Australia had been scheduled to travel to Napier for three T20s, but the countries' governing cricket bodies have agreed to abandon the series due to New Zealand's border controls and quarantine requirements.
Australia had originally committed to the tour on the basis of the New Zealand government's plan to ease restrictions at the trans-Tasman border, but that situation hasn't played out as expected.
"We thank New Zealand Cricket for making every effort to host the series, but unfortunately it wasn't possible given the border restrictions and quarantine requirements," said Cricket Australia chief executive Nick Hockley.
This cancellation follows the postponement of three one-dayers and a T20 scheduled to be played in Australia in January and February.
Australia and Sri Lanka are on the cusp of a five-match T20 series, beginning at the SCG on Friday.
Australia are the reigning T20 World Cup champions in men's and women's cricket.
For a daily dose of the best of the breaking news and exclusive content from Wide World of Sports, subscribe to our newsletter by clicking here!