ATO seeks High Court appeal over Huang Xiangmo’s $140m tax debt

A bitter tax feud over exiled Chinese billionaire Huang Xiangmo’s worldwide assets could be resolved in the High Court.

Huang Xiangmo. Picture: Renee Nowytarger

A bitter dispute over Chinese exile Huang Xiangmo’s $140m tax debt is expected to move to the High Court, after the tax office confirmed it would try to overturn a landmark legal decis­ion barring the agency from freezing the billionaire’s substantial offshore assets.

Federal Court judge Anthony Besanko agreed on Thursday to a request from the Australian Taxation Office to halt proceedings in that court while the warring parties await a decision on the Dep­uty Commissioner’s applica­tion for special leave to appeal to the High Court.

The Federal Court had previous­ly agreed to freeze Mr Huang’s overseas assets after it emerged the billionaire had overseen a “dramatic” increase in the amount of money he was transferring to offshore accounts following revelations in 2016 that he was being audited by the ATO.

The property tycoon, who was a central figure in the NSW corruption watchdog’s inquiry into state-based Labor donations, challenged the international elemen­t of the order on the grounds that it was unenforceable in China and Hong Kong, where most of his assets lay.

In response to the billionaire’s appeal, the Federal Court found in August that a freezing order on Mr Huang’s worldwide assets was unlawful because the ATO had “no realistic possibility” of clawing back the money that was tied up in China and Hong Kong.

However, on Thursday Justice Besanko ordered a stay of proceedings, finding there were “rea­s­on­able prospects” the ATO’s application for special leave to the High Court would be successful.

“Mr Huang is a person of substantial wealth who has taken steps to sever his ties with Aust­ralia,” Justice Besanko said.

“He has disassociated himself from a number of Australian corporate­ entities and trusts. Mr Huang’s transfer of monies offshore increased dramatically between the commencement of the audit and the making of the freezing orders.”

Mr Huang sent almost $91m to accounts outside Australia between January 2016 and August last year, according to financial intelligence agency AUSTRAC.

His $140m tax bill is mostly due to a commercial property sale by one of his companies in Shenzhen, China, in 2014, when the ATO says Mr Huang was an Australian resident for tax purposes.

He is accused of “making recklessly false and misleading statements” to the ATO in the years before his permanent residency visa was cancelled in late 2018.

The tax office claims Mr Huang controls a number of foreign­ companies in China and Hong Kong, where the “structures and operations” allow him to “easily move assets between jurisdic­tions”. Also known as Changran Huang, the billionaire vehement­ly denies any wrong­doing and has accused the ATO of acting as a “despicable tool of politica­l persecution”.

The ATO is seeking leave to appeal to the High Court on a single ground, contending that the full court erred when it imposed the “proof of a realistic possib­ility” that the debt could be enforced­ overseas as the key ­condition for granting the worldwide freezing order. Mr Huang is not challenging the freeze on his Australian assets.