Tax agency obtains 'jeopardy order' for debt from Downton Abbey-loving billionaire

Canada's tax agency has obtained an order to seize debts owed by 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 claimed income of just $9,424.

According to a federal court judgment issued last month,the Canada Revenue Agency sought the so-called "jeopardy order"to collect $770,710against the future sale of Mingfei Zhao'shome because the 64-year-old hasleft Canada and appearsto be in the process of trying to sell the onlyasset he has left in this country.

Zhao bought the 14,000-square foot Tudor-style propertyin 2014 to much fanfare, vowing to return the buildingto its original glory a century earlierwhen "the Rosemary" named after the daughter of aliquor tycoon was considered the grandest home ever built in Vancouver.

But according to the court documents, Zhao declared income of less than $10,000 in 2014 and $38,161 in 2015 amounts CRA auditors concluded were "not sufficient" to support his purchase of real estate andmonthly mortgage paymentsof $8,699.

"Lifestyle does not match reported income," a CRA auditor claimed in a lengthy affidavit obtained by the CBC.

The tax agency reassessed Zhao's income for the two years in question at a combined $1.28 million levelling aclaim against him for unpaid income tax, which has risento more than $770,000 withinterest and penalties.

'I was watchingDownton Abbeyat the time'

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

He described himself asa retired property developer from Beijing who made his first fortune in flax and grains before moving on to real estate. Zhaoimmigrated to Canada in September 2014, and his tax returns identify him as divorced.

Zhao told CBC he was sinking millions into an upgrade of the 12-bedroom, 12-bathroom mansion, which features an arched bridge connecting the main building to a carriage house.

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

"I liked it because I was watchingDownton Abbeyat the time," Zhao said.

The billionaire said he was determined to shatter the stereotype that people from China are serial destroyers of older properties: "I want to protect and recover this house to make it stand hereanother 100 years."

'He had started a new family in Europe'

Zhao has filed notices of objection to fight the tax penalty assessed by the CRA, which would normally mean that theagency would not be able to come for his money until after an appeal has been determined.

But the federal Income Tax Act allows the CRA to ask a judge to order payment when"the collection of all or any part of an amount assessed in respect of a taxpayer would be jeopardized by a delay in the collection of that amount."

The court file includes more than 2,000 pages of documents detailing attempts to nail down Zhao's bank account balances, his unreported worldwide income and his whereabouts.

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

Last month, records showed Zhaono longer had a Canadian cellphone account.

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

'The optics don't look good'

The documents detaildiscussionsbetweenauditor Dale Gonwick and one of Zhao's legal representatives who later advised that no one would appear forZhao at the court hearing.

"I asked if there were any items he knew of that might help balance the 'not a Jeopardy'side of the equation, because from what I could see, I would have to refer this up the line as a danger of loss issue," Gonwick wrote.

Zhao's representative pointed out that the Rosemary now listed at $19 million had been on the market for more than a year with no buyersbut "admitted that 'the optics don't look good.'"

Judges have issued jeopardy orders in previous cases where large sums of cash have been found in the trunk of an automobile or in the pocket of a taxpayer's housecoat.

Federal Court Justice Cecily Strickland concluded that, while Zhao's"conduct of his affairs" may not fit with that kind of behaviour, his reported income raised questions given his lifestyle.

"Accordingly, the nature of the assessment raises a reasonable apprehension that Mr. Zhao had not been conducting his affairs in 'an orthodox fashion'and that it would be difficult to trace or recover the funds for the tax debt," she concluded.

Zhao could not be reached for comment.