11 Aug 2009

BNZ to appeal ruling over tax case

5:11 pm on 11 August 2009

Bank of New Zealand says it has decided to appeal against the ruling in the tax case it lost in the Wellington High Court in July.

The bank is facing a $650 million bill after the court found it avoided paying tax by using used financial transactions which involved sending funds overseas.

The court ordered the BNZ to pay $416 million in tax it avoided between 1998 and 2005. The bank is also liable for $238 million in interest.

BNZ chief executive Andrew Thorburn says it is a complex area of law and the bank is not convinced that the High Court's decision was correct.

The BNZ is confident it has strong grounds for an appeal.

Despite this, the bank is making a $661 million provision for the case in its accounts.

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

The Inland Revenue Department argues the main Australian-owned banks avoided paying the tax and interest by sending money overseas in the form of cheap loans to international finance firms between 1998 and 2002.