Community bank escapes company tax

Some local businesses operating community bank franchises of Bendigo and Adelaide Bank may not have to pay company tax following a successful case brought by the operator of the only local bank in Wentworth, New South Wales.

Wentworth District Capital Limited on Friday won a ruling from the Federal Court that the services it provided to the town were for community service purposes and thus the company did not have to pay tax on its profits. Nye Perram was the judge in the case.

The judge wrote in his reasons that the company's management of a Bendigo franchise did not amount to "the provision of banking services" but rather "the service it provided was the creation of the circumstances which would make it possible for a bank to operate in the town.

"In a town with no face-to-face banking services the facilitation of such services provided a substantial benefit to the community. That benefit was both real and tangible," the judge wrote.

"It consisted of the fact that local banking then became available, increasing in a concrete way the amenity of the town."