Westpac yesterday said it planned to appeal the adverse decision of the High Court of New Zealand over contested tax assessments arising from a series of structured finance transactions undertaken in the early 2000s.For now, though, Westpac will have to provide for the judgement of NZ$918 million, including interest. Not that Westpac, in a release to the ASX yesterday, was confirming that it planned to increase provisions to allow for the full amount. Rather, the bank spelled out the impact on its tier one capital ratios (of 25 basis points) "should Westpac increase its provisions".Westpac did not make any mention of the impact of any increased provision on its cash earnings, a semantic point that National Australia Bank employed in explaining its approach to dealing with a similar provision following the loss by Bank of New Zealand in a similar case three years ago.BNZ has said it will appeal, and now Westpac says it may.Both face the task of persuading appeals courts on points of law following some uncomfortable findings by the original judges.In his reasons for finding for the Internal Revenue Department and against Westpac, the judge, Rhys Harrison, carefully scrutinised the Guarantee Procurement Fee claimed as an expense by Westpac and which was central to the mechanics of the four structured transactions under review in this case.BNZ similarly lost its tax avoidance case, heard by a different judge, because of the way the GPF was interpreted. "The interposition of the GPF has proved decisive on the facts of both cases," Harrison wrote in judgement. While trying to answer the key question of whether the transaction had a separate purpose of tax avoidance which was not merely incidental or subsidiary to the commercial purpose, the judge noted the main focus fell on the GPF. Not only was the GPF found to be an essential component of the formula used to price the shares, but also its payment was the main step by which the transaction was effected. And even though the amount of GPF was substantial, the judge noted that it was never the subject of careful evaluation or negotiation. More importantly, even if the GPF was justifiable, its amount exceeded a notional market rate. Thus it was clear that the bank's primary purpose of going ahead with its first transaction was the prospect of generating substantial deductible expenses and altering the incidence of its income tax rate. Otherwise, there was no prospect of profitability and thus no commercial justification for the transaction.  "When the contrivance of the GPF with its surrounding documentary complexity is removed from the equation, the remaining element of the dividend, described as Westpac's marginal cost, equalled its own cost of funds. "The two imposts effectively cancelled each other out. There never could be a true profit margin," the judge wrote.