Tax slug may leave St George and Westpac short on capital

Analysis by Macquarie Securities found that St George Bank and Westpac are most exposed to a more aggressive approach by the Australian Taxation Office over the taxation of hybrid capital securities. Macquarie said that the prospective tax liabilities were equal to eight per cent of St George’s core capital, and seven per cent of Westpac’s core capital. In nominal dollar terms, National Australia Bank faces the largest potential tax bill, of $687 million, followed by Westpac at $601 million and ANZ Bank at $216 million. The tax office believes interest payments made on some hybrid securities are dividends rather than interest payments, and are not tax deductible.