An outstanding tax bill of $1.2m will be paid to Inland Revenue as Gong wishes to "regulate his tax affairs", according to Justice Edwin Wylie in his judgment which approved the settlement.
The Weekend Herald can also reveal Gong's tax affairs came to light as part of a separate investigation into his brother, Xiao Hua Gong, accused of running a $202m pyramid scheme in China.
Better known as Edward Gong, the wealthy businessman has built an empire in Toronto including a hotel chain and television channels, as well as attending fundraisers for Canada's Prime Minister Justin Trudeau and donating to the governing Liberal Party.
Edward Gong was arrested in Canada and charged with fraud and money laundering last December in connection to the alleged pyramid scheme involving the "fraudulent sale of hundreds of millions of dollars" in shares in China.
Detectives in New Zealand discovered Edward Gong transferred $77m - allegedly profits from the pyramid scheme - into New Zealand bank accounts over seven years.
Nearly $70m has been frozen under the Criminal Proceeds Recovery Act - easily the largest amount since the law came into force in 2009
Money laundering was the crime committed in New Zealand, the police allege, in order to distance Edward Gong from the alleged pyramid scheme in China.
There is no suggestion Yu Ping Gong is involved with his brother's alleged offending.
But Detective Inspector Craig Hamilton confirmed the tax issues of Yu Ping Gong were uncovered as police scrutinised Edward Gong's links to New Zealand.
"We want people to pay tax. You and I do," said Hamilton, the national manager of the police's Asset Recovery Units.
"It's important people meet New Zealand's tax requirements. The Criminal Proceeds Recovery Act reaches across all government departments and we encourage anyone with information about unexplained wealth to tell us."
So far, alleged tax crimes have been used rarely by the police to take action under the legislation, which effectively requires someone to explain how an asset was paid for.
The IRD has its own powers to recoup unpaid tax or prosecute offenders.
But Stuart Nash - the Minister responsible for the police and revenue - wants to see more collaboration between the agencies on these types of cases.
While the IRD and the police can work together under the current laws, Nash said work was being done to strengthen the information-sharing agreements.
"This is the hidden economy. It's not fair to the vast majority of tradies who pay taxes and get undercut by the competition doing cash jobs," said Nash.
"Inland Revenue can look at someone's tax affairs. The police have a unique set of skills. Working together on these big cases sends a strong message to pay tax.
"It's illegal and immoral. It's not fair someone can pay $1000 in tax while earning millions of dollars."
Cases taken under the Criminal Proceeds Recovery Act are determined by the civil level of proof, the "balance of probabilities", rather than the much higher criminal evidential threshold of "beyond reasonable doubt".
In the case of Yu Ping Gong, the police alleged he committed tax evasion and the properties he purchased were "tainted" as the unlawful benefit of crime.
"This is all denied by Mr Gong. He maintains he did not evade either his or David 22 Trustee Ltd's tax obligations," Justice Wylie wrote in his judgment.
"He does, however, wish to regulate his tax affairs."
Without any acceptance of liability, Gong and the police reached a settlement where the six homes owned by David 22 Trustee Ltd would be sold.
Gong is the sole director and 80 per cent shareholder in the company.
From the sale of the homes, Westpac bank will be repaid mortgages of $1.4m and pay the tax liability of Mr Gong and another woman, Ms W, of $1.2m.
Gong will also pay another $175,000 to secure the release of two homes, worth $3m, which he personally owns.
"Mr Gong and David 22 Trustee Ltd make no admission of liability of any sort and do not concede any aspect of the Commissioner's case."
As part of the settlement, the police are not allowed to "advise the existence of, or share, any of the evidence" unless required by law.
All electronic equipment and files seized during the search of Gong's home are to be returned and the police are not allowed to look at, or copy, documents on the equipment.
Justice Wylie said the approximate value of the settlement to the Crown was $4,941,000, while Gong - represented by Rachael Reed QC - managed to secure two homes worth $2,965,000.
He approved the settlement as being within the "overall interests of justice" given a number of different factors, including the saving of time and the uncertainty of a trial.
"All parties wish to have certainty as to outcome. There is considerable truth in the old adage - a bird in the hand is worth two in the bush."
By the books
• Plumber Yu Ping Gong declared income of $929 between 2011 and 2016
• He is the sole director and 80% shareholder of a company, David 22 Trustee Ltd, which declared ZERO income.
• Police allege Gong and his company earned $2.1m over those 5 years and purchased 8 properties worth $9.1m.
• The 8 properties were restrained under the criminal proceeds law with the police alleging tax evasion.
• Gong denies any tax evasion but agreed to a settlement with police.
• He will keep 2 properties registered in his name, worth $3m.
• The rest, worth $4.9m, have been forfeited for sale.
• Mortgages of $1.4m will be paid to bank and unpaid tax of $1.2m to IRD.
