Stephen Knight

And you need to pay the capital gains tax as if you have sold the property, despite the fact that you have, in fact, not sold the property.

Well, in that case, you'd either have to borrow it, pay it in cash or sell the property.

Now, this is where it's very important that you actually check with an accountant because it does depend on the visa you're on.

Because my understanding is that exit tax situation likely doesn't apply to Kiwis on a special category visa, which is the standard New Zealand visa that most of us on are in Australia, which is considered a temporary visa.

But just check with an Australian accountant if you are purchasing a property

like in New Zealand and you're living over there, or you're making any sort of investments if you're living in Australia, because you don't want to invest thinking that you're not caught by these rules and then find out 10 years later that you actually are.

So I'm not sure the exact visa that couple were on, but the advice that they got was that these rules would apply to them.

Now, there might also be some lessons for Kiwis who are currently in New Zealand and are thinking about moving to Australia.

Now, one other thing that I've been thinking about with the two-tier system in terms of this capital gains tax is that there will likely be a lock-in effect.

Just walk everyone through how that works.

And a good example is, let's say you owned a property and you were trying to transfer from a growth to a yield strategy.

Typically, you'd say, well, I don't need that property anymore, the growth property.

Let me sell that, release that to the market.

I'll go buy something that suits my needs.

But now you might not do that and you might hold on to that property that might not suit

what your strategy now usually would be, which would be going towards something that's higher yielding, but you decide to continue holding onto it to avoid that tax.

That is typically what we see when capital gains taxes like this get introduced, because people are not dumb.

They decide to work within the rules, making the rational decision for them, which just means that it's not what they would usually do in the past, right?

Taxes change the incentives.

2028 is when they're expecting to have the next one.