For Immediate Release
6 August 2004
New Zealand structured finance transactions
The New Zealand Inland Revenue Department (NZIRD) is reviewing a number of structured finance transactions undertaken by
Westpac in New Zealand.
This is part of an industry-wide NZIRD investigation, and Westpac’s involvement in it has been previously disclosed in
half yearly accounts, quarterly General Disclosure Statements in New Zealand and most recently at the 29 July market
briefing.
On 5 August Westpac received Notices of Proposed Adjustment (‘NOPAs’) in respect of three structured finance
transactions undertaken in 1999. A NOPA is an instrument through which the NZIRD advises a taxpayer that it is
considering amending its tax assessment from that in the tax return. It is not confirmation of a liability (a ‘Notice of
Amended Assessment’) by the NZIRD.
Westpac has received four separate NOPAs for each of the three transactions, proposing alternative grounds for possible
reassessment of the tax liability. As a result, we have received a total of twelve 12 NOPAs.
The proposed tax adjustments cover the 1999 to 2002 years and have a maximum potential tax liability of approximately
NZD85 million (with interest this increases to NZD 113 million).
The total potential liability for these transactions for the 1999 to 2004 tax years is approximately NZD97 million (with
interest this increases to NZD127 million).
Westpac is confident that the tax treatment we have applied in all cases is correct. The bank sought a binding ruling
from the NZIRD on an initial transaction in 1999 which, following extensive review by the NZIRD, was confirmed in early
2001. The principles underlying that ruling are applicable to, and have been followed in, all other transactions.
Westpac also received independent tax and legal opinions at the time, which confirmed that the transactions complied
with New Zealand law. These opinions have subsequently been reviewed and confirmed by legal counsel.
The NZIRD is also investigating other transactions undertaken by Westpac, which have materially similar features to
those for which NOPAs have been received. Should the NZIRD take the same position across all of these transactions, for
the periods up to and including the year ended 30 September 2004, Westpac has calculated that the maximum potential
overall primary tax liability in dispute would be approximately NZD548 million (with interest this amount would increase
to NZD 647 million).
The issue of a law change to address transactions of this type in the future is also currently being discussed with the
New Zealand Government and the NZIRD. Westpac, along with the rest of the industry, is working cooperatively with the
NZIRD in this regard.
Based on the binding ruling received, the independent tax and legal advice obtained and the acknowledged need for future
legislative change, Westpac is confident that the tax treatment applied in all cases is correct and does not expect to
raise a provision for any tax liability relating to this matter in its 2004 accounts.
ENDS