Freezing the worldwide assets of Chinese billionaire Huang Xiangmo over a $140m tax bill was lawful, the Australian high court has ruled, boosting the tax office’s powers to chase high flyers across international borders.
The property developer, whose association with NSW Labor led to former senator Sam Dastyari’s downfall in 2018 and an Icac investigation in 2019, had challenged the international element of a freezing order put in place when the Australian Taxation Office (ATO) first filed its tax claim.
The full court of the federal court agreed with the billionaire, but that 2020 decision was overturned by the high court on Wednesday.
By majority, the high court held that the federal court’s freezing order power didn’t require the tax office to prove a judgment debt could be realistically enforced in each foreign jurisdiction the person held assets.
“The power … is broad and flexible,” the court said in a judgment summary.
“It is the court’s authority to make orders against a person who is subject to the court’s jurisdiction that is relevant to the power to make a freezing order, rather than the location of the person’s assets.”
Requiring proof the order could be realistically enforced would render the power “largely impotent” in the face of defendants who were able to secrete assets or move them across international borders almost instantaneously, the court said.
The $140.6m tax bill mostly related to a commercial property sale by one of Huang’s companies in Shenzhen, China, in 2014 when the ATO says he was an Australian resident for tax purposes. Nearly $60m relates to interest and penalties.
In 2019, Huang said paying taxes according to the law was “a fundamental tenet” he always followed and suggested the ATO had surrendered itself to the pressure of “some unknown dark forces, almost allowing itself to become a tool for political persecution against me”.
He later acknowledged he had no defence to the tax claim, leading the federal court to enter a summary judgment in the ATO’s favour in December 2019.
He never opposed freezing orders on properties he and his wife held in Australia, including a Mosman mansion valued at more than $12m.
Huang brought his Yuhu Group into Australia in 2012 and, by 2017, was boasting it would soon hold a portfolio worth $800m.
Centrepieces included shopping centres in Sydney’s Eastwood and Glenwood and a 21-storey residential tower in North Sydney.
The Chinese Communist party-aligned businessman also became heavily involved in Australian politics.
His association with Dastyari led to the senator’s downfall and he was a central figure in a NSW anti-corruption commission inquiry over a $100,000 cash donation given to the NSW Labor party. Icac is yet to release findings into that investigation.
The property developer left Australia for China in early December 2018 amid the tax audit and was later banned by security agencies from re-entering Australia or obtaining a passport.
His son, Jiquan “Jimmy” Huang, now runs Yuhu Group Australia.