Tax Cases Wont Influence Bank’s Ratings
July 23, 2009 New Zealand Taxation
Both Moody’s and Standard & Poor’s credit rating agencies have affirmed that they will not be changing their outlook on the New Zealand banks involved with tax payback cases.
Following a High Court decision in which BNZ bank was found liable to pay $416 million in unpaid taxes and a possible $238 million in use of money interest, thoughts have been centered around how this would affect the banking institution. ANZ bank, Westpac and the owner of ASB, the Commonwealth Bank of Australia are all also entangled in discussion with the Inland Revenue Department about owed taxes.
Moody’s Sydney-based assistant vice-president Marina Ip stated that while significant, the decision would not see the bank pay more than 60% of its expected yearly pre-tax earnings. So, individually this will not decrease its rating, although it is admitted that growth will be affected, it will not see the bank become a non-profitable business.
Standard & Poor’s has already confirmed their ratings of the banks, including BNZ post the High Court decision.