Westpac faces fresh tax reassessment of $85m

Westpac said today it faced a fresh potential tax bill of up to $85 million including interest relating to structured finance transactions affecting the 2000 tax year.

The latest IRD reassessments relate to three structured finance transactions undertaken in the 1999 year and two structured finance transactions undertaken in 2000, which affected the 2000 tax year.

The maximum potential tax liability reassessed for the 2000 year is $61 million, or $85 million including interest.

Westpac said it would dispute the reassessment and was confident the tax treatment applied was correct.

The latest reassessment follows on from IRD's reassessment of the 1999 tax year, for which Westpac said its maximum potential tax liability was $18 million, rising to $25 million with interest.

Westpac said it had sought a binding ruling from the IRD on an initial transaction back in 1999, which was confirmed in early 2001 following an extensive review.

"Westpac therefore does not accept that the reassessments it has received from the NZIRD with respect to the 2000 tax year impact of the five transactions are correct and will contest them," the statement said.

The bank has already disputed the reassessments issued for the 1999, and the matter is currently before the court.

Westpac said it did not expect to include a provision for tax liability relating to the matter in its 2005 accounts Last week ASB Bank said it faced a potential tax bill of up to $157 million for back taxes relating to structured finance transactions made between 2001 and 2003.

ASB also said it was confident the tax treatment it had adopted for the transactions was correct. BNZ and ANZ National are also facing potential back tax bills for structured financial transactions.

- NZPA