Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


French bank latest to fall to IRD tax avoidance net

French bank latest to fall to IRD tax avoidance net

By Paul McBeth and Pattrick Smellie

Aug. 7 (BusinessDesk) - The New Zealand arm of the French bank, BNP Paribas, is the latest international bank to fall foul of the New Zealand tax department's campaign against the use of cross-border convertible notes, quietly agreeing to pay back tax of $18.435 million in an out of court settlement reached on March 21, according to Companies Office filings.

The disclosure of the settlement, after balance date in the accounts for the financial year to Dec. 31, is the first time Paribas has been linked to the use of either Optional or Mandatory Convertible Notes - OCNs and MCNs - which tax planners used to try and reduce tax liability in New Zealand by a swag of foreign corporations, most of them in Australia.

The notes allowed debt and equity to be structured across borders in the most tax-efficient way, but only if tax authorities did not deem them to be avoidance.

A test case involving Perth-based Alesco, which the New Zealand Court of Appeal decided in the Inland Revenue Department's favour in March last year, has created a flood of settlements with taxpayers using similar structures to avoid tax in New Zealand.

Notes to the accounts for BNPP (NZ) Ltd say the IRD issued notices for unpaid tax in March 2009 relating to the 2003, 2004 and 2005 tax years on OCNs issued in 2001 and 2002, for unpaid tax of $8.778 million. That assessment was challenged in the High Court in April 2009, but in March this year, the company "agreed to pay the IRD 11,547,995 euros (NZ$18,435,246) in settlement of the issued notice of assessment denying interest deductions for Optional Convertible Notes issued by the company in 2001 and 2002."

That allowed the reversal of assessments for $4.389 million in penalties, $1.357 million in late interest payments and $259,250 in core tax in 2013.

Among those caught in the IRD operation against the use of MCN's and OCN's were Telstra Corp, Toll Holdings, and former Mediaworks owners Ironbridge Capital.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Full: Dairy Payouts Steady, Cash Will Be Tight

Industry body DairyNZ is advising farmers to focus on strong cashflow management as they look ahead to the 2015-16 season following Fonterra's half-year results announcement today. More>>

ALSO:

First Union: Cotton On Plans To Use “Tea Break” Law

“The Prime Minister reassured New Zealanders that ‘post the passing of this law, will you all of a sudden find thousands of workers who are denied having a tea break? The answer is absolutely not’... Cotton On is proposing to remove tea and meal breaks for workers in its safety sensitive distribution centre. How long before other major chains try and follow suit?” More>>

ALSO:

Scoop Business: NZ-Korea FTA Signed Amid Spying, Lost Sovereignty Claims

A long-awaited free trade agreement between New Zealand and South Korea has been signed in Seoul by Prime Minister John Key and the Korean president, Park Geun-hye. More>>

ALSO:

PM Visit: NZ And Viet Nam Agree Ambitious Trade Target

New Zealand and Viet Nam have agreed an ambitious target of doubling two-way goods and service trade to around $2.2 billion by 2020, Prime Minister John Key has announced. More>>

ALSO:

Scoop Business: NZ Economy Grows 0.8% In Fourth Quarter

The New Zealand economy expanded in the fourth quarter as tourists drove growth in retailing and accommodation, and property sales increased demand for real estate services. More>>

ALSO:

Scoop Business: RBNZ’s Wheeler Keeps OCR On Hold, No Rate Hikes Ahead

The Reserve Bank has removed the prospect of future interest rate hikes from its forecast horizon as a strong kiwi dollar and cheap oil hold down inflation, and the central bank ponders whether to lower its assessment of where “neutral” interest rates should be. The kiwi dollar gained. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news