NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
and liabilities. This can give rise to a complex disposal (gain/loss) calculation (although a safe-harbour rule can apply in certain circumstances to allow an enter - ing partner to “step into the exiting partner’s shoes”). Other Taxes Unlike many other Commonwealth countries, New Zealand does not have a comprehensive capital gains tax (CGT), although capital gains are subject to tax in certain circumstances (eg, financial arrangements and land). Similarly, New Zealand does not currently impose land tax, inheritance tax, wealth tax, gift duty, stamp duty or gross-basis transfer tax. On 28 October 2025, the opposition New Zealand Labour party announced that for the 2026 general election it will be campaigning on a limited CGT, pro - posed to take effect in respect of gains made on and from 1 July 2027 at a flat rate of 28%. Broadly, the proposed CGT would tax gains made on commercial and residential property sales, but would exempt fam - ily homes, farms, shares/business assets/KiwiSaver, inheritances and personal items. The details of the policy are yet to be released. 9.2 Withholding Taxes on Dividends, Interest, Etc Withholding tax is generally deducted from non-resi - dent companies’ New Zealand passive income, such as dividends, interest and royalties. Rates of withhold - ing tax vary under domestic law; dividends are gener - ally subject to withholding tax at 30%, and interest and royalties at 15%. These rates are often reduced under New Zealand’s tax treaties to 0–15% for divi - dends, 10% for interest and 5% for royalties. Tradi - tional principles/rules in relation to “beneficial owner - ship”, economic substance and “treaty shopping” are generally relevant to New Zealand’s tax treaties. Imputation Credits New Zealand has an imputation credit regime, which is broadly similar to Australia’s “franking credit” regime. Imputation credits can be “attached” to dividends at a maximum ratio of 28:72, in line with the corporate tax rate (known as “fully-imputed” dividends). To the extent that fully imputed dividends are paid by New Zealand-resident companies to non-portfolio foreign
shareholders, the applicable withholding tax is gener - ally 0% under domestic law. Approved Issuer Levy In addition, where interest is paid by a New Zealand borrower to an unrelated non-resident lender, it is gen - erally possible for the debt to be registered as a secu - rity with the New Zealand tax authority and the Inland Revenue Department, and for a 2% “approved issuer levy” (AIL) to apply in place of withholding tax. AIL is imposed on the New Zealand borrower, and is gener - ally allowed as an income tax deduction (resulting in an effective 1.44% post-tax borrowing cost from AIL). 9.3 Tax Mitigation Strategies There are various strategies that can be employed to mitigate New Zealand tax liabilities. These include the following. • Carefully considering the investment/acquisi - tion structure – with an asset transaction (see 3.1 Transaction Structures ), the tax-depreciable cost base of fixed assets can usually be reset based on an agreed-upon purchase price allocation. By con - trast, with a share transaction, the tax-depreciable cost base cannot be reset (unlike in some other countries, where applications or elections can be filed to align the tax-depreciable cost base of fixed assets with the purchase price for the shares in the company). • A recently implemented “Investment Boost” regime allows an upfront deduction of 20% to be taken for the cost of many new depreciable assets that first become available for use on or after 22 May 2025. The standard tax depreciation deduction is still claimable in the year of purchase and in subse - quent years. • New Zealand companies can generally claim tax deductions for arm’s length interest, rents, royal - ties, management fees, etc, subject to transfer pricing rules and anti-hybrid rules (see 9.5 Anti- Evasion Regimes ). • While debt can be pushed down to New Zealand holding companies, the thin capitalisation (inter - est limitation) rules operate in substance to disal - low a tax deduction for interest to the extent that a foreign-controlled New Zealand taxpayer is too highly geared (unless such gearing is proportionate
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