This submission responds to Inland Revenue’s proposed changes to the Foreign Investment Fund (FIF) rules, focusing on how current settings affect migrants and New Zealand’s ability to compete for global talent and capital. The Taxpayers’ Union argues the existing regime is overly punitive, taxing unrealised gains and discouraging investment before any income is actually received.
In our submission, we proposed a set of reforms to make the system fairer and more internationally competitive. These include removing the 10% ownership threshold so more investors can defer tax until income is realised, extending the transitional residency period to give migrants time to restructure their investments, and capping tax on realised gains at a lower, internationally comparable rate. We also opposed more aggressive approaches such as exit taxes and restrictive deferral rules, and recommended that any alternative methods be optional and broadly accessible.
New Zealand is competing globally for high-skilled migrants, entrepreneurs, and capital. Current FIF settings risk pushing exactly those people away—especially when they face tax bills on assets they cannot easily sell. A more neutral, predictable system would help attract investment, support innovation, and ultimately lift productivity and wages, instead of reinforcing New Zealand’s reputation as a high-tax destination for mobile talent.
