Dunne: Banks settlement victory for legal process

  • Peter Dunne

The settlement announced tonight between the Commissioner of Inland Revenue and four major banks in a long-standing court dispute was in a victory for legal process, Revenue Minister Peter Dunne said.

The BNZ, Westpac, ASB Bank, and ANZ National have agreed to settle cases with Inland Revenue, by the banks accepting liability for a combined sum that exceeds $2.2 billion. 

"This agreement brings to an end five years of a complicated legal battle. It is good news that all parties can now move forward," Mr Dunne said.

He said Inland Revenue had strongly pursued what it saw to be a clear-cut case of tax avoidance, and its diligence on behalf of the tax-paying public had been rewarded.

The case revolved around the IRD's assessments relating to cross-border structured finance transactions of a kind widely used by foreign-owned New Zealand banks in the late 1990's and early 2000's to reduce their local tax liability. Punitive penalty interest could yet be charged on the transactions.

Mr Dunne said that over half of the money agreed in the settlement is already reflected in the Crown accounts, so it is not a windfall for the Government.

"We need to see this amount in the context of the Government currently borrowing $240 million a week to keep things going," he said.