NEW ZEALAND Law and Practice Contributed by: Greg Neill, Fred Ward and Callum Burnett, Russell McVeagh
2.7 Capital Gains New Zealand does not have a comprehensive capital gains tax regime. However, there are deeming rules that may apply to treat certain receipts as income that would otherwise conventionally be regarded as capital in nature (including, for example, in relation to various real estate transactions and assets acquired with the dominant intention of disposal for profit). One such rule is the so-called “bright-line test” appli - cable to the sale of certain residential property. A gain made in circumstances where a residential property (other than a person’s principal residence) is bought and sold within the two-year bright-line period is deemed to be income even if it would otherwise be a capital gain. For New Zealand tax purposes, any capital gains derived by a company are generally only able to be distributed to shareholders in a tax-free form if the relevant company is liquidated. The risk otherwise is that the distribution is treated as a taxable dividend. With no general tax on capital receipts, New Zealand also limits the deductibility of capital expenditure. The distinction between capital and revenue expenditure is primarily determined through tests developed under case law. 2.8 Other Taxes on Transactions In addition to its income tax regime, New Zealand also imposes a broad-based value-added tax on the sup - ply of all goods and services in New Zealand, referred to as GST, at the rate of 15%. Certain transactions (including exported goods and services and sales of land between GST registered persons) attract a 0% rate of GST (known as being “zero-rated” for GST pur - poses). Supplies of financial services and residential accommodation are treated as exempt supplies and are therefore not subject to GST. New Zealand does not have stamp duty or any other transaction taxes. 2.9 Other Notable Taxes Although companies in New Zealand will not be sub - ject to any other notable New Zealand taxes (other than income tax and GST), there are certain specific
– a deduction is available anyway. Interest deductions for corporates are limited under New Zealand’s inter - est deductibility rules, not by reference to the use of the borrowed funds, but in the case of cross-border related-party funding, via the detailed thin capitalisa - tion and transfer pricing regimes. This ability for companies to automatically deduct interest does not, however, extend to interest expendi - ture that is related to certain mixed-use assets. The deductibility of interest expenditure that is incurred in relation to residential rental properties was previously limited, but was fully restored in April 2025. 2.6 Consolidated Tax Grouping Two or more companies that have 100% common ownership may elect into New Zealand’s consolidat - ed group regime, under which companies that form a consolidated group are treated as a notional sin - gle entity for tax purposes and are jointly and sever - ally liable for the entire group’s tax. If an election is made, it is not mandatory for all companies that are 100% commonly owned to be members of the con - solidated group; the consolidated group will comprise only those companies that elect to be members of the group. Subject to certain requirements, companies within a wholly-owned group may also elect to form an impu - tation group, to apply the imputation regime to those companies on a group basis. Given the commonality of New Zealand and Australian companies dual-listing on the New Zealand and Australian stock exchanges, imputation groups may consist of entirely New Zea - land companies, entirely Australian companies, or a mixture of both. There is also a similar regime for New Zealand GST. Two or more companies that have 66% common own - ership may also register for GST as a group. The group will be treated as a notional single entity for GST pur - poses and must choose one GST-registered member to be its representative. The representative is generally primarily responsible for the administrative aspects associated with the GST regime, including invoicing and filing tax returns.
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