24 Dec 2009

Tax avoidance issue still unclear - ICA

5:36 pm on 24 December 2009

The Institute of Chartered Accountants says there is still uncertainty surrounding tax avoidance cases following the settlement of a tax dispute between banks and the Government.

The four main trading banks: BNZ, Westpac, ASB Bank and ANZ National will pay in total more than $2.2 billion in back taxes and interest.

Earlier this year, two High Court rulings found BNZ and Westpac liable for using structured finance transactions from 1998 - 2002 to avoid paying tax.

ICA tax director Craig Macalister says it's good news for the banks and taxpayers.

But he says a more definitive tax ruling from higher courts would have been helpful.

He says the law on tax avoidance "is like trying to follow the Wellington rugby team - you never know which way it's going next".

Mr Macalister says some clarity is needed.

As part of the agreement, the banks will repay about 80% of what they owed in tax and interest.

ANZ National is still disputing one transaction, which it says involves $27 million in tax.

The payments will end any legal action.