Banks probed on tax records

By IAN LLEWELLYN

The big five Australian-owned banks could be paying about $600 million more a year in taxes under new laws to be announced in a few weeks.

The clampdown comes after Reserve Bank officials said they were uneasy about the manufactured nature of the banks' public accounts that made them look less profitable than they were.

Finance Minister Michael Cullen has been saying for some months that work was under way due to concerns that the tax paid by banks was not in proportion to the profits they made.

Reserve Bank papers released under the Official Information Act also showed deep concerns about how much banks report they pay in tax and how much ends up in the Government's coffers.

Going through the public statements of the big five banks shows that reported tax on profit was $678 million more than the Reserve Bank estimated the banks actually handed over to the Government.

The Reserve Bank said that was a "crude estimate", as it could be influenced by many other tax issues.

The IRD has issued several reassessments to banks in recent months.

Once all the banks are reassessed for previous tax years, it could swell the Government's coffers by more than $1 billion if the highly disputed clawbacks are successful.

IRD deputy commissioner Robin Oliver was unwilling to comment on the banks' conduct or the Reserve Bank officials' views on them. The dispute was over tax avoidance - which was not illegal - not tax evasion.

Oliver said it was difficult to estimate how much more tax the banks would pay in future. He agreed that $678 million could be used as a simple ballpark figure.

The banks were cooperating with the IRD "in a sometimes free and frank manner."

Cabinet had agreed to an "outline of a solution" for future years which Cullen's office said would be disclosed in a few weeks.

* The Bank of New Zealand said the papers were inaccurate and misleading. ASB also rejected the figures.

IN RESERVE

Reserve Bank figures for 2003 National Bank's pre-tax profit was $439 million with reported tax $143 million, whereas the tax paid was $70 million.

ASB's profit was $419 million with reported tax of $141 million but it actually received $9.8 million back.

Westpac's profit was $667 million with reported tax of $203 million and paid tax of $48 million.

BNZ's profit was $752 million with reported tax of $204 million and paid tax of $56 million.

ANZ's profit was $593 million with reported tax of $176 million and paid tax of $56 million.


- NZPA