A Foreign Investment Fund (FIF) is a weirdly complicated name for different types of overseas investments. These include:
- Shares in overseas companies (like what you buy through Hatch)
- a foreign unit trust (despite its name these are not trusts, these could be things like foreign mutual funds)
- Any overseas superannuation schemes
- Life insurance policies you took out through an overseas provider.
These overseas investments are classified as FIF ‘income’. However, unlike other income you earn (like your salary or wages), there is a specific way to calculate FIF income.
When you have more than $50,000 NZD invested overseas in FIFs, a set of rules will apply to you. You will need to work out how much FIF income you have made during the tax year using one of two methods.
But if you have less than $50,000 NZD invested, then standard income tax rules apply.