One of Australia’s top banks, the Commonwealth Bank of Australia
(ASX:CBA) says it may have to pay back NZ$285 million in taxes as a result of a New Zealand High Court case with fellow major bank Westpac Banking Corporation
(ASX:WBC).
In a statement released this morning, the bank says following the recent decision by the High Court of New Zealand concerning Westpac’s tax treatment of certain conduit structured finance transactions, the Commonwealth Bank’s New Zealand subsidiary ASB is reviewing its own position.
ASB Group total tax in dispute as at September 30 2009 was NZ$285 million, including tax affected interest. This is based on amended assessments for the 2001 to 2004 tax years issued by the Inland Revenue Department.
The bank says taking into consideration current provisions, the residual exposure would be equivalent to approximately six basis points of Tier 1 Capital for the Commonwealth Bank. Just last week Westpac lost a tax case in the New Zealand High Court that took into account nine transactions disputed by the Department of Inland Revenue, costing the bank NZ$918 million.
The Commonwealth Bank’s 2009 net profit remained relatively unchanged from its result the year before.
