SFT Bank Rorts May Be Ongoing
Structured Financing Transactions May Not Be A Thing Of The Past For Aussie-Owned Banks
In light of IRD’s recent victory over BNZ’s structured financing transactions (described by IRD as a “rort” and by the judge as having “no commercial rationale, logic or purpose”), it is worth investigating whether the Australian-owned banks are still engaging in them, or have done so more recently than the period covered by IRD’s court actions against all of them.
We recommend that you check out this article “Westpac’s Financing Transaction: Is This Another Tax-Driven Arrangement?” by Sue Newberry, Associate Professor of Accounting at the University of Sydney. It was published in Foreign Control Watchdog 115, August 2007.
The deal detailed in her article took place after the July 1, 2005 start of the Taxation (Base Maintenance and Miscellaneous Provisions) Act which was aimed at preventing the banks engaging in structured financial transactions. Her conclusion was: “The arrangement does, therefore, seem to be one that warrants closer scrutiny”.
We urge the media to subject it (and any other similar deals) to closer scrutiny. This is no small matter –the structured financial transactions that are the subject of IRD’s court actions involve a potential tax and interest bill of $2.4 billion. The taxpayers of New Zealand, who are currently guaranteeing their deposits, are entitled to know if these rorts by the Aussie-owned banks are still going on.