The Australian Tax Office singled out foreign banks in general and Morgan Stanley in particular over what the commissioner, Michael D'Ascenzo, labelled as "tax mischief".In a speech to the Australian Bankers Association on Wednesday D'Ascenzo said that while tax revenues from the financial services industry are consistently around 40 per cent of income tax revenue in large business, "there appears to be more variability in collections from foreign banks, notably branches operating in Australia."He said APRA statistics "seem to indicate that income tax revenues from foreign bank subsidiaries and branches in the near term may be minimal."My concern is there may be more inherent tax risks in the foreign bank space. The fact that many foreign banks have had difficulties globally is a cause for that concern. I note that some foreign banks don't readily engage with us, reflecting perhaps a high risk appetite."D'Ascenzo said that "of particular concern to us was the introduction and rapid take-up across the financial market in 2007 of asymmetrical swaps, a financial arrangement explicitly designed to shift profits from one business to a lower taxed one."Morgan Stanley is the foreign bank behind this swap."While it originated in a foreign bank it was taken up across the market. While the arrangement made use of the rulings system but the ruling request (intentionally or unintentionally) obfuscated the tax mischief in financial mathematics. "It would be of interest to me to know how these arrangements were explained to the boards of the relevant banks, particularly from the perspective of whether the banks' tax risk and corporate governance frameworks operated to the satisfaction of the banks."