Westpac will pay $165 million in additional tax as a result of changes to the taxation of financial arrangements.

The bank said on Wednesday it will record the additional tax charges in its results for 2011/12, even though the amount will be paid between now and 2014.

The charges arise from Westpac’s decision in April 2011 to bring its existing financial arrangements into the new taxation of financial arrangements (TOFA) regime, which would impact retrospectively on its merger with St George.