Do Australians Pay Capital Gains Tax (CGT) on shares while living in New Zealand?
- Mitchell Kelsey
- 3 hours ago
- 7 min read
One of the most common questions Australian Expats ask after moving across the Tasman is:
Do Australians pay Capital Gains Tax (CGT) on shares while living in New Zealand?
The answer is not always straightforward. While Australia generally stops taxing capital gains on shares once you become a non-resident for tax purposes, New Zealand has its own unique tax rules that can apply to foreign investments.
Understanding Capital Gains Tax (CGT) on shares while living in New Zealand is important for Australian Expats who continue to hold Australian shares, invest through Australian brokerage accounts, or build investment portfolios after relocating to New Zealand.
Australia's Position on Capital Gains Tax for Non-Residents
Once you become a non-resident for Australian tax purposes, Australia will generally not tax capital gains on shares or Exchange-Traded Funds (ETFs) that you acquire after leaving Australia.
This is because most listed shares and managed investments are classified as Non-Taxable Australian Property (NTAP). As a result, gains made from buying and selling Australian or overseas shares while living in New Zealand are typically not subject to Australian Capital Gains Tax (CGT).
If you already owned shares or ETFs before becoming an Australian tax non-resident, it is important to consider Australia's deemed disposal rules. In some cases, you may be treated as having disposed of those investments when your Australian tax residency ceased, potentially triggering a CGT event.
It's also important to remember that just because Australia may not tax capital gains on shares does not mean it will be tax-free. Your New Zealand tax obligations will depend on your tax residency status there and the nature of your investments.
Transitional Tax Residency in New Zealand
New migrants and returning New Zealanders may qualify for New Zealand's transitional tax residency rules. A transitional tax resident is generally someone who:
Becomes a New Zealand tax resident on or after 1 April 2006;
Was not a New Zealand tax resident during the previous 10 years; and
Is either a new migrant or a returning New Zealander.
Eligible individuals receive a temporary exemption from New Zealand tax on most foreign-sourced income for up to four years.
This exemption can apply to:
Overseas rental income;
Foreign interest income;
Foreign dividends; and
Many other forms of foreign investment income.
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However, some income remains taxable, including certain foreign employment and services income.
For many Australians moving to New Zealand for the first time, these transitional residency rules can provide valuable tax relief during their initial years of residency.
Understanding the Foreign Investment Fund (FIF) Rules
When discussing Capital Gains Tax (CGT) on shares while living in New Zealand, the most important concept is New Zealand's Foreign Investment Fund (FIF) regime.
For Australian Expats who are New Zealand tax residents and no longer qualify as either a non-resident or a transitional resident in NZ, the FIF rules can apply to many foreign investments, including Australian shares, unit trusts (such as ETFs) and managed funds.
Unlike Australia, New Zealand generally does not have a broad-based capital gains tax. Instead, many foreign share investments are taxed under the FIF rules.
The FIF regime commonly applies to:
Foreign listed shares;
Australian shares;
International Exchange Traded Funds (ETFs);
Australian managed funds;
Foreign unit trusts; and
Certain foreign superannuation arrangements.
For most investors holding less than a 10% ownership interest in a foreign company, the portfolio FIF rules will apply.
The $50,000 FIF Exemption
A key concession exists for individual investors.
The FIF rules generally do not apply if the total cost of all FIF investments remains below NZD $50,000 throughout the entire tax year. This exemption is available only to individuals and does not apply to companies or most trusts.
Importantly, if the $50,000 threshold is exceeded during an income year, the exemption is lost, and all FIF investments become subject to the FIF regime for that year.
Exempt Australian Shares
Not all Australian shares are subject to the FIF rules.
Many shares listed on the Australian Securities Exchange (ASX) are exempt where certain conditions are satisfied, including that the company:
Is an Australian tax resident;
Is included in an approved ASX index; and
Maintains a franking account under Australian tax law.
Where an investment qualifies for this exemption, normal taxation rules generally apply to dividends and distributions rather than the FIF regime.
How the Fair Dividend Rate (FDR) Method Works
For most foreign shares that fall under the FIF regime, the default calculation method is the Fair Dividend Rate (FDR).
Under the FDR method, taxable income is generally calculated as 5% of the market value of qualifying foreign investments held on 1 April each year.
Importantly, the tax is based on a deemed return rather than actual investment performance.
For example, if your qualifying foreign share portfolio is worth NZD $200,000 on 1 April, your FIF income would generally be NZD $10,000 for that tax year, regardless of whether the portfolio increased or decreased in value.
This means investors may pay tax even when they have not sold any investments or realised any gains.
What Happens When You Buy and Sell Shares During the Year?
Shares held on 1 April are generally included in the FDR calculation for the entire tax year.
However, special "quick sale" rules apply where foreign shares are purchased and sold within the same tax year.
These rules are designed to prevent investors from avoiding FIF taxation by buying investments after 1 April and selling them before 31 March.
Under the quick sale rules, the taxable amount is generally the lower of:
5% of the cost of the shares; or
The actual gain made on the shares.
Dividends and Capital Gains Under FDR
One of the unique features of the FIF regime is that dividends and capital gains are generally not taxed separately when the FDR method applies.
Because the 5% deemed return is intended to represent the total investment return:
Dividends are not separately taxed;
Realised capital gains are not separately taxed; and
Capital losses are generally not deductible.
Foreign withholding tax deducted from overseas dividends may also still be available as a foreign tax credit.
The Comparative Value (CV) Method
Investors may sometimes choose to use the Comparative Value (CV) method instead of FDR.
The CV method taxes the actual economic return from foreign investments, including:
Realised gains;
Unrealised gains; and
Dividends received.
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This method can be beneficial in years where total investment returns are less than 5%.
However, if you elect to use the CV method, it generally applies across all FIF investments for that tax year rather than allowing you to choose different methods for different investments.
The New Revenue Account Method (RAM)
A significant change to New Zealand's FIF rules was introduced through the Taxation (Annual Rates for 2025-26, Compliance Simplification, and Remedial Measures) Act 2026.
The new Revenue Account Method (RAM) is designed to make New Zealand more attractive to migrants and returning residents by allowing them to calculate FIF income on a realisation basis (as opposed to unrealised).
Under RAM, eligible investors are taxed on:
Dividends received; and
70% of realised gains on qualifying foreign share sales
This effectively provides a 30% discount on realised capital gains.
To qualify, an individual must generally:
Become a New Zealand tax resident on or after 1 April 2024;
Have been non-resident for at least five consecutive years before arrival; and
Not be a transitional tax resident.
Importantly, RAM primarily applies to qualifying unlisted foreign shares, meaning many commonly held listed share portfolios and ETFs will not qualify.
So, do Australians Pay Capital Gains Tax (CGT) on shares while living in New Zealand?
The short answer is: usually not in Australia, but potentially in New Zealand through the FIF regime.
For Australian non-residents, Australia generally does not tax gains on most shares. However, New Zealand residents may become subject to the FIF rules, which can effectively tax investment returns through a deemed income calculation, even when no shares have been sold.
The outcome depends on several factors, including:
Your New Zealand tax residency status;
Whether you qualify as a transitional resident;
The value of your foreign investments;
Whether FIF exemptions apply;
The type of investments you hold; and
Whether alternative calculation methods such as CV or RAM are available.
Because the rules are complex and can significantly impact long-term investment returns, Australian Expats living in New Zealand should seek specialist advice before restructuring portfolios, selling investments, or making large new investments.
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Portfolio Investment Entities (PIEs)
Many New Zealand-based managed funds, KiwiSaver funds, and certain listed investment vehicles operate under New Zealand's Portfolio Investment Entity (PIE) regime.
Under the PIE rules, investment income is generally taxed within the fund at your Prescribed Investor Rate (PIR), rather than being included in your personal tax return. The current PIR rates are 10.5%, 17.5%, and 28%, with 28% being the maximum rate. Your PIR is determined based on your taxable income over the previous two New Zealand tax years.
Because PIE investments are subject to a separate set of tax rules, they are generally not taxed under the Foreign Investment Fund (FIF) regime discussed in this article. While PIEs can offer a tax-efficient investment structure for New Zealand residents, the rules are complex and beyond the scope of this blog.
Conclusion
Understanding Capital Gains Tax (CGT) on shares while living in New Zealand is essential for Australian Expats who maintain investment portfolios after relocating.
While Australia generally ceases taxing capital gains on shares once you become a non-resident, New Zealand's Foreign Investment Fund regime introduces a very different approach to taxing offshore investments.
Getting the structure right from the outset can help minimise unexpected tax outcomes and ensure your investment strategy remains aligned with both Australian and New Zealand tax rules.
If you are considering a move to New Zealand from Australia, read our guide for Australian Expats moving to New Zealand.
Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.
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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.
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