After 25 years of standing still, the Government has proposed doubling the Foreign Investment Fund (FIF) threshold from $50,000 to $100,000.
If you’ve invested in overseas shares through Hatch, Sharesies, Interactive Brokers or overseas ETFs, Budget 2026 probably gave you something to smile about.
For many investors, that’s potentially the biggest tax simplification announcement in years.
- Social media lit up almost immediately.
- Investors started talking about paying less tax.
- Others assumed the FIF rules no longer applied to them. Some even wondered whether they still needed to worry about FIF at all.
But before you celebrate, there’s something important you need to know.
- If you’re currently preparing a tax return for the year ended 31 March 2026, the old $50,000 threshold still applies.
- And despite the headlines, the proposed $100,000 threshold isn’t actually law yet.
In other words, the announcement is good news.
Just not necessarily for the tax return you’re filing right now.
Let’s look at what Budget 2026 actually announced, who stands to benefit, and the mistake investors should avoid making over the coming months.
First, What Is FIF?
If you’re new to overseas investing, you may not have come across FIF before.
FIF stands for Foreign Investment Fund.
In simple terms, the FIF rules can apply when the total cost of certain overseas investments exceeds $50,000.
Once you cross that threshold, you may need to calculate taxable income each year under special FIF calculation methods, even if you haven’t sold your investments.
For many investors, FIF is one of the most misunderstood and frustrating areas of New Zealand tax law. Because it creates tax liabilities when there is no cashflow to fund it.
If you’d like a detailed explanation of how the rules work, I’ve already covered them in a separate article:
The $50,000 Foreign Investment Funds (FIF) Rule Every NZ Investor Should Know
For now, let’s focus on what Budget 2026 proposes to change.
Why Investors Are Excited
One of the standout tax announcements in Budget 2026 was the proposal to increase the FIF de minimis threshold from $50,000 to $100,000.
If enacted, investors with overseas investments costing less than $100,000 would generally remain outside the FIF regime.
That’s a significant change.
The current threshold has remained at $50,000 since 2000. That’s 25 years without adjustment despite inflation, the rise of online investing and the growing popularity of overseas ETFs.
Think about how much has changed since then.
Back in 2000:
- Online investing barely existed.
- Sharesies didn’t exist.
- Hatch didn’t exist.
- ETFs weren’t nearly as popular.
- Investing overseas was far less common.
- $50,000 had considerably more purchasing power.
Fast forward 25 years and the investing landscape looks completely different.
Today, it’s normal for everyday Kiwis to hold overseas shares and global ETFs as part of their long-term wealth-building strategy.
Many tax professionals have argued for years that the threshold had become outdated.
Budget 2026 may finally address that.
The Catch Most Investors Are Missing
This is where things get interesting.
I’ve already seen social media posts and comments suggesting:
- “The threshold is now $100,000.”
- “FIF won’t apply to me anymore.”
- “The old rules are gone.”
Not so fast.
If you’re currently still working on preparing and filing your tax return for the year ended 31 March 2026 or earlier years, the existing $50,000 threshold still applies.
That’s because the proposed change does not automatically rewrite the rules for prior years.
Let’s look at a simple example.
Example
Imagine you invested $75,000 into overseas shares through Hatch during the year ended 31 March 2026.
You read the Budget announcement and assume the new $100,000 threshold applies.
Unfortunately, that’s not how it works.
For the year ended 31 March 2026, the relevant threshold remains $50,000.
That means you may still need to consider whether the FIF rules apply under the current law.
This is the mistake many investors could make if they only read the headline and not the detail.
The Proposed $100,000 Threshold Isn’t Law Yet
Another important point is that Budget announcements are not automatically law.
What was announced in Budget 2026 is currently a proposal.
The legislation still needs to go through the parliamentary process before becoming law.
That means:
- A Bill must be introduced.
- Parliament must consider it.
- The usual legislative stages must be completed.
- Royal Assent must be received.
Only then does the proposal become enacted legislation.
The Government has proposed that the increased threshold would apply from 1 April 2026 if enacted.
However, until the legislation is passed, investors should treat the increase as a proposed change rather than a confirmed rule.
That’s an important distinction.
Why This Could Still Be Great News
Despite the caution above, I think this is one of the most practical tax proposals announced in Budget 2026.
Here’s why.
1. Fewer Investors Will Be Caught by FIF
Many investors currently sitting between $50,000 and $100,000 of overseas investments may no longer need to deal with FIF calculations.
That’s a meaningful simplification.
2. Lower Compliance Costs
Crossing the FIF threshold often means additional complexity.
Some investors seek professional advice. Others purchase specialist tax reports.
If fewer investors are subject to FIF, compliance costs could reduce significantly.
3. Less Complexity for Everyday Investors
The FIF rules are not easy for the average investor to understand.
Removing thousands of smaller investors from the regime would make overseas investing much easier to navigate.
4. The Threshold Finally Reflects Modern Investing
Perhaps most importantly, the proposal recognises reality.
The world has changed.
Investing overseas is no longer something only wealthy investors do.
It’s now a normal part of building a diversified portfolio.
The tax rules should reflect that.
Who Could Benefit Most?
If enacted, the proposed increase could benefit:
- Hatch investors
- Sharesies investors
- ETF investors
- Young professionals building wealth
- Migrants with overseas investments
- DIY investors managing their own portfolios
For many people, it could mean fewer calculations, less paperwork and lower compliance costs.
What Doesn’t Change?
Even if the proposal becomes law, it’s important to understand what stays the same.
The FIF regime is not being abolished.
Investors with overseas investments above the new threshold may still need to apply FIF rules.
The various FIF calculation methods would remain.
Disclosure obligations may still apply.
This is a threshold change, not the removal of the FIF system.
Should You Be Worried?
Not worried.
But you should be careful.
If you’re currently preparing your tax return for the year ended 31 March 2026, don’t assume the $100,000 threshold automatically applies.
The existing $50,000 threshold still matters.
At the same time, the proposed increase is worth paying attention to because it could significantly simplify things for many investors going forward.
My Thoughts
The proposed increase from $50,000 to $100,000 is undoubtedly welcome news for many Kiwi investors.
But don’t let the headlines fool you.
If you’re currently still preparing or yet to file your tax return for the year ended 31 March 2026 or earlier years, the existing $50,000 threshold still applies.
And until the legislation is passed, the proposed increase remains exactly that, a proposal.
The good news?
If enacted, this could become one of the most practical and investor-friendly tax changes we’ve seen in years.
After 25 years, the FIF threshold may finally be catching up with the way modern Kiwis invest.