New Zealand rejects capital gains tax

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

New Zealand rejects capital gains tax

Sponsored by

sponsored-firms-russel-mcveagh.png
AdobeStock_114647190_Reject

New Zealand's government has rejected the recommendation of its tax working group (TWG) that New Zealand introduce a capital gains tax (CGT). Announcing the government's decision, Prime Minister Jacinda Ardern acknowledged that while she personally saw merit in introducing a CGT, there was no mandate to proceed with introducing a CGT.

The TWG was set up by the government shortly after it took office in late 2017 to make recommendations on the fairness, balance and structure of the tax system.

While the CGT was the most significant of the TWG's recommendations, the group's final report included numerous other recommended changes to the tax system, and the government has indicated it will consider including a number of those other recommendations on its tax policy work programme.

The Prime Minister also reiterated that the government would soon release a consultation paper on a digital services tax.

Capital gains tax rejected

The decision not to implement a comprehensive CGT is not unexpected. The junior coalition partner in the government (the New Zealand First Party), whose support would have been required to implement a CGT, had previously voiced its opposition to a CGT. The opposition National Party had also vowed to repeal a CGT if it were enacted.

In rejecting the CGT recommendations, Prime Minister Ardern stated: "It's time to accept that not only has a government that reflects the majority of New Zealanders not been able to find support for this proposal, feedback suggests there is also a lack of mandate among New Zealanders for such a tax also".

She also ruled out a CGT under her leadership in future.

Refreshed tax policy work programme

A refreshed tax policy work programme will be released mid-year. The government is considering the following as high priority for inclusion:

  • The TWG's recommendations regarding a regime that encourages investment in nationally-significant infrastructure projects;

  • Allowing depreciation for the costs of seismic strengthening of buildings;

  • A review of tax loss trading (potentially in tandem with a review of the loss carry-forward rules for companies); and

  • Strengthening the enforcement of the rules for closely held companies.

Prime Minister Ardern also stated that following the group's recommendations, "the coalition government has agreed to tighten rules around land speculation and work on ways to counter land banking".

New Zealand has a benign tax regime for property investors and speculators that are perceived to have contributed to increasing house prices.

Such investments are not subject to stamp duty or similar transaction taxes, and in many cases, gains on disposal would be a non-taxable capital gain.

As a starting point, the government has directed the Productivity Commission to consider vacant land taxes as part of its review of local government body financing.

Digital services tax consultation

While the TWG did not recommend specific international tax changes, it did note its support for "New Zealand's continued participation at the OECD", and recommended that "the government stand ready to implement a digital services tax if a critical mass of other countries move in that direction".

The government had already acted on that recommendation by announcing, prior to the release of the group's recommendations that New Zealand will proceed with a digital services tax, with a public consultation on "options for introducing a digital services tax" to start soon.

more across site & shared bottom lb ros

More from across our site

E-invoicing is currently characterised by dynamism, with fragmentation acting as a key catalyst for increasing interoperability, says Aida Cavalera of the International Observatory on eInvoicing
Pillar two and the US tax system ‘could work in harmony’, Scott Levine tells ITR in an exclusive interview to mark his arrival at Baker McKenzie
Peter White, who has a tax debt of A$2 million, has been banned for five years from seeking registration with Australia’s Tax Practitioners Board (TPB)
Wopke Hoekstra’s comments followed US measures aimed against ‘unfair foreign taxes’; in other news, Grant Thornton and Holland & Knight made key tax partner hires
An Administrative Review Tribunal ruling last month in Australia v Alcoa represents a 'concerning trend' for the tax authority, one expert tells ITR
A recent decision underlines that Indian courts are more willing to look beyond just legal compliance and examine whether foreign investment structures have real business substance
Following his Liberal Party’s election victory, one source expects Mark Carney to follow the international consensus on pillar two, as experts assess the new administration
A German economics professor was reportedly ‘irritated’ by how the Finnish ministry of finance used his data
Countries that care about the fair taxation of tech multinationals and equitable global distribution of wealth should back the UN’s tax framework, writes economist Abdelmalek Riad
The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
Gift this article