Banks won’t lose on tax

it would give the banks an extra three months to stump up the first instalments.

In a memorandum distributed on behalf of Treasurer Scott Morrision, the government said it was “not possible to be unequivocal as to the ultimate incidence of the levy”.

“It can be passed through to those the banks lend to (in respect of residential mortgages, business lending and personal credit), deal with or provide services to,” the report said.

The tax could also be passed through to depositors or investors in bank bonds, “or be borne by the banks themselves (through reduced profits, or via increased efficiency or other cost-cutting measures)”, it said.

“The economic impact of the levy will depend upon the extent to which it affects bank borrowers, lenders, shareholders or some combination of these groups.”

A push by the banks for a “sunset clause”, where the tax would cease once the Budget was in surplus, has also been rejected by the government.

The legislation locks the tax in at 0.06 percentage points, meaning both houses of parliament would need to approve any move to increase the rate.

The government wants to raise $6.2 billion a year from the tax, which will hit Westpac, the Commonwealth Bank, National Australia Bank, ANZ and Macquarie.

Smaller banks, such as Bendigo & Adelaide Bank and Suncorp, will not have to pay.

Industry lobby group the Australian Bankers’ Association said the government had yielded to a push from banks not to tax derivative transactions, nor the money they held with the Reserve Bank.

Taxing those transactions and that pot may have led to “unintended consequences across the financial system”, ABA chief Anna Bligh said.

Mr Morrison said the first payment date for the levy would be deferred until March 21, at which point the banks would have to pay their instalment for the six months to December.

This would provide “additional time for banks to make necessary systems changes”, he said.

The banks will then have to pay a levy of 0.015 per cent on relevant liabilities every quarter, tallying up to the 0.06 per cent annual hit.