More than nine months after the country’s big four banks settled structured finance transaction disputes with the Inland Revenue Department (IRD) by agreeing to cough up about NZ$2.2 billion, Rabobank has disclosed it’s still fighting on in its own structured finance dispute with the taxman.
Rabobank’s June quarter General Disclosure Statement notes the bank received Notices of Proposed Adjustments for the 2001 to 2004 tax years from the IRD in respect of a “conduit type” transaction.
“No amended assessments at this stage have been received from the IRD in respect of this matter,” Rabobank says.
“The bank has obtained independent legal advice that confirms the transaction complied with New Zealand tax law.”
In its General Disclosure Statement for the June quarter last year, Rabobank said the overall primary tax amount in dispute was about NZ$14 million, with interest (net of tax) capped at NZ$7 million, as the payment of the primary tax was made in November 2007.
A spokeswoman from Rabobank declined to comment further. The bank has previously disclosed the dispute also involves its subsidiary, Rabo Securities and Investments (NZ) Limited.
Meanwhile, an IRD spokeswoman said the department was unable to comment on any individual taxpayer so couldn’t comment specifically on details of the case including on how much money was involved or where the dispute was at.
Asked if the IRD was challenging, or considering challenging, any further banks or financial institutions over structured finance transactions, she said structured finance was considered quite a wide term and could refer to a variety of different transactions.
“Depending on how it is defined, Inland Revenue may be involved in such litigation and could be involved in further litigation in the future,” the spokeswoman said.
However, she said the conduit legislation had been repealed and therefore no new transactions can be undertaken under the conduit rules.
“At this time, we are not engaged in any conduit related litigation. However, we cannot rule out in the future being engaged in conduit related litigation in relation to transactions undertaken before the repeal of the legislation."
The IRD announced on December 23 last year that long running structured finance transaction disputes with BNZ, Westpac, ASB, and ANZ had been settled. The four banks agreed to pay 80% of what the IRD was demanding from them, or about NZ$2.2 billion in total. That settlement, touted by the IRD as the largest commercial settlement in New Zealand's history, followed the IRD’s victories in the High Court against BNZ and Westpac over the transactions.
The Commissioner of Inland Revenue, Robert Russell, said at the time; "Our decision to pursue these cases has been shown to be absolutely right, and it has returned a very good result for the taxpayers of New Zealand."
"We believe this sends a strong signal to companies operating in New Zealand - like all taxpayers they must meet their obligations," Russell added.
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