The NZ Super Fund teamed up with its Canadian counterpart, the Public Sector Pension Investment Board, to raise concerns directly with the Australian Government over how the proposals risked “weakening Australia’s reputation as a stable and predictable investment jurisdiction”.
The Australian Government was told broadening the tax base would “establish a concerning precedent”. Photo / Getty Images
The Australian Government ended up forging ahead with its proposal to broaden the assets captured by the capital gains tax but decided to only apply changes going forward. It shut down the contentious proposal to backdate the tax reform to 2006, two decades on.
Changes took effect on October 1.
In an April submission, the NZ Super Fund and its Canadian counterpart raised concerns over the retrospective element of the proposal.
“As currently drafted, the Government would be taxing long-term foreign investors on gains that accrued when such assets were not subject to CGT in Australia,” the pension funds said.
“They also point to competitiveness issues, noting a widening tax differential between foreign investors and Australian superannuation funds.”
The NZ Super Fund and the Canadian scheme said broadening the tax base as proposed by the Australian Government would “establish a concerning precedent as the Australian Government would be taxing assets and gains that were previously subject to deliberate policy concessions or exemptions under Australia’s tax framework”.
The submission said the New Zealand Super Fund had “NZ$89.9 billion of assets under management as at 31 October 2025 and invests in diversified assets throughout the world, including Australia”.
As for Inland Revenue, it initially declined to release its briefing to Finance Minister Nicola Willis and Revenue Minister Simon Watts on the impact of the proposals, citing concern this could damage New Zealand’s standing with Australia.
Inland Revenue argued that “making available … that information would be likely to prejudice the security or defence of New Zealand or the international relations of the Government of New Zealand”.
However, the Ombudsman intervened after Newstalk ZB complained the document was withheld, as Willis herself had issued a press release criticising aspects of Australia’s CGT.
In its briefing, Inland Revenue noted the Australian Government’s original proposals “provoked a significant negative reaction in Australia” and created “sovereign risk”.
Inland Revenue officials said “commentators warn that the changes, particularly if made without transitional relief, may lead to decreased confidence in Australia as a location for long-term investment. The proposed changes follow several other recent measures tightening Australia’s investment settings for non-residents.”
Inland Revenue warned reduced investment in Australia could impact New Zealand, as investors often looked to New Zealand once they had invested in Australia.
Inland Revenue officials said “direct investment in New Zealand often follows as a second step from direct investment into Australia”.
Officials suggested investors were “likely to be dissatisfied” with aspects of the then-proposed tax changes, such as the fact the only concession was for renewable energy assets.
Inland Revenue met with Deloitte and the New Zealand Superannuation Fund to further discuss “stakeholder concerns”. Details of these concerns were not made public under the OIA.
It comes as political discussions around a proposed capital gains tax take shape on the campaign trail.
National Party finance spokeswoman Nicola Willis said it was “another example of extra tax backfiring and damaging prospects for investment and growth”.
“The New Zealand Labour Party’s capital gains tax and all the other taxes proposed by its political mates would have exactly the same impact here,” Willis said, adding New Zealand needed to attract investment, and not discourage it.
Labour has been campaigning on a “simple, targeted” CGT it promises nine out of 10 Kiwis will not pay.
Willis previously used Australia as an example to claim “a capital gains tax always grows”.
Read the letter here:
Read Inland Revenue’s briefing here:
Azaria Howell is a multimedia reporter working from Parliament’s press gallery. She joined NZME in 2022 and became a Newstalk ZB political reporter in late 2024, with a keen interest in public service agency reform and government spending.