Residency timing
When transitional residency ends
The income year when the transitional resident exemption ends needs more care than an ordinary FIF calculation.
Introduction
New migrants and some returning New Zealanders can be treated as transitional residents for a limited period. During that exemption period, many types of overseas income are not taxed in New Zealand, and the ordinary FIF calculator usually is not the right starting point.
The transitional resident window is commonly described as a 4-year exemption, but the exact start and end dates still matter. Do not assume it lines up neatly with 1 April or 31 March. A few days either way can change which dividends, sales, and market values belong in your records after the exemption ends.
The difficult year is the year the exemption ends. From that point onward, the FIF rules may start applying to foreign shares, foreign ETFs, and other attributing interests. The standard historical calculator on this site assumes the FIF rules apply for the whole income year, so it can overstate the result if your exemption ended during the year.
This page explains the rule and the records to gather. It is not a calculator for the year your exemption ends.
What happens to your foreign shares when transitional residency ends
In plain English, on the day after your transitional residency ends, your foreign shares are treated as if you had just acquired them at their market value on that day. That value becomes the starting point for FIF calculations for the rest of the income year.
Practical record: You need the market value of each foreign holding on the day after the exemption ended, converted to NZD using supportable exchange rate evidence.
The year your exemption ends is a part-year for FIF purposes
In that year, the FIF rules only apply to the portion of the income year after the exemption ends. The opening market value used in an FDR or CV calculation is not the 1 April value from when you were still within transitional resident treatment. It is the deemed acquisition value on the day after the exemption ended.
The same timing point applies to dividends and transactions. Dividends, purchases, and sales before the exemption ended should not be mixed into a FIF worksheet for the later part of the year without advice.
Worked example: FDR on a part-year
Sara's transitional residency ends on 30 September 2025. On 1 October 2025 her US share portfolio has a market value of NZ$80,000. By 31 March 2026 the portfolio is worth NZ$85,000 and she received no dividends in that period.
Under FDR, her opening market value for FIF purposes is the NZ$80,000 deemed acquisition value. The standard FDR calculation is 5% of NZ$80,000, or NZ$4,000.
Check the part-year FDR question before filing: The standard FDR formula is 5% of opening market value. There is a practical question about whether, in the year your exemption ends, the 5% should be pro-rated by the number of days remaining in the income year, or applied in full to the deemed acquisition value. The Income Tax Act and IR461 are the authoritative sources on this, and the right answer for your specific situation is something to confirm with an accountant or Inland Revenue before filing.
Worked example: CV on a part-year
Tom's transitional residency ends on 31 December 2025. On 1 January 2026 his US share portfolio has a market value of NZ$120,000. By 31 March 2026 the portfolio is worth NZ$115,000 and he received NZ$1,500 in dividends in that period, with no purchases or sales.
Under CV, his FIF income is closing value of NZ$115,000 plus dividends of NZ$1,500, minus opening value of NZ$120,000. That gives negative NZ$3,500. CV income cannot be less than zero in this ordinary comparison path, so Tom's CV result is NZ$0.
Choosing between FDR and CV in the year your exemption ends
The usual method-choice checks still matter. Individuals can often compare FDR and CV for ordinary foreign shares and use the method that gives the lower FIF income. The same method must be used across all relevant FIF holdings for the year, and a FIF loss in this ordinary comparison is reduced to zero rather than carried forward.
Your method choice can change in later income years if the rules allow it. The year your exemption ends is special because the starting value and relevant period are different, not because it creates a separate do-it-yourself method.
What to gather before talking to an accountant
- The exact date your transitional residency ended.
- The market value of each foreign holding in NZD on the day after the exemption ended.
- All dividends received between the day after the exemption ended and 31 March.
- All purchases and sales between the day after the exemption ended and 31 March.
- Broker statements, price records, and exchange rate evidence supporting each value.
- Any notes from Inland Revenue, an adviser, or your migration records confirming the exemption dates.
Useful next steps
Review FIF basics
Check what FIF is and which investments are commonly covered.
Run the responsibility check
Use the guided check before deciding which tool fits.
Historical calculator
Use only after reviewing the opening values and dates for the year your exemption ends.
Foreign Dividend Helper
Use for overseas dividends received after the exemption ends, where they are not inside a FIF method.