CBA clarifies implications from NZ tax case
(16 October 2009 – Australia) Commonwealth Bank (CBA) is reviewing the potential implications that could arise from the position of their New Zealand subsidiary, ASB, in relation to problematic structured finance transactions in New Zealand.
The CBA has the lowest exposure of the Big Four to the issues raised by the Inland Revenue Department. ASB group’s total tax in dispute, as of the 30th September 2009, was NZ$285 million (A$230 million).
If CBA is ruled against in relation to its own structure finance transactions, the result will be the equivalent of six bases points shaved from their tier one capital.
In the last case, Westpac had hoped that a 2001 ruling by the NZ Inland Revenue commissioner would convince the Auckland court that nine transactions between 1998 and 2002 satisfied all tax laws.
Last week the High Court in NZ ruled against Westpac in the court proceedings.
The High Court decision backed up the view of its sister court in Wellington, which ruled against the National Australia Bank in July on similar transactions.
If CBA is ruled against in relation to its own structure finance transactions, the result will be the equivalent of six bases points shaved from their tier one capital.
In the last case, Westpac had hoped that a 2001 ruling by the NZ Inland Revenue commissioner would convince the Auckland court that nine transactions between 1998 and 2002 satisfied all tax laws.
Last week the High Court in NZ ruled against Westpac in the court proceedings.
The High Court decision backed up the view of its sister court in Wellington, which ruled against the National Australia Bank in July on similar transactions.
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