Wellington, Oct 8 NZPA - Westpac Banking Corp has lost a court case in which $961 million of tax and interest is in dispute with New Zealand's Inland Revenue Department (IRD).
IRD commissioner Robert Russell welcomed the decision, while Westpac NZ chief executive George Frazis expressed disappointment and said the bank would consider appealing.
Westpac is also considering the issue of provisions as part of its full year result due on November 4. It has so far treated the disputed amount as a contingent liability.
IRD said Westpac had to pay $961m in back taxes. Westpac said the financial cost of the judgment was $918m.
Justice Rhys Harrison ruled the structured finance transactions were tax avoidance arrangements entered into for a purpose of avoiding tax, IRD said in a statement. "This is the second significant decision in our favour involving banks and this type of transaction, and we're pleased with the outcome," IRD's Mr Russell said.
Bank of New Zealand (BNZ) said in August it was appealing a case it lost in the High Court at Wellington involving structured finance transactions, but it made a $661m provision for the case in its accounts.
IRD has yet to decide on potential penalties in the cases.
Five banks face more than $2 billion of disputed tax assessments for 22 structured finance transactions.
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