For many years, New Zealanders looking to grow their wealth had two main options: term deposits and property. Building a diversified share portfolio in the style of Warren Buffett was often out of reach for ordinary investors, as buying a range of shares typically required a significant amount of capital.

Today, the investment landscape looks very different. Platforms such as Sharesies and InvestNow have made it easier than ever for everyday Kiwis to invest in shares and managed funds with relatively small amounts of money.

Alongside individual shares, investors can now access exchange traded funds (ETFs), managed funds, cryptocurrencies, and a wide range of other investment products. Investment opportunities that were once largely reserved for wealthy or professional investors are now available to almost anyone with a smartphone and an internet connection.

With all these new options, one common misconception remains: “There’s no capital gains tax in New Zealand, so my investment profits must be tax-free.”

Unfortunately, it’s not always that simple.

When tax rules become more complicated

One example is investing directly in overseas shares. Once the total cost of your overseas share investments exceeds $50,000, the Foreign Investment Fund (FIF) rules may apply.

As part of Budget 2026, the Government has proposed increasing this threshold to $100,000, with the change expected to apply from 1 April 2026 for the 2026-27 income year. This should reduce compliance costs for smaller investors, although the change still needs to be passed into law.

Under these rules, you could be required to pay tax even if:

• You haven’t sold any shares
• You haven’t received any dividends
• Your investment hasn’t generated any cash for you

This often catches investors by surprise.

An alternative: investing through a PIE fund

Many investors gain exposure to overseas shares through Portfolio Investment Entity (PIE) funds instead.

One advantage is that the fund handles much of the tax administration on behalf of investors. For individuals on the top 39% tax rate, there can also be a tax benefit because the maximum Prescribed Investor Rate (PIR) is capped at 28%.

However, what works well for individuals does not always work well for companies.

For example, if a company invests in a PIE fund, the tax paid within the PIE generally does not generate imputation credits. This means the company cannot pass those credits on to shareholders when it later pays dividends, potentially making the structure less tax-efficient.

Don’t forget about crypto tax

Cryptocurrency is another area where tax can catch investors by surprise. Many people assume tax only applies when they convert their crypto back into New Zealand dollars, but a taxable event can occur whenever a cryptoasset is disposed of. This includes selling crypto for cash, exchanging one cryptocurrency for another, using crypto to pay for goods or services, and in some cases even gifting cryptoassets.

It’s also worth noting that some crypto received through activities such as staking, mining, airdrops, or blockchain forks may be taxable when received. 

The IRD is seeing more than ever

The Inland Revenue Department’s ability to collect and analyse information continues to grow.

Data matching arrangements now extend well beyond traditional investment platforms. Cryptocurrency transactions are increasingly visible to tax authorities through information-sharing arrangements with exchanges and other reporting mechanisms.

In other words, assuming an investment is “off the radar” is becoming a riskier assumption every year.

Before you invest, understand the tax consequences

The right investment for one person may not be the right investment for another, and the tax outcome can vary significantly depending on how an investment is held.

If you’re exploring investment opportunities and are unsure about the tax implications, talk to us.

While we can’t provide financial advice or tell you what to invest in, we can help you understand the tax consequences of different investment options so you can make more informed decisions.