Tax agency obtains ‘jeopardy order’ for debt-loving Downton Abbey billionaire

The Canadian tax agency has obtained an order to seize the debts of a Chinese billionaire whose love of Downton Abbey inspired him to pay more than $11 million for an iconic Vancouver mansion in the same year he reported income of just $9,424.

According a federal court judgment issued last month, the Canada Revenue Agency sought the so-called ‘peril order’ to collect $770,710 against the future sale of Mingfei Zhao’s home because the 64-year-old left Canada and seems to be trying to sell the only asset he has left in this country.

Zhao bought the 14,000 square foot Tudor-style property in 2014 to much fanfare, promising to restore the building to its original glory a century earlier when “the Rosemary” – named after the daughter of a alcohol – was considered the largest house of all time built in Vancouver.

But according to court documents, Zhao reported income of less than $10,000 in 2014 and $38,161 in 2015 – amounts that CRA auditors concluded were “insufficient” to support his real estate purchase and his monthly mortgage payments of $8,699.

“Lifestyle doesn’t match reported income,” a CRA auditor said in a lengthy affidavit obtained by the CBC.

The tax agency reassessed Zhao’s income for the two years in question to a total of $1.28 million – leveling a claim against him for unpaid income tax, which reached more than $770,000 with interest and penalties.

‘I was looking Downton Abbey at the time’

Zhao spoke with the CBC in 2016 about her plans for the Rosemary.

He described himself as a retired real estate developer from Beijing who made his fortune in flax and grain before moving into real estate. Zhao immigrated to Canada in September 2014 and his tax returns identify him as divorced.

The Rosemary, built in 1918, is named after the daughter of the liquor magnate who built it. New owner Mingfei Zhao bought the property for $11 million in 2014. (Leonard Frank/Vancouver Public Library)

Zhao told CBC he was investing millions in upgrading the 12-bedroom, 12-bathroom mansion, which includes an arched bridge connecting the main building to a coach house.

Speaking through a Mandarin translator, Zhao said he fell in love with rosemary at first sight.

“I liked it because I was watching Downton Abbey at the time,” Zhao said.

The billionaire said he was determined to break the stereotype that the Chinese are serial destroyers of older properties: “I want to protect and reclaim this house to stay here for another 100 years.”

“He had founded a new family in Europe”

Zhao filed notices of objection to fight the CRA’s tax penalty, which would normally mean the agency couldn’t come and collect his money until an appeal was determined.

But the federal Income Tax Act allows the CRA to ask a judge to order payment where “the recovery of all or part of an amount assessed against a taxpayer would be jeopardized by a delay in the recovery of this amount”.

Mingfei Zhao smiles and joins her hands in an opulent room with a fireplace and red walls.
Mingfei Zhao immigrated to Canada from China in 2014. He now appears to have moved to Europe, and the Canada Revenue Agency claims he owes $770,000 in unpaid income taxes and interest. (Chris Corday/CBC)

The court filing includes more than 2,000 pages of documents detailing attempts to determine Zhao’s bank account balances, his undeclared worldwide income and his whereabouts.

At one point he also owned another multi-million dollar home as well as a Bentley, Rolls Royce, Mercedes and Range Rover. But since last June he was only registered as the owner of the Rosemary and the Range Rover.

Last month, records showed Zhao no longer had a Canadian cellphone account.

In March, the CRA also claimed to have “discovered” a Globe and Mail article from nearly two years earlier “in which it was stated that Mr. Zhao no longer lived in Vancouver and had started a new family. in Europe”.

“The optics are not good”

The documents detail discussions between auditor Dale Gonwick and one of Zhao’s legal representatives – who later indicated that no one would appear for Zhao at the hearing.

“I asked if there were any things he knew that might help balance the ‘not a danger’ side of the equation, because from what I could see I would have to send that back in upstream as a danger of loss issue,” Gonwick wrote.

A fisheye view of a gray walled mansion.
The Rosemary was bought for $11 million in 2014 and is now on sale for $19 million. It takes a fish-eye lens to capture the size of the property correctly. (Chris Corday/CBC)

Zhao’s rep pointed out that the Rosemary – now listed at $19 million – had been on the market for more than a year without buyers, but “admitted that ‘the optics don’t look good’.”

Judges have issued jeopardy orders in previous cases where large sums of money were found in the trunk of an automobile or in the pocket of a taxpayer’s dressing gown.

Federal Court Judge Cecily Strickland found that while Zhao’s “conduct of business” may not amount to this type of behavior, her reported income raised questions given her lifestyle.

“As a result, the nature of the assessment raises a reasonable concern that Mr. Zhao has not conducted his business in an ‘orthodox fashion’ and that it would be difficult to trace or recover the tax debt funds,” he said. she concluded.

Zhao could not be reached for comment.

Esther L. Steinbach