The $50,000 threshold explained

One of the first things to work out with FIF is whether you're even above the threshold. If the total cost of your overseas investments stayed under NZD $50,000throughout the whole tax year, FIF rules don't apply. You just declare any dividends as normal income and move on.

Cost price, not market value

The $50,000 threshold is based on what you paid for your investments(the cost price), not what they're currently worth.

For example: you bought $45,000 worth of US shares over the last couple of years. They've grown to $70,000 in value. The threshold is still based on the $45,000 you paid, so you're under the threshold, and FIF doesn't apply.

This is good news for long-term investors who bought early. Their cost base is lower than their current portfolio value, which means they might stay under the $50k threshold for longer than they think.

“At any point during the year”

The threshold is checked against whether your cost base exceeded $50,000 at any point during the tax year, not just at the end. So if you bought $55,000 of US shares in November and then sold $10,000 worth in February, you'd still be subject to FIF for that whole year, because you crossed the threshold in November.

All your foreign investments combined

The threshold applies to all your overseas investments combined, not each one separately. So if you have $30,000 in US shares, $15,000 in a global ETF, and $10,000 in Australian shares (if they don't qualify for the Australian exemption), that's $55,000 combined, which puts you over the threshold.

What happens when you cross $50k?

Once you're over the $50,000 threshold, FIF rules apply for the entire tax year(not just the period after you crossed it). You'll need to calculate your FIF income under either the FDR or CV method and include it in your tax return.

This is why keeping an eye on your cost basis as you invest is useful. Crossing the threshold triggers a meaningful change in how you're taxed.

Currency conversions

Everything needs to be in NZD for the threshold check. If you hold US dollar investments, you'll need to convert using the exchange rate at the time of purchase (or IRD's approved rate).