NEW ZEALAND Trends and Developments Contributed by: Alex Neal, Violet Yu, Sandy Chen and Jonathon Russell, Cone Marshall Limited
tion tax credits being misused for aggressive tax plan - ning. This new change is met with challenges. Many ques - tion the effectiveness of such taxation changes in improving the philanthropy landscape in New Zea - land. This change may only impact a small percent - age of New Zealand’s population; however, this small percentage also have the most ability to support large-scale improvements in social and environmen - The New Zealand government announced a change in the foreign investment funds (FIF) regime. The FIF regime comprises special tax rules that apply to off - shore investments in FIF. These include: • an offshore investment that is a foreign company; • a foreign unit trust; • a foreign superannuation scheme; or • an insurer under a foreign life insurance policy. The FIF income is attributed to the investor, whether or not the investor actually received such income. It is therefore a deemed income taxation regime under which investors are taxed for deemed income rather than actual income realised. tal issues. FIF Rules The FIF regime applies to investment amounts exceeding NZD50,000 within the tax year. The change will increase the FIF regime threshold from NZD50,000 to NZD100,000. This change is in response to the real - ity that New Zealand’s share market is dividend-heavy compared to other counterparts, which may have more capital gains to which the FIF regime does not apply. Previously, the FIF regime applied to all investors’ deemed income. On 1 April 2025, the government introduced changes, allowing new immigrants and returning New Zealanders to be taxed for only real - ised income rather than deemed income because it was considered unfair and difficult for immigrants and returning New Zealanders from a tax planning perspective. The method of calculation for realised income from FIF was called the revenue account method (RAM).
In the New Zealand government budget announce - ment in 2026, it was announced that RAM rules are now extended to all New Zealand taxpayers for unlisted foreign shares. This initiative seeks to improve investment settings by New Zealanders and allows New Zealand taxpayers to have more complex diver - sified portfolios. Some continue to question whether this is extensive enough to encourage an investment- friendly environment in New Zealand. Amendments to Overseas Investment Act 2005 The Overseas Investment Act 2005 regulates over - seas entities’ ability to make investments within New Zealand, particularly in relation to sensitive New Zea - land assets. Reforms were introduced by the Over - seas Investment (National Interest Test and Other Matters) Amendment Act, which came into effect on 6 March 2026. The amendment now allows overseas investors to make investments in residential property worth NZD5 million or more subject to the investors having an “Active Investor Plus”, Investor 1 or Investor 2 resi - dency visa. The key change is the update of the consent process by consolidating the tests for national interest, benefit to New Zealand and investor tests into a single test for all assets excluding farmland, fishing quota and resi - dential land. Previously there were separate tests for investor, benefit to New Zealand and national interest test. The consolidation brought into effect a simpler framework for a more efficient process. The new consolidated test is a new three-stage National Interest Test that takes a risk-based approach and focuses on managing the risks identified. The first stage is to identify the risk, the second stage is to assess the risk and the third stage is for the minister to determine whether or not to decline consent. The changes, along with the revised purpose state - ment of the Overseas Investment Act 2005, seek to balance recognising the increase in economic oppor - tunity for overseas investment against protecting and controlling the ownership of sensitive New Zealand assets.
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