The New Zealand branch of Westpac Banking Corp has revealed its intention to appeal the New Zealand High Court’s decision on the bank’s tax assessment.
Last month Westpac had challenged an amended assessment of their tax information by the Inland Revenue Department. The New Zealand High Court had decided to dismiss the challenge, leaving Westpac liable for NZ$586 million in unpaid taxes and a possible NZ$332 in interest. George Frazis, Westpac NZ Chief Executive, said, regarding the appeal decision “In our view there are sound arguments that warrant an appeal of the High Court’s decision. We consider those arguments are of sufficient merit to justify consideration by the NZ Court of Appeal”.
The IRD’s assessment amendment of Westpac revolves around a series of structured financing transactions, which were formed such that Westpac would make an equity investment in a foreign entity, who would repurchase this investment. All costs associated with the transactions would be classed as expenses and be used to offset tax liability.
Between 1998 and 2002, Westpac was accused of carrying out a nine such transactions, ranging between NZ$390 million and NZ$1.5 billion in value, that are claimed to have served no purpose other than tax evasion. The IRD amended the bank’s tax assessment to reflect this opinion.
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