Westpac Lose Tax Case
October 9, 2009 New Zealand Taxation
The Inland Revenue Department (IRD) has won its tax evasion case against Westpac Banking Corp, resulting in a NZ$918 million fine for the bank.
The New Zealand High Court made a decision to dismiss Westpac’s challenge to IRD’s decision that the bank owes $586 million in taxes for a series of structured finance transactions. The IRD claimed that between 1998 and 2002 the bank undertook a series of offshore transactions whose sole purpose was tax evasion. The court proceedings centered around nine such transactions, ranging between $390 million to $1.5 billion. Westpac has stated they may appeal the decision upon review of the judgment.
Westpac is currently liable for $918 million, $332 million of which consists of interest charged by the IRD on taxes unpaid. This sum could increase if the IRD decided to impose further penalties, though no official decision has been given on this.
Moody’s Investor Services stated that the outcome will not have an effect on Westpac Banking Corp’s credit rating, which currently stands Aa1. Although, the price of Westpac stocks did fall by 0.6% upon release of the news.