Does New Zealand really have no capital gains tax?

Some people say that New Zealand should have a capital gains tax depending on the funds. Other people say that we already tax capital gains on certain property sales, so it wouldn’t make any difference. So do we have a CGT or not?

No, but…

We don’t have a single, comprehensive capital gains tax, and although the Tax Working Group recommended one, the Prime Minister ruled it out in 2019.

However, we do tax some types of capital gains, particularly those from the sale of investment properties. The bright line test is a tax on capital gains that applies only to property.

Which capital gains are taxed?

Capital gain is the profit you make when you sell an asset. You will pay tax on the gains you make on some assets, including:

• Gains from the sale of a property that is not your family home, if you have owned for less than 10 years (with some exceptions). This is the bright line test; you can read more about it here.
• The gains you make on the sale of foreign shares over $50,000.

Which capital gains are not taxed?

Some capital gains remain untaxed, including:

• Any profit from the sale of your family home.
• The profit on the sale of another property you have owned for at least 10 years (with some exceptions under the bright line test).
• KiwiSaver fund gains, and gains on other managed funds, index funds and PIE funds.
• Gains made from the sale of most New Zealand and Australian listed shares.
• The gains you make on selling collectables like wine, art and cars.
• Profits you make selling items casually on TradeMe or any other online platform.

How this applies to your situation

Everyone’s tax situation is unique, and these rules can be confusing. We’re here to help you wade through the intricacies of it, so you don’t pay more tax than is required. Get in touch if you have questions about tax on capital gains or any other tax. Our team of experienced tax and business advisors would love to hear from you!