For the next few years at least, NZ can market itself as the “light‑touch” jurisdiction for startups that want proximity to Australia. (Image: Getty)
Australia’s proposal to slap a 30% floor on capital gains makes New Zealand the friendlier side of the Ditch for company founders – at least for now.
Australia’s 2026 Federal budget tore up the old deal where, if an Australian investor held an asset for more than 12 months, they paid tax on only half the gain.
That 50% discount is being scrapped and replaced with cost-based indexation, so they’ll pay tax on the “real” gain after inflation.
On top of that, any real capital gain will be subject to a minimum 30% tax rate, regardless of the taxpayer’s marginal tax band, with only narrow carve‑outs, such as the family home.
A cooling effect
What does that mean in real terms? Sydney-based equities management firm, Plato Investment Management, laid out a stark scenario:
"Take $100 invested in global shares (MSCI World ) growing at 7.01% per annum for 20 years. It generates roughly $288 in nominal gains," Plato pointed out in a LinkedIn post.
“Under today’s rules, a top-rate investor pays about $68 in tax. Under the inflation-adjusted system, that rises to around $101. The higher the real return, the higher the tax take.”
In comparison, the typical New Zealand investor holding the shares as a long-term investment would pay zero capital gains tax. The same goes for an early backer of a startup that has a big exit – think Trade Me, Seequent or Vend.
The proposed changes don’t just hit landlords with their fourth investment property. They apply to shares, managed funds, business assets and equity in private companies.
The Australian Government is seeking to alter the tax mix, reducing its reliance on taxing wages and placing greater emphasis on taxing wealth and assets.
It is betting that the tax changes, which include changes to negative gearing rules for properties, will primarily have a cooling effect on property prices, making housing more affordable, while also bringing in billions every year in additional tax revenue.
The startup grumbles across the Ditch
For Australian startup founders and early investors banking on a big exit to justify years of living on two-minute noodles, the changes are a real slap in the face.
LinkedIn’s Australian pages are in full meltdown post Budget night.
"You are actively making Australia a less favourable place to start, scale, and succeed," wrote Richard Li, founder of July, a Victoria-based entrepreneur making luggage and selling it directly to consumers.
“Capital and talent go where they are treated best. Places like Singapore, Hong Kong, the US and even New Zealand are about to welcome a massive wave of Australia’s brightest minds!”
Me&u co-founder Kim Teo was on the same page.
“If I were starting again tomorrow, would I be starting in Australia? Honestly, Singapore (where I was born and my folks live), the US, and even NZ start to look very different.”
“Even New Zealand!” could be our new business-friendly slogan!
Selling the NZ advantage (while it lasts)
Do we really have an opportunity to attract Australia-based investors and entrepreneurs seeking to reduce their tax exposure? Yes, we do.
For venture capital funds like Blackbird and Main Sequence Ventures backing trans‑Tasman portfolios, having founders and intellectual property in NZ starts to look less like a quirky lifestyle choice and more like prudent tax diversification.
Base your holding company in NZ, operate across ANZ, and list wherever you like. If your Australian exit is going to attract a 30% CGT floor, but a NZ‑based structure can soften that, why wouldn’t you consider it?
As Matthew Bennett, the Havelock North-based CEO of snack food maker Nibblish, chimed in on LinkedIn, NZ offers founders a stable business environment, relatively founder-friendly settings, and a great lifestyle.
“Talent and capital move where they feel welcome. Let’s start rolling out the red carpet.”
So what’s the opportunity? For the next few years at least, NZ can market itself as the “light‑touch” jurisdiction for startups that want proximity to Australia without inheriting Canberra’s growing enthusiasm for taxing capital.
If we got our act together, maybe we could lure over entrepreneurs working in strategic areas where we are light on talent: quantum tech, AI, aerospace, and gene technologies.
A change in Australian tax law could probably net us more in investment and talent than the Active Investor Plus “golden visa” scheme.
And it’s not as though Anthony Albanese’s political bedfellows on this side of the Tasman are intending to follow his lead on tax.
A more comprehensive way
Labour’s proposal for a capital gains tax is explicitly framed as targeting property only, carving out farms, business investments, shares, Kiwisaver, inheritances and personal items.
Labour’s CGT would apply to the profit made after July 1 2027, when a commercial property or residential investment property (excluding the family home) is sold.
So yes, the Australian budget has just handed NZ a marketing opportunity. Not that what was announced on Budget night in Canberra is set in stone.
In light of the business community’s hostility, the Australian Government said it will consult further on the proposed changes, which will require legislative amendments.
Let’s see if the huffing and puffing will result in the CGT proposals being watered down.
It would also be naive to assume we’ll remain an outlier forever. International pressure, domestic inequality debates and fiscal reality all point in the same direction.
Sooner or later, NZ will move toward a more comprehensive way of taxing capital gains. It’s the only way we’ll be able to cope with an ageing population and the ravages of climate change.
When that happens, much of today’s trans‑Tasman arbitrage will evaporate. Founders will be back to competing on fundamentals: talent, regulation, and capital, rather than clever tax geography.
That’s how it should be.
In the meantime, the smart move for policymakers is to lean into the window we have. That means helping founders move IP and teams here, and ensuring our own tax rules stay coherent and predictable.
We should make it easy to plug in and benefit from the brain gain.