Foreign bank tax tactics reviewed by ATO

Financial engineering by foreign banks is under fresh scrutiny by the Australian Taxation Office.

The Financial Review reported that some foreign banks have tried to illegitimately transfer losses to their Australian branches and subsidiaries to offset their profits and reduce their tax bill here.

Michael D'Ascenzo, commissioner of taxation, told the Financial Review that the ATO was "very concerned about the transfer of losses to offset profits they may have made in this country."

One example D'Ascenzo cited to the AFR was the sale of intangible assets for low value and the receipt of associated income from a tax haven country protected by secrecy laws.

The ATO detected efforts by foreign banks to shift profits offshore that are properly taxed in Australia.

Structured finance products created by banks are also under scrutinty, the ATO said.