The Revenue Account Method (RAM) explained

Under FDR and CV, you owe FIF tax every year, whether or not you've sold anything, and whether or not you've received any cash. The Revenue Account Method works differently. Under RAM, you only pay tax when something actually happens: when you sell shares, or when you receive a dividend.

For long-term investors sitting on offshore shares, this is a meaningful shift.

How RAM works

When you sell a qualifying investment:

• Your gain is calculated (sale price minus cost base)
• A 30% discount is applied: only 70% of the gain is treated as taxable income
• That 70% is taxed at your marginal rate as usual

Dividends are taxed in full at your marginal rate when received. No discount applies there.

Losses are ring-fenced: they can only be used to offset other RAM income (gains and dividends from the same investments), not against your broader income. Any unused losses carry forward to future years.

A simple example

You hold unlisted US shares. You bought them for $60,000 and sell for $100,000, a $40,000 gain. Under RAM:

• 70% of $40,000 = $28,000 taxable
• At a 33% marginal rate: $9,240 tax

Under FDR over the same period, you'd have been paying tax every year on 5% of your opening value, regardless of whether you sold anything or the shares actually grew.

Who can use RAM right now

The original RAM was introduced in Budget 2025 and applies from 1 April 2025. It was designed for recent migrants and returning Kiwis. To qualify under the original rules:

• You must have become a full NZ tax resident on or after 1 April 2024
• You must have been non-resident for at least 5 consecutive years before arriving
• The shares must have been acquired before you became a NZ resident
• The shares must be in unlisted foreign companies: no listed shares, no funds with market-value redemption facilities

Family trusts can also qualify if the principal settlor meets these criteria.

What Budget 2026 proposes

The Budget 2026 announcement proposes two significant expansions:

1. Ordinary RAM: open to all NZ residents

The main change: RAM for unlisted foreign shares would no longer be limited to recent migrants. Any NZ resident could elect to use it for qualifying unlisted investments, regardless of when they arrived or when they bought the shares.

This is particularly relevant for investors in startups, private equity, or any unlisted overseas company, where FDR's annual deemed return doesn't reflect reality well.

2. Extended RAM: for those facing double taxation

A broader version of RAM is proposed for NZ residents who are also taxable in another country based on citizenship or the right to work there. Most commonly this applies to US citizens and Green Card holders, who are taxed by the US on worldwide income regardless of where they live.

Extended RAM removes the restriction to unlisted shares. It would cover all foreign shares, including listed ones, as long as:

• You're subject to tax in another country on the same shares
• That country has a Double Tax Agreement with New Zealand

The intent is to avoid situations where an investor is taxed twice: once under NZ's annual FIF rules, and again when the other country taxes the gain on sale.

Should you use RAM?

RAM is not automatically better than FDR or CV. It depends on what you hold and how you invest.

It tends to suit you if you:

• Hold shares for a long time without selling
• Invest in unlisted companies, where FDR's annual deemed return is particularly awkward
• Have low or no dividends coming through
• Are a US citizen or otherwise face double taxation on the same investments

It's less likely to help if you trade in and out often, since RAM's whole advantage is deferring tax until you actually sell. Big dividend payers are a wash too, because RAM taxes dividends in full just like the other methods. And if you're in a lower tax bracket, FDR's 5% times your marginal rate may already be a small enough number that the paperwork isn't worth it.

Switching out is costly

Electing into RAM must happen in your first year with FIF income from eligible investments. Once in, RAM applies consistently going forward. If you later choose to stop using RAM, a deemed disposal at market value is triggered, treated as if you sold everything on that date, and you cannot re-elect RAM for those shares again.

This makes the decision worth thinking through carefully before electing.

What happens when you leave NZ?

If you leave New Zealand while holding RAM investments, there's a deemed disposal at fair market value on departure, similar to other FIF exit rules. However, if you hold onto the investment and sell more than three years after leaving NZ, no NZ tax applies on that eventual sale.

What's still to be confirmed

The Budget 2026 expansion (RAM for all NZ residents and extended RAM for dual-tax situations) is a proposal. The legislation still needs to pass through parliament. Until then:

• The original migrants-only RAM applies from 1 April 2025
• FDR and CV remain the default methods for everyone else
• We'll update this page when the legislation is confirmed