Most people who have bought $50k to $100k of overseas shares not wealthy — minister

Thursday, 11 June 2026

Inland Revenue figures suggest only tens of thousands of New Zealanders have directly invested more than $50,000 in overseas shares.

But Revenue Minister Simon Watts has rejected the assertion that those whose purchases total less than $100,000 and who stand to gain from a tax change in Budget, could be described as mostly wealthy.

Individuals who have cumulatively spent more than $50,000 on overseas shares that they still own, and couples who have spent more than $100,000, have been required to pay tax on their investments every year, even if they did not sell them. The threshold is based on what investors paid for their shares, rather than their current market value.

They would include people who directly bought sufficient shares in the likes of Alphabet or Rocket Lab.

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However, the thresholds were doubled to $100,000 for individuals and $200,000 for couples who split their investments in one of the few Budget measures that reduced tax revenue, in a Budget otherwise focused on spending restraint.

That, and some other more technical changes benefiting people with overseas assets, will come at an expected cost to the Crown of $17 million a year in foregone tax revenue.

The easiest and most common option for investors who exceed the threshold has been to pay tax under the Foreign Investment Fund (FIF) regime, which generally treats 5% of the opening market value of their overseas share portfolio as taxable income each year.

That is generally in lieu of any tax on dividends from those shares.

The FIF regime was originally created to reflect a concern that US companies, in particular, prioritised capital growth over dividends, so returns could be tax free if investors were not paying tax on their capital gains.

Investments in some Australian-listed shares have been excluded from the FIF regime.

Watts justified the increase in the FIF threshold by noting that share-trading platforms such as Hatch and Sharesies had made it easier to invest overseas, while the FIF threshold had not been updated to reflect inflation since 2000.

“More and more small investors are falling within scope of the FIF rules, increasing their compliance costs,” he said.

“Our Government is also interested in ensuring people with skills remain in New Zealand, and the FIF rules are a commonly cited barrier to these people remaining in New Zealand.”

According to Inland Revenue, only 33,710 people declared income under the FIF regime in the year ending March 2024, up from 18,690 the previous year.

However, Watts denied it was mostly wealthy individuals who would benefit from the threshold change, adding that people with investments with a cost base over $100,000 would continue to be taxed under the FIF rules.

“The change is about reducing compliance costs and complexity for people with smaller offshore holdings. The change will not benefit the wealthiest investors at all,” he said.

Deloitte tax partner Robyn Walker said the threshold increase would lift “a mental burden” for a new generation of sharemarket investors who had been bumping into the previous threshold.

Whether individuals who had directly invested more than $50,000 in overseas shares could be classed as wealthy was quite subjective, she said.

“It kind of depends on what else do they have?

“Obviously, one of the reasons that people invest in overseas shares is to have that diversification of risk — not having all their eggs in the New Zealand basket.”

Labour revenue spokesperson Deborah Russell did not criticise the Budget move, which she said did not make a substantial difference to the amount of tax people would pay but did make it easier for them to calculate how much they ought to pay.

“People with investments overseas will still be required to pay tax on the income they earn,” she said, reflecting the fact that income from dividends derived from shares outside of the FIF regime are liable for income tax.