Macquarie decides to take ATO to court over $318m

Macquarie has been in dispute with the ATO since it was slapped with the bill in June.

The tax bill relates to the 2004 financial year. When the bank first objected to the bill, Taxation Commissioner Michael D'Ascenzo rejected the appeal.

Faced with having to pay the bill or go to court, the bank decided on Friday to take the matter to the Federal Court.

Macquarie argues that the $318 million of revenue should be tax free. The stoush comes as the ATO faces several actions from banks on the tax treatment of franking credits on hybrid shares.

The ATO is also reviewing several asymmetrical swap transactions undertaken by banks such as Commonwealth Bank and National Australia Bank.

Across the Tasman, a tax dispute continues over structured finance transactions that have a combined liability of about $1.4 billion for the big four retail banks.

In its filing, Macquarie says it is applying for the Tax Office ruling to be "set aside or varied".

The matter is due back in court on April 14.

In the 2004 financial year, Macquarie paid about $161 million in tax, representing an effective tax rate of 24.5 per cent.

Macquarie declined to comment, citing a policy of not discussing matters before a court.