Australia’s fugitive Chinese accounts frozen

Via Investing in Chinese Stocks.

The top story in the finance section on Tuesday morning is about the Chinese government’s hunt for hidden assets (and unpaid taxes) overseas. The article mentions Australia and New Zealand freezing accounts from customers who don’t identify if they are foreign taxpayers. It goes on to say many of the frozen accounts belong to Chinese residents, warns that more account freezes are coming and that in September, the Australian and New Zealand governments will begin sharing information with China’s tax department.

iFeng: CRS+反避税条款实施:澳洲、新西兰的大批华人账户已被封

“The poor cut meat and pay taxes, and the rich have tax avoidance” has long been criticized. However, from now on, the tax haven that hides the wealth of the rich may no longer exist.

Since this month, China has exchanged CRS (Overseas Financial Accounts Common Declaring Guidelines) information with other countries for the first time. The Chinese tax authorities will grasp the personal overseas income. Once they are listed as high-risk taxpayers, they face a huge review of the source of funds. It is also necessary to pay a large amount of personal income tax.

In addition, the revised personal income tax law for the first time to establish anti-tax avoidance provisions will give the Chinese tax authorities a strong legal basis. In short, China’s crackdown on the international tax haven is officially open, and the invisible rich will have nowhere to go.

A large number of Chinese accounts in Australia and New Zealand have been sealed.

As early as more than a month ago, foreign media released major news. New Zealand and Australia’s major commercial banks froze thousands of accounts and asked whether the account holders belonged to foreign taxpayers, including a large number of Chinese residents.

Referring to this news from July: Kiwi banks freeze hundreds of accounts, figure likely to stretch into thousands

New Zealand banks are set to freeze thousands of accounts for people who have yet to respond to requests to confirm whether they are foreign taxpayers.

Under new legislation, financial institutions must find out whether their customers are tax residents of other countries and report the details of those who are to the Inland Revenue by June 30 each year, starting this year.

Back to the iFeng story:

A spokesperson for Australian state-owned Kiwibank said the bank sent letters to about 3,000 customers at the end of May and gave customers a 14-day period to supplement their overseas tax status information.

ANZ, Australia’s largest bank, said it had frozen about 200 customers’ accounts in a week and will continue to freeze accounts every week, as required by tax laws. Westpac and BNZ also did the same.

In fact, as early as the beginning of June, New Zealand media released news, if you do not provide foreign tax information, Bank of New Zealand will freeze your account. From July 1st, the bank has not yet completed the overseas arrears in accordance with the regulations of the bank, and all accounts are frozen. No one can be an exception. Of course, the funds in the frozen account will remain in the account, but the customer will not be able to access it.

At present, the banks of Australia and New Zealand have frozen thousands of accounts, and the scope will continue to expand.

It is worth mentioning that China, Australia and New Zealand are all on the list of information exchanged for the first time in September this year. Basic information about all non-Australian residents who open an account in Australia, such as name, ID number, address, birthday, account number, account balance, and major transactions that occur each year, as well as bank deposit accounts, escrow accounts, insurance contracts, etc. Information will be shared by the tax bureaus of China and Australia.

David Llewellyn-Smith
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Comments

    • The money might be frozen, but the guilty aren’t going to be extradited back to China from their Aussie mansions.

      Julie Bishop refused to sign an extradition treaty with China last year, after some local Chinese property developers gave her $450,000 for her “Julie Bishop Glorious Foundation”.

      • If we signed the extradition treaty with China, it will be used to target political activists as well. The Chinese justice system does not operates independently from the CCP.

      • Completely agree with Julia Bishop’s decision. A extradition treaty would be used to clamp down on freedom of speech issues and for political purposes, and create a diplomatic headache every time it was used.

        Extradition treaties should only be signed where we trust the other countries’ legal system.

  1. 1. Is there a hotline we can call to report offenders?
    2. So who is driving this and motivating the local banks to do this? Surely it’s not the federal govt as they are the numero uno facilitators of money laundering.

    As per the last paragraph, it’s a bit concerning that they are sharing details of all non residents with China not just Chinese.

  2. “A spokesperson for Australian state-owned Kiwibank said the”. ….yeh, seems like it is really credible information being reported.

    • Mistakes aside, when I logged into internet banking a few months back (NAB’s offshoot), I had to go through the Declaration process as matter of course. I guess had I not, I’d have my accounts frozen as well!

      • Obviously, everyone has the option of lying on the declaration.

        Those Chinese (not just Chinese, obviously) dudes who are rich and smart enough to have money stashed away secretly in offshore accounts will not, as a rule, be dumb enough not to lie about appropriately it when making a declaration.

        The couple of hundred with frozen accounts are the dumb ones.

      • the declaration is not the source of truth Peachy. It’s merely the legal document they’ll hold you to if/when they uncover you’re lying through more sophisticated means, like applying unlimited compute power and analytics over more and more data sets they’re able to incorporate into their system.

      • You are right, Monty… in theory… in theory – they will eventually get you.

        In practice, it’s more like: lie in declaration>don’t get funds frozen>move the funds somewhere out of harms way>don’t care if eventually the sophisticated means enable authorities to demonstrate that you lied on the declaration.

      • I had an account frozen last year. Minor detail needed to be corrected in a form. Frozen does not mean confiscated.

    • Pericles Alcmaeonidae

      Cognitive dissonance as per usual.

      Try reading the article instead of just being an absurdist reactionary. You’re almost cartoonish in your buffoonary.

      • Forrest GumpMEMBER

        True. however if the money leaving China is laundered, stolen or is under scrutiny of the tax dept, the first place anyone will put it is into a house. Can be under your wife/husbands name, or a relative, or friend. that way it evaporates…no trace…But this doesn’t happen here right??

      • Gump, you would be surprised and scared at the data matching power of a modern analytics system running of a huge server farm (if run by a government) or cloud like AWS/Azure.

        And the Chinese, both politically, militarily and commercially, have been making huge investments in analytics and all the pseudo AI (machine learning etc) that builds upon that research.

      • Forrest GumpMEMBER

        @C.M.Burns
        Actually, i’m not surprised. Possibly re leaved if the Chinese use it for purposes that result in a better outcome for the Australian Housing Market

      • Pericles Alcmaeonidae

        @C.M.Burns

        Making up ground ? The Yanks have just taken the title of worlds most powerful super computer, for the first time in almost two decades – off guess who.

        China leads the way on data matching and power computing by a MASSIVE MASSIVE margin.

        US is toying with phone records and internet activity of a couple of hundred million – China has full biometric and 100% data awareness on every citizen. One is a grain of sand the other a beach.

    • … and you can’t hide a house in a tax-haven.

      Which is why real-estate will one-day become a much more important source of Govt revenue.

  3. This will snare the little people, perhaps a lot involved in Diagou trade , but the big money uses ‘white gloves’ and shell companies. This won’t touch them.

    Even so, if it leads to less coming here, then it is still a good thing,

    • if you are uber rich, do you dump your laundered gains into 1 or 2 properties worthy of the uber rich, or do you invest in 50 apartments and houses in the burbs ?

      I suspect it’s the latter, especially if the property is either their to escape/retire to, or purely to wash the money in the first place.

      • +1. My leafy burb is full of rebuilt, empty houses owned by this lot. The moment I see them getting sold off is when I’ll believe any of this is real and effective. Until then it is pure bear porn.

      • I’m with you Tony. I like porn as much as the next person, but I’m waiting to see them hoarded blocks/houses being sold (en masse) before accepting that the little scam is finished.

      • There is anecdotal evidence in NZ that a lot of the multi-million dollar foreign owned “ghost houses” are now being put on the rental market after having been empty for years. Might just be a co-incidence, or ….. it might have something to do with the income being paid into a non-frozen account like a real estate agents before being transferred.

  4. Tax bills coming big time to dodgy Chinese. Could see laundered money apartments hitting the market soon to pay the piper. Oh dear

    • Forrest GumpMEMBER

      Perhaps, however, if their ill-gotten gains have landed outside of China (thats the objective) and in fixed assets such as house, land, Ferrari, businesses, etc and the culprits are outside of China in someone elses name and have either PR or become citizens, well there is nothing the Chinese government can do…is there?

      Like I said above, you cant freeze a house! I guess the only thing thats recoverable would be if the assets are in the form of a business such as a Chinese restaurant, then I guess you can claim the frozen dim sims….

      Horse literally bolted

      • unless they moved their entire family out of china, then there is always leverage that the CCP and whichever part of their security apparatus is running Operation Fox Hunt can apply pressure to.


      • Like I said above, you cant freeze a house! I guess the only thing thats recoverable would be if the assets are in the form of a business such as a Chinese restaurant, then I guess you can claim the frozen dim sims….

        The ATO has certainly compulsorily acquired houses, sold them and kept the proceeds to pay off tax bills. I think it might be slightly more difficult if the property is the relevant taxpayer’s PPOR, but that may not be a problem here, and it certainly won’t guarantee you get to keep your house.

        For example:
        https://www.theage.com.au/national/victoria/roberta-williams-set-to-lose-essendon-home-after-tax-debt-ruling-20180711-p4zqvl.html

  5. Could be why a few knock down perfectly good home rebuilds around the place have been idle for months

    • A few? Half my street is vacant freestanding semi-inhabitable places waiting for Godot for longer than a few months.

      • Yeah there are definitely more than a few, the knock down rebuilders like rawson, Metricon etc must be concerned

  6. There’s a lot wrong with the story. New Zealand is clamping down, not Australia. Kiwibank Limited is a subsidiary of the state-owned enterprise New Zealand Post, not Australia.

    ANZ is only targeting New Zealand customers as are BNZ and Westpac, again not Australia, according to the full text of the iFeng article.

    • Yes. It’s clear to me it’s only NZ accounts and the article has exaggerated the fact that some banks are Australian owned to make it sound like Aus accounts are affected. Sounds like typical Chinese efforts to deter their own citizens capital flight, as Gramus said above.

      Aus is doing next to nothing. We may well be sharing tax info – that is an international treaty we’ve signed up to – but freezing accounts? Nope.

    • Yeah but I read it as, Aus will also start from september.. which is now. Whereas nz had been already sharing and already getting feedback about which ones to freeze and freezing them.

      • I think they are two different things. Sharing of tax info begins in September, both Aus and NZ are signed up to that. Separately there is a reference to NZ legislation which requires people to report if they are foreign taxpayers by June 30 each year and will freeze accounts if they don’t. I think we would have heard about it if Australia had similar legislation?

  7. We pay China for poorly made products so there are fewer jobs here. Then we pay for infrastructure so their citizens can move here. Now we help pay their taxes in China.