Tax office slaps second tax demand on St George

The Australian Taxation Office issued a demand on St George Bank for $112 million in unpaid tax over deductions on hybrid capital the ATO considers to be equity rather than debt. The tax demand follows an earlier demand for $40 million. St George said the tax assessments were less than expected, that it would contest the tax demand, and that it would not make a provision to pay the tax. But the bank has decided to stop claiming deductions on interest paid on subordinated debentures from 2005.