Banks to pay billions owed

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Four major banks have settled their long-running disputes with the Inland Revenue Department.

The Commissioner of Inland Revenue, Robert Russell, and the Solicitor-General, David Collins QC, said they are pleased long-running tax disputes have been settled.

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

The settlement, believed to be the largest commercial settlement in New Zealand's history, follows IRD's success in the High Court this year in two cases involving a particular type of transaction known as "structured finance". As late as this month Westpac, BNZ and ANZ National said they would take IRD to the Supreme Court in a bid to hang on to about $8 million in unclaimed funds the IRD said belongs to the Crown.

The High Court and Court of Appeal have both found against the banks in hearings over the past three years.

This month the three banks, all of which are challenging the IRD over contested "structured finance" tax bills which dwarf the sums involved, were granted leave to take their case to the Supreme Court.

- NZPA