New Zealand vs Australia After Australia’s 2026 Budget: The Honest Comparison
Editors note as at 1 June 2026. International tax rules change frequently. Please confirm the current tax rules and their application to your circumstances for any destination that you are seriously considering before making a relocation decision. We can assist with that analysis where required.
Three weeks after the 2026 Australian Budget announced the removal of the 50% CGT discount and a tax regime that lands at 47% on indexed capital gains for high-income earners, the New Zealand Finance Minister did something most foreign politicians don’t. She made an explicit pitch for our taxpayers.
Nicola Willis, reported in the Australian media, borrowed Australia’s own 2006 tourism slogan back at us. “Where the bloody hell are you? Come over.”
It was cheeky. It was on-brand for a National Party-led government that has spent two years positioning New Zealand as the lower-tax, lower-friction alternative to Canberra. And, somewhat awkwardly for any Australian who’d rather not contemplate the question, it is substantively correct.
New Zealand really does not have any general capital gains tax.
The Investment Boost rules introduced from 22 May 2025 really do let businesses claim 20% of the cost of qualifying new assets upfront, then depreciate the remaining 80%.
And the immigration arrangement between Australia and New Zealand really does mean you can board a plane on Tuesday and be a New Zealand tax resident by Wednesday.
So let’s actually look at it.
Of all the destinations Australians might think about, New Zealand gets the most casual dismissals and the most serious second looks. Casual dismissals because it feels too close to count. (“It’s basically Australia with sheep.”) Serious second looks because, once you actually do the maths, the tax position is meaningfully better than ours, the immigration friction is essentially zero, and the cultural transition is the lowest of any destination in this series.
This article walks through what an Australian actually faces if they relocate to New Zealand. The tax position. The planning levers (including one most Australians don’t know exists). The political risk worth watching. And the practical realities that should temper the spreadsheet.
The headline tax position
New Zealand does not have a general capital gains tax.
That’s the core fact, and it deserves to be said cleanly because it usually gets buried under qualifications.
When a New Zealand tax resident sells listed shares, private company interests, business assets, art, collectibles, or overseas residential property held outside the bright-line period, no general capital gains tax applies. The gain may still be taxable if the asset was bought to resell or the activity amounts to trading, but for ordinary long-term investors, the position holds.
This is structurally different from Australia, the UK, the US, and most other developed economies. And it’s been the New Zealand position for decades, despite repeated political debate about whether to change it.
The exception is the bright-line test on residential property, which we’ll get to.
Personal income tax in New Zealand runs progressively across five brackets for the 2025-26 tax year (running 1 April 2025 to 31 March 2026):
10.5% on the first NZD 15,600. 17.5% to NZD 53,500. 30% to NZD 78,100. 33% to NZD 180,000. 39% above NZD 180,000.
There’s no tax-free threshold. The 39% top rate was introduced on 1 April 2021.
Trustee income is taxed at 39% from the 2024-25 income year, with some exclusions. Worth flagging for Australians who currently hold assets through trust structures.
GST is 15%, broadly applied. No payroll tax. The ACC earners’ levy applies at 1.67% on employment income up to NZD 152,790 for 2025-26.
The transitional resident exemption: the bit most Australians don’t know about
This section is worth paying attention to, because the planning value is genuinely large and most Australian advice on New Zealand glosses past it.
New migrants to New Zealand (and returning New Zealanders who’ve been non-resident for at least 10 years) may qualify as transitional residents under the Income Tax Act 2007. The transitional resident gets a four-year temporary tax exemption on most foreign-sourced income. This is one of the more generous welcoming-newcomer regimes in the developed world.
What it covers, for the first 48 months of New Zealand tax residency: most foreign-source income and gains, including foreign dividends, foreign interest, foreign rental income, foreign pension income, royalties from foreign sources, income from controlled foreign companies, and income that would otherwise arise under New Zealand’s Foreign Investment Fund (FIF) rules.
What it doesn’t cover: foreign employment income for services performed personally. And any New Zealand-sourced income. Both stay taxable from day one.
Two practical implications for Australians.
First, if you relocate to New Zealand with a substantial investment portfolio still held in Australia, the dividends and interest from that portfolio are exempt from New Zealand tax for four years. If you then sell the Australian assets during the transitional period, the gain is generally exempt from New Zealand tax as well (subject to what happens on the Australian side, which we’ll cover). That’s a real four-year window to reposition a portfolio without New Zealand tax friction.
Second, it’s one-time only. You qualify if you’ve not been a New Zealand tax resident in the previous 10 years. If you move to New Zealand, use the four-year exemption, leave, and come back, there’s no second window. Plan accordingly.
The exemption applies automatically (no application required) but you can elect not to be a transitional resident, which is sometimes the right call if Working for Families payments would be more valuable. The two are mutually exclusive. You get one or the other, not both.
For Australians considering a long-term move to New Zealand, the transitional resident exemption is the single most important New Zealand tax planning lever to understand before you go. It materially changes the after-tax economics of the first four years.
The bright-line test on residential property
The bright-line test is sometimes described as “the New Zealand capital gains tax.” It isn’t, but it’s the closest functional equivalent and worth understanding properly.
The current rule, in effect for property sold on or after 1 July 2024, taxes gains on residential property sold within 2 years of acquisition. Earlier versions ran the rule out to 5 years and then 10 years, but the current National-led government reverted to 2 years in 2024 as part of its property tax reforms.
The 2-year rule applies to all residential property regardless of when it was acquired. So if you bought an investment property in 2019 under the original 5-year rule and you sell it in 2026, the 2-year rule now applies and the bright-line period has long since expired.
The bright-line test only applies to residential property. It doesn’t apply to commercial property, farmland (with specific carve-outs), business premises, or any non-residential capital asset. There’s a main home exclusion that protects most owner-occupiers.
The start date is generally when the property title is registered with Land Information New Zealand (typically settlement). The end date is generally when the binding sale and purchase agreement is signed. Special rules apply to off-the-plan purchases, subdivisions, and inherited property.
If the test catches you, the gain is taxed at your marginal income tax rate, not a separate CGT rate. A high-income earner selling within the 2-year window could see the gain taxed at 39%. After 2 years of ownership, the gain is generally not taxable, subject to the catch-all that gains from a business of trading in property remain taxable as ordinary income.
One thing worth knowing. If you’re a New Zealand tax resident and you also own overseas residential property, the bright-line test applies to those overseas properties too. This matters for Australians who relocate to New Zealand but keep Australian investment properties.
The Labour CGT proposal: real political risk worth watching
The New Zealand Labour Party has committed to introducing a 28% capital gains tax on investment property as a 2026 general election policy. If Labour wins the election, the new rules would apply from 1 July 2027.
The 2026 New Zealand general election will be held on Saturday, 7 November 2026. Whether Labour wins, whether it can form government, and whether the proposal survives coalition negotiations in its current form are all open questions.
Here’s the proposal in summary:
Flat 28% rate, aligned with the New Zealand company tax rate.
Applies to gains on residential investment property and commercial property only. Excludes family homes, farms, KiwiSaver, shares, and businesses.
Applies to gains accruing from 1 July 2027 onwards. Property held across that date would be valued at 1 July 2027, with only post-2027 gains taxed.
Replaces the bright-line test, so the time-limited nature of the current rule disappears. Tax applies on sale, however long the property is held.
No inflation adjustment. The tax applies to nominal gains, not real gains.
Losses are ring-fenced to other capital gains in the same property category. Not deductible against ordinary income.
The current National-led government opposes the policy. Polling has been mixed.
For Australians considering New Zealand specifically because of its no-CGT position, the Labour proposal is the real political risk to monitor. The scope is narrow (investment property only, not shares or businesses), so the no-CGT position on most asset classes isn’t at immediate risk. But if your relocation thesis depends on owning New Zealand investment property, the picture could shift after the election.
There’s also a quiet irony worth flagging. The “come over” invitation from Nicola Willis is implicitly an offer of the current National-led tax regime. If Labour wins on 7 November and the property CGT lands as proposed, part of what Willis was selling will be partially withdrawn the following year. The general no-CGT-on-shares-and-businesses position remains. But the property piece, which matters to a meaningful share of relocating Australians, becomes more uncertain.
The honest framing: New Zealand remains a no-general-CGT jurisdiction today. The Labour proposal is a real political possibility for 2027 but is not enacted. Plan accordingly, and watch the election result.
The Trans-Tasman immigration position
This is the part Australians often overlook, because it’s so easy it almost doesn’t register as a thing.
Under the Trans-Tasman Travel Arrangement, Australian citizens can enter, reside indefinitely, and work in New Zealand without applying for a visa. The arrangement has been in place since 1973.
When you land in New Zealand, you receive a New Zealand Resident Visa (under the Australian Resident Visa programme), which gives indefinite right to live and work. No pre-departure visa application. Subject to standard border and character checks on arrival. No employer sponsorship requirements, no skills tests, no English language tests, no investment thresholds.
Put that next to the alternatives. Singapore requires an employment pass or substantial investment. The UAE requires a residence visa tied to employment, business, or investment. The US requires complex visa structures and often years of planning. Even Hong Kong and Singapore, both relatively open, require active steps. New Zealand requires you to board the plane.
The citizenship pathway exists but isn’t necessary for tax purposes. Australian citizens can live in New Zealand indefinitely on Australian citizenship. Tax residency in New Zealand depends on physical presence and the establishment of a permanent place of abode, not on immigration status.
Tax residency: when one country ends and the other begins
For Australians actually relocating, the question of when Australian tax residency ends and New Zealand tax residency begins matters. Both questions involve nuanced facts.
New Zealand tax residency starts in one of two ways. Either you spend more than 183 days in New Zealand in any 12-month period (a mechanical test), or you establish a permanent place of abode in New Zealand (a facts-and-circumstances test). For most Australians moving permanently, the permanent place of abode test is the trigger, and it starts on the day you establish the abode, not the day you cross the 183-day threshold. And as for the 183 day test, once you do cross that threshold, you’ll typically be a resident from the first day of physical presence under that test.
Australian tax residency ends under the four residency tests contained in section 6 of the Income Tax Assessment Act 1936 and the ATO’s published guidance. The tests look at the nature of the move, intention to return, location of family and home, retention of Australian assets and connections.
A clean break helps. A messy departure, with the Australian house retained, family staying behind, frequent returns, can leave you Australian-resident even after physically moving. For most people, the goal is to cease Australian residency cleanly on departure. That triggers CGT Event I1, which we’ll come to next.
The DTA between Australia and New Zealand has tie-breaker rules for individuals who’d otherwise be resident in both countries. Useful in transition years, but the central goal for most movers is to be resident in only one country at a time.
CGT Event I1 on departure from Australia
The Australian side of the move is where the careful planning needs to happen.
When an Australian ceases to be an Australian tax resident, CGT Event I1 in section 104-160 of the Income Tax Assessment Act 1997 deems a disposal of all CGT assets (with some exceptions for taxable Australian property) at their market value on the day of departure.
What this means in practice: a taxable gain is triggered in the year of departure on the unrealised appreciation of every applicable CGT asset. For an Australian with significant unrealised gains on Australian-held shares, foreign property, foreign business interests, or other CGT assets, the bill in the departure year can be substantial.
Section 104-165 provides a choice. The departing taxpayer can choose to disregard the deemed disposal, in which case the assets remain in the Australian CGT net. A subsequent actual disposal then triggers Australian CGT on the full gain (including the gain accruing while you were a foreign resident).
The choice between taking I1 in the departure year or deferring under section 104-165 is genuinely complex. The right answer depends on facts. For some departures, taking I1 and resetting cost bases is cheaper. For others, deferring is. The interaction with the New Zealand transitional resident exemption matters too. If you become a New Zealand tax resident with the four-year exemption, gains realised during that window are generally exempt from New Zealand tax, which can shift the calculus on I1 timing.
There are also rules about the market value cost base where an asset becomes taxable Australian property (section 855-45) and the foreign resident capital gains withholding regime (which increased to 15% from 1 January 2025, with the previous AUD 750,000 threshold removed) that affect Australian property assets retained after departure.
For clarity, leaving Australia to live in New Zealand doesn’t require giving up Australian citizenship. Most Australians who relocate to New Zealand stay Australian citizens. What changes is tax residency, which is separate from citizenship.
Thinking seriously about the move?
The interaction between Australian departure rules and the New Zealand transitional resident exemption is where most of the planning value lives. Done well, the four-year window can be used to reposition a portfolio, restructure ownership, and substantially reduce the total tax bill across both countries. Done poorly, the departure year tax bill can be larger than necessary. We run dedicated Outbound Expat Tax Consultations to work through your specific situation, including CGT Event I1 timing, the section 104-165 choice, and the New Zealand side. Our consultations are conducted personally by Shane Macfarlane or Terryn Davidow, both partners of the firm. Generic advice isn’t good advice. Tell us your circumstances and we’ll analyse your facts and provide specialist advice for your situation.
KiwiSaver and Australian super
The Trans-Tasman retirement savings portability arrangement allows transfers between Australian complying superannuation funds and KiwiSaver schemes. For Australians relocating to New Zealand, this means Australian super can (subject to specific rules) be transferred into a KiwiSaver scheme. Going the other way, KiwiSaver balances can be transferred to Australian super.
The arrangement has specific procedural and timing rules, and the transfer is voluntary, not automatic. Not all funds or schemes participate in the same way. Some Australians choose to leave their super in Australia and access it in retirement under Australian rules. Others transfer to KiwiSaver for consolidation. Before transferring either Australian super to KiwiSaver or KiwiSaver to Australian super, the exact timing, tax treatment, preservation rules, fund participation and scheme rules should be checked.
What this looks like for different Australian profiles
Different Australian taxpayer profiles face different economics on the move.
The founder approaching exit. An Australian founder sitting on substantial unrealised gain in a private company faces the worst-case Australian outcome after 1 July 2027: 47% effective tax on the indexed gain (assuming the founder’s other income, or the gain itself, pushes total taxable income above the top threshold). New Zealand’s position is no CGT on the sale (provided the sale is genuinely a capital disposal, not a trading transaction). The departure timing matters enormously. Applying CGT Event I1 before the New Zealand move can be advantageous where the unrealised gain has not already substantially accrued. Deferring and selling during the New Zealand transitional resident period may reduce New Zealand tax friction, but it will leave the asset within the Australian CGT net. The Australian tax outcome needs to be modelled carefully before the section 104-165 election to defer the gain is made. This is the planning conversation that pays for itself many times over.
The high-income executive with a share portfolio. An Australian executive holding significant Australian or international shares faces 47% effective tax on indexed gains from disposals after 1 July 2027. New Zealand’s position is no tax on capital gains from shares. During the transitional resident period, dividends and interest from the foreign portfolio are also exempt. After year four, New Zealand worldwide taxation kicks in. New Zealand still does not generally tax capital gains on ordinary share disposals, but the FIF rules can tax an attributed return on many foreign share portfolios even without a sale. For Australian executives holding substantial foreign share portfolios, the FIF interaction needs careful modelling before the move.
The high-net-worth retiree. An Australian retiree with substantial Australian assets faces a different set of considerations. The 50% CGT discount removal affects the eventual disposal of investment assets, with the rate on the indexed gain depending on the retiree’s other income. For self-funded retirees whose investment income or realised gains push total taxable income above the top threshold, the effective rate on the indexed gain reaches 47%. The exemption for age pension recipients from the 30% minimum tax provides some protection for very low-income retirees, but most self-funded retirees considering relocation aren’t in that category. New Zealand’s transitional exemption plus the no-CGT regime can produce materially better after-tax outcomes. The cost-of-living and quality-of-life considerations are separate.
The family with school-age children. For families, the lifestyle comparison runs in both directions. New Zealand offers similar Western standards on education and healthcare, lower housing costs in most cities (Auckland is comparable to Sydney and Melbourne, but the rest of the country is materially cheaper), and a similar time zone band as Australia. Working for Families payments are available but mutually exclusive with the transitional resident exemption. For families with significant foreign-source investment income, keeping the transitional exemption is usually the better choice. For families dependent on local employment income, Working for Families may be more valuable.
The honest assessment of drawbacks
None of the above is an argument that New Zealand is uniformly better than Australia. It isn’t.
The New Zealand economy is smaller. Salaries in most sectors are lower than equivalent Australian roles. The job market for senior professionals is shallower, particularly in finance, consulting, and large corporate roles. If your earning capacity is tied to operating in a deep market, New Zealand can mean a meaningful pay cut.
Auckland housing is expensive in absolute terms and relative to local incomes. The cost-of-living picture depends heavily on where you settle. Wellington and the South Island are materially cheaper than Auckland.
Geographic isolation is real. Direct flights to most international destinations are longer than from Australia. Hub connectivity is generally through Sydney, Melbourne, or Singapore. If you travel internationally a lot, the extra flight time matters.
Healthcare and infrastructure quality is broadly comparable to Australia, but not uniformly better. Public healthcare wait times have been a political issue. Roads infrastructure outside major centres is sometimes limited.
The 39% top income tax rate is high by international comparison and applies above NZD 180,000, which is a lower threshold than the Australian top rate. However the rate is significantly lower than Australia’s 47% tax rate which kicks in above AUD$190,000 for Australian residents. For high-income earners on active income (salary, business income), the New Zealand tax bite is comparable to or slightly worse than Australia, even though the CGT position is much better.
None of this rules New Zealand out. It just means the move should be made for considered reasons rather than because “no CGT” looks attractive in a headline.
The bottom line
For an Australian seriously thinking about leaving after the 2026 Budget, New Zealand is the simplest move available. Same time zone band. No immigration friction. Cultural similarity. English language. Common law system. And meaningfully better tax position for capital gains, founders, and high-income earners with significant investment portfolios.
The transitional resident exemption is the most undervalued feature of the New Zealand tax system from an Australian perspective. Used properly, it gives a four-year window where foreign-source income and gains can be repositioned without New Zealand tax friction. Most Australian advice on New Zealand barely mentions it.
The Labour CGT proposal is real political risk worth watching, but its narrow scope (property only) means it doesn’t threaten New Zealand’s underlying no-general-CGT position. For Australians whose relocation thesis involves capital gains on shares, business interests, or non-residential property, New Zealand remains structurally favourable.
The drawbacks are real and worth weighing. Smaller economy. Lower top-end salaries. More expensive Auckland housing. Geographic isolation. New Zealand isn’t Australia with better tax. It’s a different country with its own trade-offs.
When you relocate overseas, it’s the things you don’t know that you don’t know that make all the difference financially between a roaring success and simply a change of scenery, same outcome, different country. The New Zealand move, properly planned, can be one of the more financially significant decisions an Australian high-income earner makes after 1 July 2027. Poorly planned, it can leave value on the table that should have been captured.
Get the New Zealand move planned properly
We’ve spent over 20 years advising Australian expats and Australians considering relocation. The New Zealand move involves several specific planning levers that most advisers don’t surface: the timing of CGT Event I1, the section 104-165 choice, the transitional resident exemption window, the KiwiSaver portability arrangement, and the interaction with the bright-line test if Australian residential property is retained. Done well, the move can save substantial tax. Done without proper planning, it can cost more than it should. Our Outbound Expat Tax Consultations are conducted personally by Shane Macfarlane or Terryn Davidow, both partners of the firm. Generic advice isn’t good advice. Tell us your circumstances and we’ll analyse your facts and provide specialist advice for your situation.
