Labour's proposed capital gains tax (CGT) is back on the agenda ahead of the 2026 election. The policy would apply a flat 28% tax on gains from the sale of commercial and residential property (excluding the family home) after 1 July 2027, with revenue earmarked for three free doctor’s visits per year, for every New Zealander. If this feels like a familiar topic, it's because it is. Over the years, CGT has repeatedly surfaced in New Zealand’s tax policy debate, and we have previously highlighted that while New Zealand lacks a comprehensive CGT, most forms of capital gain are already taxed in some way (read our articles: Just admit it already New Zealand, we do have capital gains taxes and Capital gains tax proposal – An overview).
The recent proposal raises important questions across three key areas:
- Scope: what's captured and what's exempt (family home, farms, KiwiSaver, shares, business assets, inheritances, personal items), how mixed-use properties are treated, implications for charities
- Calculation: how assets will be valued on 1 July 2027, which expenses will be deductible, treatment of capital losses through ring-fencing, availability of roll-over relief
- Market behaviour: how investors and property owners might respond, business planning implications, administrative costs.
Whilst significant detail remains to be settled, starting this conversation now creates opportunities for better outcomes. Organisations that think through these issues early - considering their asset holdings, potential tax exposure, and operational implications - will be better positioned regardless of the election result. There may also be opportunities to contribute to the policy development process as details emerge.
As you start to think about the impacts of this proposal, our CGT team remains available to discuss any questions you may have. Keep an eye out for further communications as we continue to provide updates and share additional insights.
Co-authored by Prapitha Reddy (Senior Solicitor).
