Abstract:
Unlike most OECD countries, New Zealand has never implemented a realisation-based capital gains tax (CGT). During the recent 2011 election the Labour Party announced its plans to change this position, broadening the New Zealand tax base by introducing a CGT. The Labour Party’s tax policies drew heavily from the Australian taxation system. However, the Labour Party only set out the broad framework for the proposed new tax. As the Australian experience shows, the devil is often in the detail. To date the primary reason offered against introducing a CGT in New Zealand has been its complexity. The Australian experience shows that there are a number of design features that can make a CGT complex and undermine the potential benefits of the tax. Ultimately it is suggested that while a CGT should be introduced into the New Zealand tax regime, it should be designed to avoid the problems encountered in Australia. Lessons can certainly be learned from across the ditch.