The NZ Super Fund and Canada’s Public Sector Pension Investment Board warned the Australian
The NZ Super Fund and Canada’s Public Sector Pension Investment Board warned the Australian Government that proposed capital gains tax changes risked “weakening Australia’s reputation as a stable and predictable investment jurisdiction”. In an April submission, the two pension funds cautioned that broadening the tax base to capture assets like wind turbines and transmission lines would establish a concerning precedent by taxing long-term foreign investors on gains that accrued when such assets were not subject to CGT in Australia.
Retrospective Tax Proposals Dropped After Pushback
Australia ultimately forged ahead with its plan to broaden the assets captured by the capital gains tax but decided to apply the changes only going forward, shutting down a contentious proposal to backdate the tax reform to 2006. Those changes took effect on October 1. In their submission, the NZ Super Fund—which held NZ$89.9 billion in assets under management as of October 31, 2025—and its Canadian counterpart pointed to competitiveness issues, highlighting a widening tax differential between foreign investors and Australian superannuation funds.
Inland Revenue Officials Warned of Sovereign Risk
In New Zealand, Inland Revenue initially withheld its official briefing to Finance Minister Nicola Willis and Revenue Minister Simon Watts, arguing that releasing the material could prejudice international relations and New Zealand’s standing with Australia. The Ombudsman intervened following a complaint from Newstalk ZB after Minister Willis publicly criticized aspects of Australia’s tax policy. In the released briefing, Inland Revenue officials noted that the original Australian proposals provoked a significant negative reaction and created “sovereign risk”. Officials warned that reduced investment in Australia could subsequently impact New Zealand, as direct investment in New Zealand often follows as a second step from direct investment into Australia.
Domestic Political Debate Intensifies Over Tax Policy
The trans-Tasman dispute coincides with political debate over tax policy on New Zealand’s campaign trail, where the Labour Party has been campaigning on a “simple, targeted” capital gains tax it promises nine out of 10 Kiwis will not pay. Nicola Willis previously used Australia as an example to claim “a capital gains tax always grows”.
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