As if there’s not enough going on in the affairs of billionaire businessman Phillip Dong Fang Lee and his wife Xiaobei Shi, given allegations about his “sham” income tax arrangements and the tax office’s lien over their real estate, the couple are pushing to expand the footprint of their Point Piper home.

Woollahra Council has been approached to sell a seven-metre strip of public land that fronts their Mandalay residence, effectively adding about 250 square metres to the already substantial land size of the European-style villa.

The Lees’ family home was the headline-making venue of a private dinner party last week hosted by Lee’s 25-year-old son Felix Ming Ze Lee in honour of Prime Minister Anthony Albanese, and which included the likes of former Victorian premier Dan Andrews, CBA boss Matt Comyn, and ex-ASIC chairman James Shipton around the dining table.

Lee snr wasn’t in residence at Mandalay for the intimate and unofficial Labor Party fundraiser, but it is his officially registered home, and it coincided with sensational allegations by the Australian Tax Office that Phillip Lee deceived the authorities to funnel huge sums of money from China into Australian bank accounts and mansions, and was suspected of secretly controlling business interests in China despite having claimed he had wound those businesses up when he moved to Australia.

The allegations are detailed by a top-ranking tax official in an 189-page affidavit that was read in the Federal Court as part of a tax dispute with Phillip Lee over what was claimed to be a then-outstanding debt of $278 million.

The tax dispute has since been settled for an undisclosed amount, but it remains unpaid. The tax office retains a lien over the property empire of Phillip Lee and Xiaobei Shi, including Mandalay.

The landmark residence has long commanded one of the most prized positions in Point Piper, set atop the ridge above Wolseley Road and an 80-metre frontage.

It was built in the mid-1990s by architect Michael Suttor on behalf of the late businessman Kerry Manolas, the latter of whom sold it to the former Philip Morris executive Bill Webb and his wife Marijke in 2004.

Phillip Lee’s wife Xiaobei Shi purchased the house in her name in 2015 for $39.9 million, and more than a decade later the tax office investigation alleges the purchase was care of his mother, Zhangzhu Li, using money transferred via Phillip Lee’s then 10-year-old son Edward Feng Zhao Lee.

Mandalay’s Point Piper neighbours have been notified of the proposal to close and sell the strip of reserve on Wolseley Road, effectively taking Mandalay to a half-acre parcel.

The strip of land is no standard block of land. It is currently taken up by a steep rock shelf, retaining wall, a portion of access driveway, security gates and a double garage. Since 2019 the wall has had to be stabilised by a series of rock anchors that were part of a rebuild of the site after a partial wall collapse.

The Lee family’s purchase would take their site up to the edge of the footpath on Australia’s most expensive street.

A council spokesperson said if the sale is approved by council and relevant authorities, an independent valuation would be commissioned to determine the value.

“No discounting will be applied in the disposal of council-owned land, such as verges and road reserves, with adjustments only to reflect any liability that would otherwise remain with council if the land was retained,” she said.

The Lee family have agreed to pay all council’s costs in connection with the sale, according to council documents.

There have been no objections to the proposed sale, although council is accepting submissions until August 5.

There was no response to inquiries from Phillip Lee, and a spokesperson for his son Felix said he has no financial interest in Mandalay and hence no comment on any matters associated with it.