Not every overseas investment is a FIF. New Zealand companies are never FIFs, most ASX-listed Australian companies are specifically exempt, and anything you hold through KiwiSaver or a NZ PIE fund is the fund's problem, not yours. The catch is in the detail: the Australian exemption covers companies but usually not ASX-listed ETFs, an NZX listing doesn't make a foreign company local, and IRD has a lookup tool that settles the question share by share.
This guide covers the exemptions that matter to ordinary investors. For what the FIF rules are in the first place, start with what FIF tax is. And remember the $50,000 de minimis threshold sits in front of all of this: stay under it and the FIF rules generally leave you alone regardless.
Where the exemptions fit
A FIF is, broadly, a foreign company or fund (the pillar guide has the full definition). An exemption means your holding isn't an attributing interest: you don't calculate FIF income on it, and other tax rules apply instead. Usually that means the ordinary ones, where you return the dividends you actually receive.
The Income Tax Act 2007 lists the exemptions in sections EX 31 to EX 43B. Most are narrow. Two of them do almost all the work for retail investors: the ASX-listed Australian share exemption, and the fact that NZ PIE funds handle the FIF rules internally.
The ASX exemption
Section EX 31 exempts shares in a company that meets all four of these conditions:
- it's listed on the official list of ASX Limited
- it's an Australian tax resident, and not treated as resident in another country under one of Australia's tax treaties
- it maintains a franking account (Australia's version of an imputation credit account), and
- it isn't stapled stock.
BHP, Commonwealth Bank, Wesfarmers and most of the familiar big Australian names qualify. When the exemption applies, there's no FIF income from the holding. You return the dividends in your tax return like ordinary income, and capital gains are only taxed if you hold the shares on revenue account, which for most buy-and-hold investors they aren't.
Don't guess, though. IRD runs a lookup tool that tells you whether a given share qualifies for the exemption in a given year: ird.govt.nz/fif-australia-tool. A company can drop out of the exemption if, say, its tax residence changes, so a share that qualified last year is worth re-checking.
💡 Good to know: the exemption is decided per company, not per exchange. An ASX listing satisfies one condition of four; IRD's tool settles the rest.
Why ASX ETFs usually miss out
The trap that catches the most people: s EX 31 exempts shares in a company. The popular ASX-listed ETFs (VAS, VGS and their peers) are Australian unit trusts, not companies, so they fall outside it. There's a separate exemption for Australian unit trusts (s EX 32), but its conditions around turnover and distributions are narrow, and the big index ETFs generally don't meet them.
So an investor who buys Vanguard's Australian Shares ETF thinking "Australian, therefore exempt" usually has a FIF. The same fund's underlying companies would mostly be exempt if held directly. Odd, but that's how the sections are drawn. When in doubt, put the ticker through IRD's tool.
Where does that leave common holdings?
| Your holding | FIF or not? |
|---|---|
| Australian-resident company on the ASX (BHP, CBA, ...) | Usually exempt: confirm with IRD's tool |
| ASX-listed ETF (VAS, VGS, ...) | Usually a FIF: it's a unit trust, not a company |
| US or other non-Australian company, on any exchange | A FIF |
| NZ company listed on the NZX | Not a FIF: it isn't foreign |
| Foreign company listed on the NZX | A FIF, unless the ASX exemption happens to cover it |
| Smartshares, Kernel or another NZ PIE fund | The fund applies the FIF rules, not you |
| KiwiSaver | The fund applies the FIF rules, not you |
An NZX listing doesn't make a share local
What matters is where the company is resident, not where you bought it or which exchange it trades on. A New Zealand company is never a FIF. An Australian or American company is foreign wherever it's listed, including on the NZX. Dual-listed Australian companies can still qualify for the ASX exemption (the conditions look at the company, and an NZX listing doesn't disqualify it), but a US company that happens to trade on the ASX or NZX qualifies for nothing.
KiwiSaver and PIE funds: handled for you
Strictly speaking this isn't an exemption at all. When you invest through KiwiSaver or another NZ portfolio investment entity, the fund holds the foreign shares, so the fund runs the FIF calculation and pays tax at your prescribed investor rate. Your interest in the PIE isn't a FIF, there's nothing for you to calculate, and none of it counts toward your $50,000 threshold. The trade-offs between holding through a PIE and holding shares directly are the subject of PIE fund or direct shares.
Own 10% or more of an Australian company?
A different exemption (s EX 35) covers income interests of 10% or more in a FIF that's resident and subject to tax in Australia. Cross it and you're out of the FIF rules for that holding, back to ordinary tax on dividends, and into disclosure territory. The 10% test counts indirect interests too, so shares held through another company you part-own can push you over. If this is you, the calculation belongs with an accountant; it's well outside typical broker-portfolio territory.
The rest of the list
The remaining exemptions are narrow, and most investors will never touch them:
- Employee share schemes (s EX 38): certain shares acquired through your employer's scheme.
- Venture capital interests (ss EX 36, EX 37, EX 37B): 10-year exemptions tied to NZ venture capital companies that migrate or take offshore investment.
- Foreign superannuation and pensions (ss EX 33, EX 41, EX 42B, EX 43): rights in Australian regulated super schemes, and some interests acquired while you were a non-resident. Foreign super mostly has its own regime outside the FIF rules.
- Exchange controls (s EX 40): where a country's currency controls stop you converting or withdrawing the investment.
- Returning share transfers (s EX 43B): share-lending arrangements, which the calculator flags and excludes from the maths if it spots the pattern.
If one of these looks like your situation, read the relevant section of IR461 rather than relying on a summary this short.
In short
- NZ companies are never FIFs; residence decides, not the exchange.
- Australian-resident ASX companies with a franking account are usually exempt. Check each one on IRD's tool.
- ASX-listed ETFs are unit trusts and usually are FIFs, despite being Australian.
- KiwiSaver and NZ PIE funds run the FIF rules for you, and don't count toward your $50,000.
- Exempt shares still produce taxable dividends. Exemption from FIF isn't exemption from tax.
Common questions
Does my Australian share count as a FIF?
If it's an Australian-resident company listed on the ASX that maintains a franking account and isn't stapled stock, it's usually exempt under s EX 31. Check the specific share on IRD's lookup tool at ird.govt.nz/fif-australia-tool, because not every ASX-listed company qualifies.
Are ASX ETFs like VAS or VGS exempt from the FIF rules?
Usually not. The ASX exemption covers shares in companies, and ASX-listed ETFs are Australian unit trusts. The separate unit trust exemption has narrow conditions that the big index ETFs generally don't meet, so they're normally FIFs and count toward your $50,000 threshold.
Do I apply the FIF rules to my KiwiSaver?
No. KiwiSaver schemes and other NZ PIE funds apply the FIF rules inside the fund and pay tax at your prescribed investor rate. Your KiwiSaver balance doesn't count toward the $50,000 de minimis threshold either.
Is a share listed on the NZX ever a FIF?
Yes, if the company is foreign. Residence decides FIF status, not the exchange. A US or Australian company traded on the NZX is still a foreign company, though an Australian one may qualify for the ASX exemption on its own merits.
What happens to dividends from exempt Australian shares?
You return them as ordinary income in the overseas income section of your IR3, the same way you'd handle any foreign dividend. The filing guide covers where they go. There's no FIF income on the holding, and no FIF calculation to do.
Sources: IR461 (exemptions table pp.6-7, ASX-listed Australian share exemption p.7, Australian-resident FIFs p.8), IRD's FIF exemption tool, and the exemptions in ss EX 31 to EX 43B of the Income Tax Act 2007.
This guide is general information, not tax advice. Always verify figures against IR461 and your year-end statements, and check anything important with a qualified NZ accountant before filing.