Westpac gives taxman extra six months

By PAULA OLIVER

Westpac has cleverly given the Inland Revenue Department a further six months to review a type of transaction that lumped the BNZ with a sizeable tax bill last month.

The department is looking into structured financial transactions, which can involve a foreign company using a New Zealand subsidiary to invest in a third country and pay a low 15 per cent tax rate.

Some of the transactions under review date back to 1999. But the department cannot by law review transactions more than four years after a return was filed.

For Westpac, that cut-off is fast approaching. Yesterday it revealed it had voluntarily given the department a further six months to look into the transactions.

That means it avoids Inland Revenue effectively being forced into issuing a high bill in order to continue with its review.

BNZ was landed with its $57 million bill, which could yet reach more than $200 million, on the day before its deadline ran out.

"We didn't want to prompt them," Westpac's local chief executive Ann Sherry said yesterday.

"There was no value in us backing them into a corner so that they felt they had to put a stake in the ground."