's own example rules out an S&P 500 index fund. Foreign superannuation schemes and life insurance policies are excluded. Shares bought after arriving are not eligible (IRD, Guide to foreign investment funds, IR461, April 2026, pp. 17–18).

The extended RAM: US citizens and similar cases

An eligible person may apply the RAM to all their foreign shares, listed or unlisted, if they are generally liable to tax in another country on the disposal of those shares because of their citizenship or a right to work and live there. That country must have a tax treaty with New Zealand and must tax share disposals: citizenship of a country with no capital gains tax does not qualify. Holding a special exemption in that country for one particular sale does not remove eligibility. The commentary's examples are US citizens. The extended RAM ends if the person stops being taxed that way, for instance by renouncing citizenship, and the holdings that do not qualify for the ordinary RAM are then treated as sold at market value.

How the revenue account method works

• Dividends derived from a RAM interest are FIF income in full, at the marginal rate, in the year they are derived. The amount includes any foreign withholding tax allowed as a credit (s EX 56B(2)).
• Gains and losses on disposal are discounted by 30%: (disposal proceeds − cost − foreign accruals) × 0.7. "Foreign accruals" is the gain or loss that built up while the interest was not taxable, for example before arrival or during transitional residence. There is no deemed disposal on arrival or at the end of transitional residence.
• A valuation is needed to work out the foreign accruals: the market value when the RAM starts to apply, obtained by the later of 12 months from acquisition or from when the RAM applied, and the due date of the first return using the RAM. If the value can only be found by independent valuation and the client chooses not to get one, a time-based apportionment of the whole gain can be used instead.
• Losses are ring-fenced. A loss on disposal can only be set against RAM dividends and RAM gains; any excess is carried forward to later years.
• One election, portfolio-wide. The RAM is chosen in the first year the person has FIF income, which the commentary says is generally the later of the end of transitional residence and the year the NZ$50,000 de minimis is exceeded. It then applies to every eligible share; other FIF interests use another method. Once another method has been applied, the RAM cannot be chosen later. A person whose transitional residence ended in 2024–25 is treated as first having FIF income in 2025–26, so they can still choose it (s EZ 32H).
• Electing out is possible, but every RAM interest is then treated as sold at market value immediately before the next income year begins.
• Leaving New Zealand. On becoming non-resident, the person is treated as disposing of all RAM interests at market value. The tax on that deemed disposal crystallises only for interests sold within three years of leaving, using the value at departure, not the later sale price; for interests not sold in that time, or if the person returns within it, the deemed disposal is reversed. A sale within the three years must be notified to Inland Revenue through myIR by the filing date for the year of sale (IR461, p. 18). The tax is due on the person's terminal tax date.

The NZ$50,000 de minimis is unchanged by the RAM: it still decides whether the client has FIF income at all, and under the law in force it is a test on cost (IR461).

What the 2026 bill would change

These are proposals in the bill as introduced (bill commentary, 10 September 2026, pp. 44–49 and 58; Inland Revenue information sheet, 28 May 2026). Inland Revenue notes that they may change as the bill goes through Parliament.

• The RAM for every resident. All natural persons and eligible trustees could use the RAM for unlisted foreign shares, whenever they arrived. From 1 April 2026, for the 2026–27 and later income years.
• The extended RAM without the arrival date. Anyone subject to concurrent taxation by citizenship or a right to work in another country could use it for all their foreign shares, listed and unlisted. The concurrent-taxation condition stays.
• Opting in and out. Instead of choosing at the first opportunity, a person could opt in at any time, then must stay in for five consecutive income years; after opting out, they could not opt back in for five years.
• De minimis of NZ$100,000. The FIF de minimis threshold would rise from NZ$50,000 to NZ$100,000 from the 2026–27 income year, with the four-year look-back reading each year's own threshold.
• Time-based apportionment would exclude days as a transitional resident or as a treaty non-resident.
• Exit tax on a treaty tie-break. From 1 April 2027, becoming treated as non-resident under a double tax agreement would trigger the same deemed disposal as leaving New Zealand.

A worked example (illustrative)

The figures are invented to show the arithmetic; the 5% fair dividend rate is from IR461 and the 33% marginal rate is the one Inland Revenue uses in its own RAM example. A US citizen moves to New Zealand after more than five years abroad. Assume her transitional residence ends on 31 March, so her first FIF year starts on 1 April, and that she elects the extended RAM for her listed foreign shares. They cost NZ$250,000 and are worth NZ$400,000 on 1 April. Exchange rates, foreign tax credits, the comparative value method and US tax are left aside.

• Fair dividend rate. 5% × 400,000 = 20,000; 20,000 × 33% = 6,600. The dividends are not taxed separately.
• RAM, first year. Only the 6,000 received is income: 6,000 × 33% = 1,980.
• RAM, a later sale. In year three she sells shares that cost NZ$100,000, were worth NZ$160,000 when the RAM began, for NZ$190,000. Foreign accruals are 160,000 − 100,000 = 60,000. FIF income is (190,000 − 100,000 − 60,000) × 0.7 = 21,000, and NZ tax at 33% is 6,930, on top of that year's dividends.

The RAM does not always cost less. It moves the tax to the year of sale and taxes 70% of the gain actually made, so the comparison depends on what the shares return, when they are sold, and how the US taxes the same sale. The example also leaves out the valuation the client needs for the foreign accruals.

What to check with a client

• When did they become a New Zealand resident, and when did (or will) their transitional residence end? Was it on or after 1 April 2024, or did transitional residence end on or after 31 March 2024?
• Were they non-resident for at least five years before that?
• For each foreign holding: listed or not, any effective redemption facility, a fund or holding company, and acquired before or after arrival (or under an arrangement made before arrival)?
• Are they taxed on share disposals by another treaty country because of citizenship or a right to live and work there, as a US citizen or Green Card holder is?
• Has a FIF method already been used in a return? Under the law in force, that closes the RAM.
• Is a market valuation on file for the date the RAM started to apply, or will time-based apportionment be used?
• Is a departure likely within the next few years? Sales in the three years after leaving bring the exit tax into play.
• For a family trust: does the principal settlor qualify?

The election and the valuation belong with the client's tax adviser. The portfolio review can make sure the question is asked before the first FIF return is filed.

What Borderfolio shows today

Borderfolio for Advisors screens New Zealand FIF on the method most listed portfolios use. For a New Zealand resident it classifies each holding (New Zealand shares and PIEs are not FIF interests, ASX companies are exempt under s EX 31, Australian unit trusts only when you confirm s EX 32), applies the NZ$50,000 test to cost from the client's confirmed statements, shows no FIF income for a client you mark as a transitional resident, estimates fair dividend rate income on today's value with the US withholding credit capped at 15%, and compares S&P 500 and total-world trackers with the same exposure in a PIE. For US citizens it also screens non-US funds as possible PFICs.

• Not modelled yet: the revenue account method and the extended RAM. For a client who has elected the RAM, the FIF figure on screen is the fair dividend rate alternative, not the tax they will pay. Holdings are not marked as RAM-eligible.
• Also not modelled: the comparative value method, the quick sale adjustment and the exchange-rate election.
• The proposed NZ$100,000 de minimis is not applied; the test uses NZ$50,000, the threshold in force.

The documentation lists every input of the FIF screen, and New Zealand FIF tax for advisers works through the fair dividend rate and the PIE comparison.

Sources: Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Act 2026, ss 2(28), 64 and 68, Inland Revenue Act commentary, "Foreign investment fund – revenue account method", IRD, Guide to foreign investment funds (IR461, April 2026), Inland Revenue information sheet "Foreign investment fund changes" (28 May 2026), bill commentary (10 September 2026), Inland Revenue bill progress page.

Frequently asked questions

Does the revenue account method cover a new resident's ETFs?

Usually not. Under the rules in force, the ordinary RAM covers only foreign shares that are not listed, have no effective redemption facility for market value and are not in an entity that gets 80% or more of its value from such shares. Inland Revenue's own example says an S&P 500 index fund is not eligible. Listed shares are covered only under the extended RAM, for people also taxed on share disposals by another treaty country on the basis of citizenship or a right to live and work there.

Can a client choose the revenue account method later?

Under the law in force, the choice is made in the first year the client has FIF income, generally the later of the end of transitional residence and the year the NZ$50,000 cost threshold is passed. Once another FIF method has been applied, the RAM cannot be chosen afterwards. The bill introduced on 10 September 2026 would allow opting in at any time, with a five-year consistency rule, but it is not law yet.

What happens if a client using the revenue account method leaves New Zealand?

They are treated as disposing of their RAM interests at market value immediately before becoming non-resident. The tax on that deemed disposal is only payable for interests actually sold within three years of leaving; for the rest, the deemed disposal is reversed. A sale within the three years must be notified to Inland Revenue by the filing date for that year.