According to a federal court ruling issued last month, Canada Revenue Agency sought a so-called “jeopardy order” to collect $770,710 against the future sale of Mingfei Zhao’s home because the 64-year-old has left Canada and appears to be is in the process of trying to sell the only asset it has left in this country. Zhao bought the 14,000-square-foot Tudor-style estate in 2014 with much fanfare, promising to return the building to its original glory a century earlier, when “Rosemary” — named after the daughter of a liquor magnate — was considered the grandest house ever built in Vancouver. However, according to court documents, Zhao declared income of less than $10,000 in 2014 and $38,161 in 2015 — amounts that CRA auditors concluded were insufficient to support the property purchase and monthly mortgage payments of $8,699 . “The lifestyle does not match the reported income,” a CRA auditor alleged 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 – leveling a claim against him for unpaid income tax, which has grown to more than $770,000 with interest and penalties.
“I was watching Downton Abbey at the time”
Zhao spoke with CBC in 2016 about his plans for Rosemary. He described himself as a retired property developer from Beijing who made his first fortune in flax and grain before moving into real estate. Zhao immigrated to Canada in September 2014 and his tax returns list him as divorced. Built in 1918, Rosemary was 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 the CBC he is 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 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 dispel the stereotype that people from China are serial destroyers of older properties: “I want to protect and restore this house to make it stand here for another 100 years.”
“He had made a new family in Europe”
Zhao has filed notices of appeal to fight the tax penalty imposed by the CRA, which normally means the agency would not be able to come for his money until after the appeal is determined. However, the federal income tax law allows the CRA to ask a judge to order payment when “the collection of all or part of an amount assessed against a taxpayer would be jeopardized by a delay in the collection of that amount.” Mingfei Zhao immigrated from China to Canada in 2014. He now appears to have moved to Europe and the Canada Revenue Agency claims he owes $770,000 in unpaid income tax and interest. (Chris Corday/CBC) The court file includes more than 2,000 pages of documents detailing efforts to wipe out Zhao’s bank account balances, his undeclared global income and his whereabouts. At one 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 Rosemary and the Range Rover. Last month, records showed Zhao no longer had a Canadian cell phone account. In March, the CRA also claimed to have “uncovered” a Globe and Mail article from almost two years earlier “which reported that Mr. Zhao was no longer living in Vancouver and had started a new family in Europe.”
“The visuals don’t look good”
The documents detail discussions between auditor Dale Gonwick and one of Zhao’s legal representatives — who later advised that no one would appear for Zhao at the hearing. “I asked if there were any elements he knew of that might help balance the ‘non-risky’ side of the equation, because from what I could see, I would have to report it as a risk-of-loss issue.” wrote Gonwick. Rosemary was bought for $11 million in 2014 and is now for sale for $19 million. A fish-eye lens is needed to properly capture the size of the property. (Chris Corday/CBC) Zhao’s representative pointed out that Rosemary — now listed at $19 million — had been on the market for more than a year without buyers, but he “admitted that ‘the visuals don’t look good.’ Judges have issued distress warrants in previous cases where large sums of money have been found in the boot of a car or in a taxpayer’s coat pocket. Federal Court Judge Cecily Strickland concluded that while Zhao’s “conduct of affairs” may not be consistent with this type of conduct, his reported income raised questions because of his lifestyle. “Consequently, the nature of the assessment creates a reasonable concern that Mr. Zhao did not conduct his affairs in an ‘orthodox manner’ and that it would be difficult to trace or recover the funds for the tax debt,” he concluded. Zhao could not be reached for comment.
