12 Aug 2009

Green Party indignant over cost of tax case to date

3:59 pm on 12 August 2009

The Green Party says banks have cost the taxpaper $38.5 million in investigations and litigation over claims of tax avoidance.

The Bank of New Zealand is to appeal against a tax verdict delivered in the High Court in Wellington in July.

The BNZ is facing a $650 million bill after the court found it used structured finance transactions to avoid paying tax. The case was brought by the Inland Revenue Department.

Figures on the legal spending and investigations by the Inland Revenue Department were obtained by Green Party co-leader Russel Norman.

He says taxpayers are shelling out just to get the tax that was owed to them.

Case details

BNZ is making a provision of $661 million for the case in its accounts.

Chief financial officer Ken Christie says it is a complex area of law and the bank is not convinced the High Court's decision was the right outcome.

The BNZ is among five banks facing more than $2 billion of disputed tax.

Inland Revenue argues seven banks dodged paying tax and interest by sending money offshore in the form of cheap loans to international finance companies between 1998 and 2002.

In BNZ's case, the High Court found these transactions had no commercial rationale, logic or purpose and cost New Zealand $336 million in lost investment.