Feeling overwhelmed by the complexities of the taxation rules associated with Foreign Investment Funds (FIFs)? Don’t let offshore investments become a source of stress and uncertainty in your financial portfolio simply because you do not understand the income tax side of the investment equation.
Managing the taxation implications of foreign investments can feel like navigating a labyrinth of regulations and calculations. The solution to mastering your offshore investment taxation obligations can be as simple as having expert guidance when you need it most. Our Foreign Investment Funds (FIF) taxation advisory service can remove the headaches and hassle by ensuring your international investments are tax compliant, optimised, and working hard for your financial future.
With over 30 years in the industry, our tax specialists have navigated the complexities of the FIF taxation regime, through numerous changes and updates. We’ve helped countless clients ensure that they are compliant with their FIF reporting obligations.
A foreign investment fund (FIF) is an offshore investment that is:
- Shares in a foreign company
- Units in a foreign unit trust
- A foreign superannuation scheme (on rare occasions)
- An insurer under a foreign life insurance policy
A FIF does not include term deposits, bonds, debentures, money lent, foreign employment, pensions, qualifying foreign private annuity or rental investments.
We understand that no two investment portfolios are alike. Our team takes the time to thoroughly understand your unique FIF investments, to provide personalised FIF taxation advice for you.
What is our Foreign Investment Fund (FIF) service?
We provide a specialised advisory service to assist investors in understanding and managing their NZ tax reporting obligations in relation to their offshore investments. We offer a tailored approach based on your specific investment portfolio.
We can provide expert guidance on all aspects of FIF
Our team is committed to ongoing education and stays at the forefront of international tax law. We regularly attend global tax conferences and maintain relationships with international tax experts to bring you the most up-to-date and advantageous strategies.
Complexity of rules: The FIF tax rules, introduced for years beginning on or after April 1, 2007, are complex and can be challenging to interpret.
Attribution of income: FIF income is attributed to an investor, meaning you may have to pay tax on income before receiving any money. We can advise you on this calculation.
Multiple calculation methods: Various methods are available for calculating FIF income, including fair dividend rate (FDR), comparative value (CV), cost method (CM), deemed rate of return (DRR), and attributable FIF income method. Choosing the most appropriate method can be complicated.
Compliance costs: The rules aim to reduce compliance costs for investors with relatively small amounts invested offshore (under NZ$50,000), but compliance can be burdensome for those above this threshold, especially for investors with substantial or diverse foreign investment portfolios. The complexity and time requirements can be significant, even if the actual tax liability isn’t large.
Foreign tax credits: Managing foreign tax credits can be complex. They can only be used to reduce income tax payable on FIF income and can’t be carried forward in most cases.
Inconsistencies with other investment types: The old rules had inconsistencies that overtaxed some investors using New Zealand-based managed funds and were biased in favour of direct investment in offshore shares.
Country biases: The previous system favoured investment in certain countries over others, which the new rules aim to address.
Exemptions and thresholds: Understanding and applying the various exemptions from the FIF rules can be challenging.
Potential for double taxation: Without proper management of foreign tax credits, there’s a risk of being taxed both in the foreign country and New Zealand.
Frequent updates and changes: As with many tax laws, FIF rules may be subject to updates and changes, requiring you to stay informed and potentially adjust your strategies.
Our Foreign Investment Funds service can alleviate the stress of managing your offshore investments. We ensure you understand the FIF rules that apply to your investments and help you choose the most advantageous calculation method. We can assist with annual calculations, guide you through foreign tax credit claims, and keep you informed about any changes in FIF regulations.
Your peace of mind is our priority
We don’t just crunch numbers – we build lasting relationships. Our team is always available to answer your questions, address your concerns, and provide the support you need to feel confident in your foreign investments.
We’ll do everything possible to simplify your foreign investment experience, provide expert advice, and connect you with the right resources for your global investment strategy.
