Hidden Problems for US Citizens Investing in New Zealand

If you are a US Citizen in New Zealand, we can help you understand problem areas of investing in New Zealand.*

Problem Areas

• Investing in non-US managed funds can result in punitive tax consequences in the US. The IRS rules impose taxes at the highest rates when a US citizen invests in a non-US managed fund. These are known as Passive Foreign Income Companies (PFIC). The PFIC issues also apply to non-US exchange traded funds. Even some listed property shares and other companies can create PFIC issues.

• Investing in KiwiSaver funds creates two different problems. Nearly every KiwiSaver provider uses a managed fund investment solution. This creates PFIC issues so not only are you taxed in New Zealand, but when you withdraw your funds from KiwiSaver, you will be taxed in the US.

• Investing in KiwiSaver will also create complicated tax filing obligations in the US because it is considered investing in a foreign trust. If you open a KiwiSaver account for your child who is a US citizen, even if they have no earned income, they will be required to file a US tax return as well as the additional documents since they have invested in a foreign trust.

• Transferring your 401(k), IRA or other tax advantaged assets over from the US to New Zealand also may create complex tax implications in both the US and New Zealand. It is important that you know the most efficient way to transfer these assets from the US to New Zealand.


• NEWTON ROSS has expertise with these issues and can assist you in working through these potential tax traps. We have portfolios specifically designed for US Citizens investing in New Zealand. NEWTON ROSS has an attractive investment track record dating back to 2003 with experienced portfolio managers.

• We can advise you on ways to work through the PFIC issues in investing in KiwiSaver or at least lessen their consequences.

• We can refer you to accountants familiar with the necessary filings if you invest in KiwiSaver.

• There can be tax and penalty consequences for transferring retirement assets. We can prepare a financial plan to assist you in making decisions on the transfer of your 401(k) and other retirements assets from the US to New Zealand. We can show you how to benefit from the transitional tax residency status when you move to New Zealand.

Drew Hoffman

Drew Hoffman (FSP 106224) was a financial adviser in the US for over 10 years working at UBS and Merrill Lynch. He specialised in US Retirement Plans. He established 401(k), SEP IRA and Simple IRA Plans for numerous businesses and managed those assets. He has been a financial adviser in New Zealand for over 10 years. He has done planning and investing for US citizens living and working in New Zealand.

*NEWTON ROSS does not provide New Zealand or US tax advice or prepare New Zealand or US tax returns.

Contact Details

E: drew@newtonross.co.nz

M: 021 655 754