Tax for Overseas Income
Updated for 2026 IRD rates
New Zealand's Worldwide Tax System
New Zealand taxes its residents on their worldwide income. This means if you're a New Zealand tax resident, you must declare income earned anywhere in the world in your New Zealand tax return. This includes employment income, investment income, rental income, business profits, and capital gains from overseas sources.
Non-residents are only taxed on income that has a New Zealand source (such as rental income from a New Zealand property or salary earned while working in New Zealand).
Residency Rules
You are a New Zealand tax resident if you meet either of the following tests:
The 183-Day Rule
You are a tax resident if you are physically present in New Zealand for 183 days or more in any 12-month period. Once you meet this test, you become a resident from the first day of that 12-month period.
The Permanent Place of Abode Test
Even if you spend fewer than 183 days in New Zealand, you may still be a tax resident if you have a permanent place of abode here. This considers factors such as:
- Whether you own or maintain a home in New Zealand
- Your family and social connections
- Your economic interests (bank accounts, investments, business)
- The frequency and length of your visits to New Zealand
- Your personal property and belongings in New Zealand
If you leave New Zealand permanently, you may become a non-resident for tax purposes after a transitional period. Contact IRD for a formal determination of your residency status.
Foreign Investment Fund (FIF) Rules
If you hold shares in foreign companies (outside Australia or New Zealand) worth more than $50,000 cost at any time during the year, the FIF rules may apply. Under these rules, you must pay tax on investment gains from certain foreign investments, even if you haven't sold them or received any income.
The FIF rules use one of several calculation methods, including:
- Fair Dividend Rate (FDR): 5% of the opening value of the investment is treated as deemed income
- Comparative Value (CV): Based on the actual change in value of the investment over the year
- Cost method: For certain types of investments
Exemptions apply for investments in Australian listed companies, certain venture capital investments, and where the total cost of all FIF interests is under $50,000.
Double Tax Agreements (DTAs)
New Zealand has double tax agreements with over 40 countries. These agreements prevent the same income from being taxed twice — once in New Zealand and once in the foreign country. Typically, DTAs provide:
- That certain types of income are only taxable in one country
- That the foreign tax paid can be credited against your New Zealand tax liability
- Reduced withholding tax rates on dividends, interest, and royalties
If you've paid foreign tax on income that is also taxable in New Zealand, you can claim a foreign tax credit in your New Zealand tax return. The credit is generally the lower of the foreign tax paid or the New Zealand tax payable on that income.
Reporting Overseas Income
Overseas income is reported in your annual IRD tax return:
- Employment income: Include gross foreign wages in NZ dollars
- Investment income: Include interest, dividends, and FIF income
- Rental income: Include net rental income from overseas properties
- Business income: Include profits from overseas businesses
You must convert foreign income to New Zealand dollars using the exchange rate at the time you earned the income (or an approved annual average rate).
The $50,000 FIF Threshold and How It Works
New Zealand's Foreign Investment Fund (FIF) rules apply to shares and interests in foreign companies (including overseas index funds and ETFs) once your total cost of those investments exceeds NZ$50,000. Below the threshold, you are taxed only on dividends actually received (and gains are generally not taxed, since NZ has no capital gains tax). Above it, you must use one of the FIF calculation methods — the fair dividend rate (FDR) method, which taxes 5% of the opening market value each year regardless of actual returns, is the default. The FDR method means a year of 15% growth is taxed as if you earned 5%, while a loss year still triggers tax on the deemed 5% — a quirk worth understanding before you hold large offshore portfolios. The $50,000 threshold is per person, so couples can each hold up to $50,000 before the rules apply.
Residency, Transitional Residence and Foreign Tax Credits
You are a New Zealand tax resident if you are in NZ for 183 days or more in any 12-month period, or if you have a permanent place of abode here. New residents get transitional residence for four years: most foreign income (including foreign pensions and FIF income) is exempt during that window — a valuable planning period for migrants bringing existing investments. Once a full resident, you are taxed on worldwide income, but New Zealand's double tax agreements with around 40 countries let you claim a credit for foreign tax paid, so the same dollar is not taxed twice. Practical steps: declare overseas salary, rental, interest and dividend income in your return; use myIR's foreign income pages; and keep evidence of foreign tax paid to support the credit claim.
Related Guides
Deep dive — 2026 update
The transitional resident window, in practice
Most new arrivals are transitional residents for the four years after they become NZ tax residents (excluding the year they arrive). During that window, most foreign-sourced passive income is exempt: dividends, interest, royalties, rent from overseas property and foreign-sourced gains are outside the NZ tax net.
| Income type | Transitional resident (years 1–4) | After the window |
|---|---|---|
| Foreign dividends and interest | Exempt | Taxable; FIF rules may apply |
| Overseas rental income | Exempt | Taxable on worldwide basis |
| Employment income for NZ work | Taxable | Taxable |
| Employment income for overseas work (while NZ resident) | Taxable | Taxable |
| NZ-sourced income | Taxable | Taxable |
The exemption does not cover salary — employment income for overseas work is generally taxable here unless a double tax agreement takes it out.
FIF in numbers
The foreign investment fund rules apply to most offshore shares, funds and insurance products once the $50,000 total cost threshold is exceeded. Below that, you simply declare actual dividends. Above it, two common methods:
- Fair dividend rate (FDR): 5% of the opening market value is treated as taxable income whether or not the investment rose.
- Comparative value (CV): the year's change in value plus dividends is taxable, so a down year produces a loss you can generally use.
Australian-listed shares and Australian superannuation interests are excluded from the FIF rules for most investors,.
Double tax agreements — the mechanics that actually matter
- You claim the tax treaty benefit in the country where you are resident — usually by filing a certificate of residency with the foreign payer to reduce withholding at source (for example, NZ–US withholding on dividends falls from 30% to 15%).
- Withholding already paid overseas becomes a foreign tax credit, claimed in your NZ return, capped at the NZ tax on that income. Unused credits are generally carried forward for four years.