A tax bill of NZ$918 million ($677 million) is faced by Australia's Westpac Banking Corp, after it lost on a tax case at a New Zealand court.

The bank revealed Thursday that New Zealand's Commissioner of Inland Revenue was supported by the court. The NZ's Commissioner of Inland Revenue claimed that Westpac had undertaken structured finance transactions that were designed to avoid tax.

As per the Westpac New Zealand Chief Executive George Frazis, the judgement is being reviewed by the bank, which is also mulling for an appeal.

Westpac estimated the financial cost of the judgement, including interest at NZ$918 million, a little more than it flagged in July. The bank said that it shall review appropriate provisions as part of its 2009 fiscal year results, to be released Nov. 4.

Shares for Westpac, which gained trading after the announcement, plummeted0.6 percent to A$25.37 in a broader market that was trading 0.3 percent higher. The bank specified that any change in provisions will not be included in its cash earnings.

The bank said, "An increase in its existing tax provisions would trim its Tier 1 capital ratio by about 25 basis points." The bank sees no difficulty in meeting any increase in tax payments.

"The case between the bank and the New Zealand Inland Revenue Department related to nine structured finance transactions undertaken in the country between 1998 and
2002," said a source.

Back in July, Westpac predicted that ruling against it in the matter would cost about NZ$903 million.