Sharechat Logo

French bank latest to fall to IRD tax avoidance net

Thursday 7th August 2014

Text too small?

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.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report