All four of Australia’s major banks are likely to fall foul of the New Zealand government’s review of the banking sector and the Inland Revenue’s crackdown on structured finance transactions, which may result in the banks paying more tax in the future.
According to the Australian Financial Review, a report by investment bank Merrill Lynch has calculated that Australia’s big four banks have underpaid New Zealand corporate tax by about A$746 million since 1998.
New Zealand Revenue Minister Michael Cullen, confirmed in a statement issued at the end of last month that the Inland Revenue and Treasury are reviewing the tax laws applying to trading banks to ensure they are “robust”.
“The work has been underway for around a year now and has included consultation with the banking industry and tax practitioners,” commented Dr Cullen.
A report on the issue is due out in the coming months, upon which the government will consider any legislative changes that it deems are necessary to tighten up the rules.
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