Westpac receives cash injection
(26 October 2010 – Australia) Westpac Banking Corporation’s annual statutory net profit will receive a boost of around A$685 million as a result of tax consolidations from the takeover of St George.
The Australian Taxation Office has completed the complex tax issue of assessing the value of several St George assets.
Despite the cash bump, which will result in the group’s Tier One capital ratio and core capital ratio receiving another 24 basis points, the contribution will not be included in Westpac’s cash earnings for fiscal 2010.
The additional A$685 million is a result of tax on the increase in value of certain St George assets not being required to be paid in the past two tax years.
This means that the tax paid on the assets in 2009 would be refunded, with adjustments being made to tax to be paid in 2010.
If the bank had received tax adjustments within the initial 12 months of the merger, the merger price would have been reduced by six percent to A$11.5 billion, Westpac said.
The bank added that further material adjustments to the merger may be required as derivative contracts expire, but the size of those adjustments cannot currently be determined.
However, no further adjustments were expected to impact Westpac's ability to pay fully franked dividends, the bank claimed.
Despite the cash bump, which will result in the group’s Tier One capital ratio and core capital ratio receiving another 24 basis points, the contribution will not be included in Westpac’s cash earnings for fiscal 2010.
The additional A$685 million is a result of tax on the increase in value of certain St George assets not being required to be paid in the past two tax years.
This means that the tax paid on the assets in 2009 would be refunded, with adjustments being made to tax to be paid in 2010.
If the bank had received tax adjustments within the initial 12 months of the merger, the merger price would have been reduced by six percent to A$11.5 billion, Westpac said.
The bank added that further material adjustments to the merger may be required as derivative contracts expire, but the size of those adjustments cannot currently be determined.
However, no further adjustments were expected to impact Westpac's ability to pay fully franked dividends, the bank claimed.
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