Capital Gains Tax in New Zealand: Should CGT Be the Issue of the 2026 Election?

New Zealand elections often turn on one defining issue.

Sometimes it is tax. Sometimes it is housing. Sometimes it is law and order, health, or the cost of living. But in 2026, I think the issue we should be brave enough to debate properly is this:

Should New Zealand introduce a capital gains tax?

And, if we are serious about the long-term cost of an ageing population, should we also be asking an even more uncomfortable question:

Should New Zealand consider an inheritance tax?

I am not writing this on behalf of any political party. I am not affiliated to one. I am writing as someone who works in finance, tax, valuation and business, and as someone who genuinely sees both sides.

Personally, I rather like the fact that New Zealand does not have a broad capital gains tax. It keeps things simpler. It makes us distinctive. It is one of the features of our tax system that business owners, investors, farmers, migrants, trustees and families understand intuitively, even if the detail is never quite as simple as people think.

And, with my accountant’s hat on, I can also admit the slightly cheeky truth: a capital gains tax would probably be very good for accountants.

But tax policy should not be designed around what is convenient for taxpayers, profitable for advisers, or politically useful for parties. It should be designed around fairness, growth, simplicity, sustainability and intergenerational trust.

That is why I think capital gains tax deserves a better national conversation.

First, let’s be honest about where New Zealand currently sits

New Zealand does not have a broad, comprehensive capital gains tax in the way many other countries do.

But that does not mean New Zealand simply does not tax capital gains.

In reality, we already have something closer to a targeted, or pseudo, capital gains regime.

• Gains from residential property can be taxable under the bright-line rules.

• Gains from land can also be taxable where the land was acquired with a purpose or intention of resale.

• Personal property acquired for the purpose of resale can also be taxable. Other land gains can be caught in specific circumstances, including some gains linked to development, dealing, association rules or zoning-related uplift.

Where these gains are taxable, they are not usually taxed under a separate, concessional CGT rate. They are generally treated as ordinary assessable income and taxed at the taxpayer’s marginal rate.

So the real question is not whether New Zealand taxes any capital gains. It already does.

The real question is whether New Zealand should move from a targeted, patchwork approach to a broader, more comprehensive one.

The case for a capital gains tax

The argument for capital gains tax usually starts with fairness.

If someone earns $100,000 from salary, that income is taxed. If someone makes $100,000 from the sale of an appreciating asset, the tax outcome may be very different depending on the asset, the intention, the structure and the timing.

That difference matters.

It can influence where capital goes. It can make property look more attractive than productive business investment. It can make younger New Zealanders feel that the tax system favours those who already own assets over those who earn wages and salaries. It can make wealth creation feel less like a level playing field and more like a race in which some people started a lap ahead.

Internationally, New Zealand is unusual. The OECD notes that most OECD countries tax capital gains when realised, usually with lower rates, exemptions or special reliefs for certain assets such as housing or closely held businesses.

That does not automatically mean New Zealand should copy them. But it does mean we should be intellectually honest when we say “the rest of the world does it differently”.

A well-designed capital gains tax could broaden the tax base. It could allow future governments to rely less heavily on taxing labour. It could improve perceived fairness. It could reduce distortions in investment decisions. It could also help fund services New Zealanders consistently say they want: health, infrastructure, education, aged care and superannuation.

And that brings us to the bigger issue.

New Zealand is ageing. Treasury’s 2025 Long-term Fiscal Statement materials identify population ageing, health expenditure, New Zealand Superannuation and the future relationship between Crown revenue and expenditure as core long-term fiscal issues. Treasury’s chart set includes projections on the ratio of working-age people to those aged 65+, health expenditure by age, NZ Superannuation expenditure, and long-term revenue and expenditure paths.

That is the uncomfortable fiscal reality. If we want high-quality public services, internationally competitive wages, low debt, universal superannuation, good hospitals, better infrastructure and no new taxes, the maths eventually pushes back.

The case against a capital gains tax

But the argument against a capital gains tax is not just “I don’t want to pay more tax”.

There are serious objections.

1.      Complexity. New Zealand’s broad-base, low-exemption GST is admired because it is simple. Capital gains tax is rarely simple. It immediately raises difficult design questions.

What assets are included? The family home? Farms? Businesses? Shares? Baches? Māori land? Crypto? Art? Goodwill? Foreign assets? Trust assets?

Do we tax only gains after a start date? Do we value assets at introduction? Who pays for those valuations? What happens when value rises on paper but there is no cash? What happens on death, relationship property transfers, restructures, or succession of a family business?

2.      Lock-In Effect. If selling crystallises a tax liability, some owners may hold assets longer than they otherwise would. That can reduce market mobility.

3.      Inflationary Gains.  It may penalise inflationary gains. If an asset rises in nominal value but much of that increase simply reflects inflation, taxing the whole gain can feel unfair unless the system allows indexation or other relief.

4.      Revenue Uncertainty.  The revenue may disappoint once exemptions, thresholds, deferrals, valuations, avoidance behaviour and administration costs are factored in.

5.      New Zealand’s international tax identity. New Zealand’s lack of a broad CGT is part of our international tax identity. It is a feature that some investors and migrants understand. Removing it may have behavioural consequences, particularly if not accompanied by offsetting reductions elsewhere.

6.      A live Australian example.  Recently, I have had calls from Australian business owners and advisers exploring whether New Zealand might be a more attractive place to do business, at least partly because of Australia’s capital gains tax settings and proposed changes.

But there is an important caveat.

New Zealand should not be oversold as a simple CGT-free alternative for Australians. For Australian tax residents, Australian tax can still apply to worldwide income, including capital gains on overseas assets. The Australian Taxation Office says "Australian residents’ capital gains on overseas assets are generally treated in the same way as capital gains on Australian property".

So any Australian considering a move across the Tasman — whether personally, through a company, trust, investment structure or business expansion — should get complete tax advice on both sides of the Tasman.

The point is not that New Zealand is a loophole. The point is that tax settings influence behaviour. Even proposed or debated changes can cause business owners, investors and advisers to pause, model alternatives, and ask where capital is most welcome.

7.      Trust & Political Stability. There is a trust issue. Many New Zealanders worry that a “limited” capital gains tax may not stay limited. Today it might exclude the family home, farms or shares. Tomorrow’s Parliament could change that. In tax, design matters — but so does credibility.

8.      Are we taxing wealth before we have fully grown it?

There is another lens through which I think about this.

People go through stages of life: baby, child, teenager, young adult, adult and elder. Countries do too. Economies mature. Wealth pools deepen. Capital markets broaden. Families accumulate and transfer capital. Entrepreneurs build, sell, reinvest and back the next generation.

In that sense, New Zealand still feels like a relatively young economy. Perhaps not a baby, but maybe a teenager: still forming its identity, still building deep pools of intergenerational wealth, still trying to grow more globally competitive businesses, and still nurturing new-wealth individuals who may become tomorrow’s investors, employers, philanthropists and mentors.

That does not mean wealth should never be taxed. But it does mean we should be careful not to confuse fairness with a tall-poppy reflex.

Before we tax accumulated gains more broadly, should we ask whether New Zealand has first created enough scale, capital depth and business success to tax? Or should we take a longer-term view and deliberately nurture this phase of capital formation?

What about inheritance tax?

If the real issue is not just capital gains, but the long-term funding burden of an ageing population, then we should also be willing to discuss inheritance tax.

That conversation may be even harder.

New Zealand generally does not tax people simply because they inherit property, although tax can arise later depending on the circumstances of sale or the underlying property rules. Inland Revenue says that, "generally, you do not pay tax when you inherit property, but tax may be payable when you sell it depending on the circumstances.

Estate duty was abolished for deaths occurring on or after 17 December 1992, and gift duty was abolished for dispositions of property made on or after 1 October 2011".

Again, New Zealand sits differently from many of its peers.

The OECD has argued that "inheritance taxation can play a role in raising revenue, addressing inequality and improving efficiency, while also noting that design is crucial". It reports that "inheritance or estate taxes are levied in 24 OECD countries, although many countries have exemptions and thresholds, and revenues are often modest".

The case for inheritance tax is that it targets unearned wealth transfers rather than work or enterprise. If designed with high thresholds, it could affect only larger estates. It could help respond to intergenerational wealth inequality, especially where housing wealth has accumulated largely through asset inflation rather than productive effort.

The case against inheritance tax is also strong. It can feel like a tax on grief. It can be seen as double taxation. It can create liquidity problems for farms, family businesses and illiquid estates. It may encourage avoidance through trusts, gifting, insurance, emigration or restructuring. And unless carefully designed, it may raise less revenue than expected while creating substantial compliance cost.

In other words, inheritance tax is not a magic answer. But neither is pretending the fiscal pressure does not exist.

So where do I land?

My instinct is still to prefer New Zealand without a broad capital gains tax.

I value simplicity. I value certainty. I worry about complexity, overreach and unintended consequences. I worry about introducing a tax that begins narrow but expands over time. I also worry that we may reach too quickly for new taxes before asking harder questions about productivity, government spending quality, superannuation settings, health efficiency, infrastructure funding and economic growth.

But I also think the “no CGT ever” position is becoming harder to defend without a serious alternative.

If we do not want a capital gains tax, then what is the plan?

Do we keep relying more heavily on taxing people’s wages, salaries and other earned income?

Do we raise GST?

Do we reduce future superannuation entitlements?

Do we means-test more?

Do we accept higher debt?

Do we cut services?

Do we rely on productivity growth that has not yet arrived at the scale required?

Or do we broaden the tax base in some other way?

That is the conversation I want to see in the 2026 election.

Not slogans. Not envy. Not fear. Not “tax the rich” versus “hands off my assets”.

A proper adult debate.

My challenge to every party

One thing I would like to see, regardless of where each party lands, is a more durable cross-party approach to major tax settings.

If New Zealand ever introduces a broad capital gains tax, inheritance tax, wealth tax, or any major alternative, it should not be designed as a three-year political weapon.

Tax settings shape long-term behaviour. They influence whether people invest, sell, hold, migrate, start businesses, pass farms or companies to the next generation, or bring capital into New Zealand.

If the rules see-saw with every change of government, we lose one of the most important features any tax system can offer: certainty.

So perhaps the challenge is not simply, “Should we have a CGT?”

Perhaps the bigger challenge is: can our political parties agree on a stable, long-term framework for taxing work, wealth, capital and inheritance — one that survives more than one election cycle? One that stands until it is no longer fit for purpose.

What do you think:

• is New Zealand’s lack of a broad capital gains tax a competitive advantage, an unfair gap in the tax system, or both?

• Would you support a cross-party tax accord so New Zealand does not rewrite major capital tax settings every time the government changes?

This is general commentary, not tax advice. Anyone making decisions should get advice specific to their circumstances.

Sources: Inland Revenue guidance on the bright-line test and inherited property; Australian Taxation Office guidance on overseas assets; OECD material on capital gains and inheritance taxation; Treasury’s He Tirohanga Mokopuna 2025 material; and New Zealand legislation on estate duty and gift duty.