Mr Zhang, 56, was arrested last week after a crash near Auckland where he has lived for an unknown period following the collapse of more than 100 Hightrade companies 10 years ago.

He is fighting extradition to Australia where his Hightrade group is alleged to have defrauded the Commonwealth of more than $10.5 million in goods and services tax during construction of Resort Hunter Valley at Lovedale between 2002 and 2007.

The Australian Tax Office alleges a sophisticated scheme involving multiple Hightrade companies working at the Lovedale site meant "the goods and services tax liability fell into a GST accounting 'no man's land'."

It alleges the interaction of four Hightrade building companies and multiple Hightrade "supplier" companies resulted in funds moving "in a round-robin-like manner" across the construction group that inflated the cost of building Resort Hunter Valley by more than $115 million.

It allegedly resulted in Hightrade companies receiving goods and services tax credits of more than $10.5 million more than they were entitled to receive.

The liquidation of some Hightrade companies during the resort's construction left some Hunter sub-contractors owed substantial sums.

Court documents show the Tax Office alleges Li Zhang was "the person in effective control of the companies in the Hightrade group".

The Tax Office alleges quantity surveyors for the Lovedale resort's financiers, St George Bank and Capital Finance Australia, assessed total construction costs of $73 million for the Lovedale resort, but Hightrade allegedly claimed $240 million in costs through business activity statements.

Mr Zhang, a Chinese-born Australian citizen, left Australia in April, 2009 after the Australian Taxation Office and Australian Federal Police executed search warrants at various Hightrade properties.

Mr Zhang's New Zealand lawyer, Quentin Duff, told the Newcastle Herald he had been instructed to oppose the extradition application after Mr Zhang appeared at Auckland District Court on Thursday after police attended a minor car crash.

Mr Duff said he had made his client aware of "the reality that the New Zealand/Australia relationship and compatibility of legal systems make fighting this extremely difficult".

"At this stage he is simply awaiting an application for electronically-monitored bail so that he can have the opportunity to review the evidence and his response," Mr Duff said.

The Hightrade group operated from 2002 until January, 2010. Its Hunter developments include the Lovedale resort, the Sky Central buildings at Charlestown and a number of Newcastle apartment developments. The company was also involved in large apartment developments in the Sydney area.

Hightrade creditor Michael Martin said he was pleased Mr Zhang had been arrested more than 15 years after his roofing company lost a substantial sum when a Hightrade building company involved with the Lovedale resort was liquidated.

"The justice system is slow but there are allegations that need to be tested before a court," Mr Martin said.

Hunter Land chief executive Graham Burns said it was "good Li Zhang has been arrested" and there would be many people in the Hunter keen to see him returned to Australia to have charges tested in court.

The Tax Office said it could not comment on the matter.