Worrying about tax shouldn’t stop you from investing - and knowing the basic rules can help you to avoid any surprises at tax time. 

If you invest in shares from New Zealand — whether NZ shares, US shares through Hatch, or both — the tax you pay depends on how you invest, the income you earn, and where those shares are based. We’ll explain how tax on shares in NZ works so that you can be confident when tax time comes around.

‍

Quick answers: Tax on shares in NZ

• ✅ Selling shares? It depends. Check if your sale meets IRD’s tax criteria below.
• ✅ Dividends? Yes — dividends are taxable income.
• ✅ Holding US shares? Unrealised gains aren’t taxed, but FIF rules may apply.
• ⚠️ Over $50,000 NZD invested overseas? FIF tax likely applies.

‍

Tax on shares for NZ investors

If you are an NZ tax resident, there is no general capital gains tax on shares. What this means is that simply buying shares and seeing the value go up doesn’t mean you’ll get a tax bill. When you sell shares at a profit, the intent behind the original purchase is often what decides if you pay tax.

‍
‍Do you pay tax when you sell shares in NZ?

When you do pay tax on shares

According to Inland Revenue’s tax criteria, IRD may tax gains from share sales if:

• You bought shares with the intention of selling them.
• You’re in the business of dealing in shares, meaning regular and organised buying and selling.
• The shares are part of a profit-making scheme. 

When you don’t pay tax on shares

The IRD’s tax guidance states that share sales will not be taxable if an investor can show (both through their stated purpose and tested objectively) that shares were bought for the dominant purpose of;

• Receiving dividend income.
• Receiving voting interests or other rights provided by shares.
• A long-term investment, growth in assets, or portfolio diversification...’

Not every share sale is liable for tax. There are many reasons investors sell their shares, and not all of them are driven by making a profit. Some examples from IRD include;

• A sale made as part of rebalancing your portfolio - be sure to note why you’re rebalancing, and how it relates to your investment plan.
• A change in your personal or financial circumstances.
• A change in a company’s circumstances.

Read more: How to sell shares - what to know before you sell stocks

‍

Do I have to declare my share sales to IRD?

It’s up to you, the investor, to disclose any income received (and the nature of that income) to IRD. New Zealand operates a self-assessment tax regime, and the IRD may follow up to check the accuracy of records.

It's good practice to keep records of your buys and sells, and the intent behind them.

Historically, tax guidance focused on whether someone was a share investor or a share trader. While behaviours such as regular buying and selling activity, or having a significant amount invested matter, the focus today is more on the intent behind individual trades.

The IRD has a helpful fact sheet, Income tax – Share investments, that you can download. It gives example scenarios of when the sale of shares is taxed, and when it isn’t. If you’re unsure about your tax obligations, seek advice from a tax professional.

Capital gains tax and overseas shares

When an asset increases in value, that increase is called a capital gain. New Zealand generally doesn’t tax capital gains. This means that in many cases you can buy assets, sell them at a higher price, and keep all profits tax-free. 

Is there a bright-line test for selling shares?

Tax on shares in New Zealand is based on principles – not timeframes. Unlike property, there is no bright‑line test for share sales in New Zealand. That means IRD hasn’t set a fixed time period (for example, 2 or 5 years), or a specific number of trades that automatically make share sales taxable.

In simple terms:

• Holding shares for a short time doesn’t automatically mean the sale will be taxable.
• Holding shares for a long time doesn’t automatically mean your sale will not be taxable.

Read more: Property vs Shares: A battle of the heavyweights

‍

Tax on share dividends

Dividends from shares are counted as income, and are subject to tax. Tax on dividends is generally paid at your marginal tax rate and calculated when you file your end-of-year NZ tax return. The source withholding tax rate will depend on the country or location of the company you hold shares in.

Read more: What are dividends?

New Zealand dividend tax

The NZ tax rules that determine who needs to file a tax return depend on how much you've invested, the dividends you receive during the tax year (1 April – 31 March), and whether you've received any other untaxed income. In many cases, the tax on dividends is paid on your behalf by your broker before the dividends reach your account. Check with your broker to see if they pay tax on your behalf, or if you need to make the payment yourself.

Do you have to pay US tax on dividends from US shares?

Yes. If you invest through Hatch, the US withholding tax is deducted before the dividends reach your account. The US withholding tax rate on dividends for non-US tax residents is usually 15%, given you’ve completed a W-8BEN form. 

Hatch automatically submits all required annual US tax reports on our investors’ behalf (with the exception of US tax residents). Hatch charges a $0.50 US fee for tax reporting (excluding FIF reporting), which is deducted from investors' accounts at US tax time. 

If you invest through Hatch, you can see what your situation is in your Hatch tax reports and learn what you might need to do at tax time. 

Can I get taxed on my shares twice?

If you invest in a foreign country, such as buying shares on the US share market, double tax agreements (DTAs), also known as tax treaties, mean that the tax you pay overseas offsets your New Zealand tax bill – so you won’t be double taxed. Read more about double tax agreements.

‍

What is the $50,000 FIF rule in NZ?

For individual investors, if your total overseas investment cost reaches $50,000 NZD at any point during the tax year, you’ll need to consider foreign investment fund (FIF) tax.

FIF tax applies to certain investments held outside New Zealand including:

• Shares in overseas companies.
• Overseas superannuation schemes.
• Life insurance policies held with overseas providers.
• A foreign unit trust (these are treated as foreign companies under NZ tax law, such as foreign mutual funds).

These investments require a specific tax calculation to work out taxable income.

Example: If you invested $52,000 NZD in US shares at any point during the tax year, FIF tax may apply — even if your portfolio later drops below $50,000 NZD. If you hold investments jointly with a spouse or partner, the threshold is $50,000 NZD each (a combined $100,000 NZD).

Important: If your overseas investment cost exceeds $50,000 NZD at any point in the tax year (even for a day!), you may need to apply the FIF rules for that tax year.

Read more: FIF tax rules for individuals and trusts

Tax Glossary

Still struggling to wrap your head around tax terminology? These key terms can help.

Gross – the total amount before tax

Net – the amount left after tax

Gain – an increase in the value of an asset

Loss – a decrease in the value of an asset

Dividend – a share of a company’s profits paid to shareholders

Unrealised gain – an increase in the value of shares you still hold; not taxed until sold

‍

Need more help?

This article is general information only and is based on current New Zealand tax guidance from Inland Revenue (IRD). It has a limited scope and covers tax on shares only — it doesn’t address tax on other types of investments. Tax treatment and services may differ between financial service providers. Tax rules can change, and we don’t know your individual circumstances.

If you have questions:

• Check out our Help Centre
• Contact our friendly support team or
• Talk to a tax professional