![\"Christopher](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/06\/eafa9fc9a4ae7be1d1c6ca446c7e0a33.jpeg\")
<\/p>\nThe Albanese government\u2019s CGT reforms are set to cause a \u201csurge\u201d of Australian capital into the international market including New Zealand, economists have warned.<\/p>\n
From July 1, 2027, the existing 50 per cent capital gains tax discount will be replaced by cost-base indexation for assets held for more than 12 months.<\/p>\n
This means investors will only be taxed on their “real” capital gains above inflation and a minimum tax rate of 30 per cent on net capital gains will also apply.<\/p>\n
However, assets held before July 1, 2027, will still have the 50 per cent discount applied to the gains that accrued prior to this date.<\/p>\n
As Labor changes the CGT settings and risks disincentivising domestic investment, New Zealand has put a line through the tax altogether.<\/p>\n
Prime Minister Christopher Luxon said his government would not introduce capital gains taxes, arguing it would be an economic “wrecking ball”.<\/p>\n
Capital to ‘surge’ out of Australia due to CGT changes<\/p>\n
University of Tasmania senior lecturer in economics professor Maria Yanotti said Labor’s changes would push investors to seek new investment opportunities which may exist outside Australia.<\/p>\n
This includes New Zealand.<\/p>\n
Speaking to SkyNews.com.au, Professor Yanotti said the strict 30 per cent minimum tax floor on capital gains and the cost base indexation would increase the risk and lower the returns for investors.<\/p>\n
A reduced return on investments, particularly in the short-to-medium term until expectations \u201cadjust\u201d to the new rules, are expected to drive significant cashflows out of Australia.<\/p>\n
\u201cThe 2026 CGT reforms will most likely shift capital away from speculative, high-growth assets into inflation-hedged instruments, potentially international markets, and heavily on new builds and superannuation,\u201d Professor Yanotti said.<\/p>\n
Professor Yanotti said when a country increases its domestic tax on capital growth, investors \u201cnaturally\u201d seek more competitive jurisdictions.<\/p>\n
Investors may seek to take advantage of arbitrage in countries without CGT, such as New Zealand, or regions with highly competitive corporate tax environments, like Singapore.<\/p>\n
\u201cBut investing overseas comes with foreign exchange risks, complex foreign tax credit structures, and tightened Australian rules regarding offshore assets and foreign resident regimes,\u201d Professor Yanotti said.<\/p>\n
\u201cMost likely though is that, to bypass the 30 per cent flat capital gains tax floor on personal or trust investments, individual investors are highly likely to redirect capital into international and domestic share portfolios within their superannuation funds to capitalise on the lower internal tax rates of the superannuation system.\u201d<\/p>\n
As New Zealand does not have a comprehensive CGT, they \u201ccould receive a capital inflow from Australia”.<\/p>\n
\u201cIf Australian investors face a 30 per cent minimum floor and a loss of the 50 per cent CGT discount at home, New Zealand assets can look more competitive,\u201d Professor Yanotti said.<\/p>\n
\u201cThis could drive a surge of Australian capital into the NZ market.\u201d<\/p>\n
The new budget will give incentives for the superannuation sector to grow even more, she added.<\/p>\n
Australia\u2019s superannuation sector holds approximately $4.44 trillion in total assets, roughly 1.5 times the size of Australia’s entire annual Gross Domestic Product (GDP), according to APRA.<\/p>\n
Aussie innovation to take a hit as investors look elsewhere<\/p>\n
On top of the capital outflow, domestic entrepreneurs are expected to be \u201cdisincentivised\u201d from early-stage Australian innovation projects.<\/p>\n
Professor Yanotti said some investments which have returns close to the inflation rate may allow investors to reduce taxes, but high-performing assets with high rates of return would be \u201cpenalised\u201d.<\/p>\n
\u201cThese new rules could disincentivise entrepreneurs, angel investors, venture capitalists from building and funding high-risk, early-stage Australian innovation,\u201d the Tasmanian economist said.<\/p>\n
\u201cThis may be particularly the case in the short to medium-term, until the market generates new expectations, internalising the new costs.\u201d<\/p>\n
Centre for Independent Studies Executive Director Michael Stutchbury said that there was \u201cnothing wrong with some CGT\u201d, in principle, but at a relatively low rate.<\/p>\n
While New Zealand had a top personal tax rate of 39 per cent, together with zero capital gains tax \u201cglobally focussed Australian enterprises\u201d could move operations to its neighbour.<\/p>\n
\u201cTogether with zero capital gains tax, that provides an incentive for entrepreneurs and globally focused Australian enterprises to operate out of NZ – or Singapore or the US – rather than high-taxing Australia which now proposes to increase taxes on capital,\u201d Mr Stutchbury told SkyNews.com.au.<\/p>\n
<\/p>\n
Dual-listed companies may also consider shifting their capital allocations, headquarters, or asset portfolios into New Zealand entities to preserve wealth.<\/p>\n
However, New Zealand may also have worries of its own.<\/p>\n
A combination of the CGT and negative gearing measures may cause a \u201csharp cooling\u201d or \u201ccredit tightening\u201d in Australian property and equity markets.<\/p>\n
\u201cThis economic slowdown could slow New Zealand export demand, as Australia is one of New Zealand’s largest trading partners,\u201d she said.<\/p>\n
Tug-of-war between investors and first home buyers\u00a0<\/p>\n
While the changes to CGT and negative gearing are meant to create an \u201ceven playing field\u201d in the housing market, economists have told SkyNews.com.au that the cost of construction could be \u201cpushed up\u201d.<\/p>\n
Meanwhile, investors purchasing new residential properties will have the option to choose between the old 50 per cent discount or the new indexation model.<\/p>\n
Investors would have \u201chigh incentives\u201d to purchase new builds as they can choose between the old 50 per cent CGT discount system or the new inflation-indexation model.<\/p>\n
They can also retain full negative gearing privileges against wage income, Professor Yanotti added.<\/p>\n
\u201cThis would fuel demand for new builds and supply for new builds, keeping in mind that supply for new builds remains quite inelastic,\u201d Professor Yanotti said.<\/p>\n
\u201cWhich means, higher demand for new builds without responsive supply of new builds will push prices for new houses up, and more importantly push the cost of construction up.\u201d<\/p>\n
If supply for new housing is not responding to demand fast enough, the effect could have a \u201cspill-over\u201d into older buildings.<\/p>\n
In comparison to investors, first home buyers will have incentives to purchase the relatively more affordable, existing housing stock.<\/p>\n
However, Professor Yanotti warned that buyers of older homes could face hidden, long-term costs.<\/p>\n
\u201cThe cost of construction will go up, so the cost of potential renovations would also be high,\u201d she said.<\/p>\n","protected":false},"excerpt":{"rendered":"The Albanese government\u2019s CGT reforms are set to cause a \u201csurge\u201d of Australian capital into the international market…\n","protected":false},"author":2,"featured_media":726227,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[8932,64,63,99,44704,15855,164,91495,47714],"class_list":["post-726226","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-albanese","tag-au","tag-australia","tag-business","tag-cgt","tag-economists","tag-economy","tag-invest","tag-sky-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/726226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=726226"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/726226\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/726227"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=726226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=726226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=726226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}