iscover Former Labor ‘rising star’ fails to overturn penalties following alleged tax evasion
TaxA former “rising star” of the Labor Party has failed to overturn amended tax assessments stemming from almost $4 million in undeclared income amid tax evasion allegations.
Last Wednesday (7 January), the Administrative Review Tribunal declined to overturn amended tax assessments and penalties applied to NSW politician Simon Zhou after the ATO found he had received over $3.9 million in “unexplained deposits.”
The ATO alleged that Zhou had committed tax evasion during the income years ending 2013 through to 2017. Finding that he had acted recklessly with respect to his taxation obligations, it applied a base penalty amount of 50 per cent of the tax shortfall for the relevant period.
A former “rising star” of the Australian Labor Party and previous deputy mayor of Ryde Council, Zhou argued that the money had been lent to him by family and friends on verbal agreements. Despite receiving millions in undeclared loans, his only declared income was Ryde Council’s annual stipend of $25,000.
An ATO investigation revealed that the majority of the 19 unexplained deposits and 2 cheques, totalling almost $4 million, were offshore payments sourced from Hong Kong.
In May 2020, Zhou informed the ATO that his uncle had been involved in providing the extensive loans. He said that almost $2.5 million had been transferred from his uncle’s Hong Kong-based company.
Further ATO investigation indicated that the uncle’s company was solely set up to enable him to lend funds to family members outside of China. According to Zhou, this was because Hong Kong applied weaker foreign capital restrictions than mainland China.
In its 2026 January ruling, the Tribunal found that Zhou had failed to prove that the ATO’s amended assessments were excessive or that they had wrongly applied penalties.
The court noted that Zhou had also been embroiled in a corruption scandal during his time as Ryde deputy mayor, and was investigated by ICAC and ASIO as a result.
Zhou was ousted from Ryde Council in a no-confidence vote after he was found to have failed to declare a $13 million property portfolio held by himself and his mother in an area that was to be rezoned. During his tenure, Zhou had also supported a $376 million redevelopment proposal for the Eastwood Plaza, which was owned by his business associate.
He had also been forced to resign as a Labor staffer in 2017 following a gold trading scandal. He had helped co-ordinate up to $140,000 in donations to the ALP from gold dealers linked with a multi-million dollar tax scam, The Sydney Morning Herald reported at the time.
The tribunal noted that Zhou was “clearly distressed” by the “burden” placed on him by tax authorities, and that he placed a large portion of the blame for his situation on the ATO. However, it reiterated that the outcome was not personal, but simply a function of the law.
“The tax office, from what I can see, has looked very carefully at what you have provided and found there were a lot of gaps in the material. So it's not a personal vendetta against you, it's a requirement that you have to disclose,” a Tribunal member told Zhou, according to court documents.
“I'm telling you this, because I do not want you to leave here in despair thinking that everybody in the world is against you. There are just obligations under the law.”
Emma Partis
Emma Partis is a journalist at Accountants Daily and Accounting Times, the leading sources of news, insight, and educational content for professionals in the accounting sector. Previously, Emma worked as a News Intern with Bloomberg News' economics and government team in Sydney. She studied econometrics and psychology at UNSW.
