Online shopper for Australian properties gets $600k penalty

Fengqin Li arrived in Australia from China in mid-2016 on a subclass 600 tourist visa after purchasing the 401 square-metre Berwick property for $296,000 while still at home.

Purchasing the land on the condition with the Foreign Investment Review Board (FIRB) that she develop a dwelling on the land within four years, Li failed to do so when the deadline came around, with the Federal Court finding that she had in fact left Australia and did not return only one month after her arrival.

Federal Court of Australia Justice Michael Hugh O’Bryan ordered Li to pay the Commonwealth a pecuniary penalty in the sum of $508,000 and a lump sum in the amount of $50,757.70 for its legal costs, and imposed a freezing order on the property for 28 days from the date of his 28 September 2026 decision to prevent her from selling the property prior to his determination.

Justice O’Bryan said that Li failed to respond on multiple occasions when the ATO sought to contact her for an explanation for her contraventions.

When finally successful, the ATO learned that Li intended to resell the property before developing on the land, as she did not have enough funds to build.

“The respondent has not applied to vary the condition, and has not taken steps to build a dwelling on the land. To date, no building permit, planning permit, or construction activity has been recorded against the property in any ATO, FIRB or publicly available Victorian land information system,” Justice O’Bryan found.

“I am satisfied that the respondent has been duly served with all relevant documents pertaining to the proceeding, including the relevant orders of the Court. The respondent has failed to take any step in the proceeding.”

Following the finding of more than 2,300 contraventions over six and a half years made by Li, the court imposed the maximum penalty for a single contravention, which was equal to double the amount of the capital gain that would be made on the disposal of the property – $508,000.

ATO Assistant Commissioner Jennifer Moltisanti said that the tax regulator initiated compliance action against Li after identifying the breach through intelligence from data matching and their land banking audit program.

“This sends a clear message to foreign investors that land banking, which limits housing supply for the Australian community, will be met with significant consequences,” Moltisanti said.

According to the ATO, while Li was initially cooperative, she decided not to engage further with the agency’s enquiries, failing to meet her obligations under Australia’s foreign investment framework.

“Foreign investors need to understand that buying residential land in Australia comes with clear obligations under Australia’s foreign investment framework.”

“These obligations will be enforced even where the investor is offshore or disengaged,” Moltisanti said.

Ultimately, the ATO secured a civil penalty order in the Federal Court, which also imposed freezing orders over the land to prevent it being sold before the case was resolved.

The taxman also pursued unpaid vacancy fees tied to another residential property held by Li, securing the outstanding debt with a charge over the vacant land.

“Where foreign investors do not abide by the law, the ATO can and will use its powers to bring illegally ‘land-banked’ property held by foreign investors back into the Australian housing market. This may include the forced sale of land,” Moltisanti said.

In 2024–25, the ATO forced remediation of 217 breaches of the foreign investment rules, including the disposal of 111 residential properties.

The case citation: Commissioner of Taxation v Li (No 2) [2026] FCA 1424