News · Fraud and dishonesty offences
GST fraud and Operation Protego.
The tax office and the AFP have charged another person over false GST refunds, this time more than $1.3 million. The scheme is simple to describe and easy to fall into after a video makes it look like free money. The charge that follows is serious, carries up to ten years, and the debt does not go away when the case is over.
By Aaron Kernaghan · Published 30 July 2026
The news, in summary.
On 28 July 2026 the Australian Federal Police and the Australian Taxation Office said a NSW man had been charged over allegedly false Goods and Services Tax claims worth more than $1.3 million. Police allege he registered an Australian Business Number for a business with no real activity, lodged fictitious business activity statements between 2020 and 2022, and claimed GST refunds he was not entitled to. He was charged with one count of obtaining a financial advantage by deception under section 134.2 of the Criminal Code (Cth), which carries up to ten years. He was granted bail to appear in a local court.
That matter is before the court and the person charged is presumed innocent. Nobody is named here, and what follows is about the law, not any individual.
The case is one of many from Operation Protego, the tax office investigation into large-scale GST fraud that began in 2022. A week earlier the AFP charged a student over an alleged $5 million version of the same scheme. The pattern is worth understanding, because a lot of the people caught up in it did not think they were committing a serious crime. They thought they were following a tip from a video.
What is GST fraud, and what was Operation Protego?
A business registered for GST charges GST on what it sells and pays GST on what it buys. If the GST it has paid is more than the GST it has collected in a period, it can claim the difference back from the tax office as a refund. That is a normal part of running a business.
The fraud takes that machinery and runs a fake business through it. A person invents a business that does nothing, gets an Australian Business Number for it, registers for GST, and lodges business activity statements that report purchases that never happened. On paper the business looks owed a refund. The tax office pays it. There was never any business and never any GST paid.
Operation Protego is the tax office led investigation into this, launched in April 2022 after the scheme spread fast on social media, including on TikTok. Many of the posts dressed it up as a way to get a loan or a government payment from the tax office, rather than what it was. The tax office has said it stopped about $2.7 billion in fraudulent refunds. It works with the AFP through the Serious Financial Crime Taskforce, an ATO led joint agency body set up in 2015, and the most serious cases end up in the criminal courts.
What is the penalty for GST fraud in Australia?
The usual charge is obtaining a financial advantage by deception, under section 134.2(1) of the Criminal Code (Cth). The maximum penalty is ten years' imprisonment. In a GST case the financial advantage is the refund, and the person from whom it is obtained is the Commonwealth, through the tax office.
Several related offences sit alongside it. Conspiracy to defraud the Commonwealth, under section 135.4, also carries ten years, and is used where two or more people plan the fraud together. General dishonesty, under section 135.1, carries five years and covers dishonestly obtaining a gain from or causing a loss to the Commonwealth. Obtaining a financial advantage, under section 135.2, is a lesser offence carrying twelve months and is used for smaller matters. Giving false or misleading information or documents to the tax office can be charged under sections 137.1 and 137.2.
An attempt is punished the same as the completed offence under section 11.1 of the Code, so a claim that the tax office caught and stopped can still be prosecuted at the full maximum. The number that decides where a case sits on the scale is usually the amount claimed, followed by the degree of planning and the person's role.
What is the difference between a GST mistake and GST fraud?
Dishonesty is the dividing line. A mistake in a return is dealt with inside the tax system: the money is repaid, interest is charged, and an administrative penalty may be applied. Fraud is a crime, and it turns on the person's state of mind.
To convict under section 134.2 the prosecution must prove two mental elements. First, a deception. Under section 133.1 that means an intentional or reckless deception by words or conduct, about a fact or about the law. Lodging a statement that reports purchases which never happened is a deception. Second, dishonesty. Section 130.3 defines dishonest conduct as conduct that is dishonest by the standards of ordinary people, and known by the person to be dishonest by those standards. This is the two-part test the High Court set out in Peters v The Queen (1998) 192 CLR 493.
The second part is where real cases are won and lost. A person who honestly, if wrongly, believed they were entitled to a refund is not dishonest under this test, whatever an accountant would say later. That is why the defence looks hard at what the person actually understood, what they were told, and whether they knew the business was a sham. It is also why "I saw it in a video and thought it was legal" is not a defence in itself, but is not irrelevant either. It goes to what the person knew.
How does the ATO detect false GST refund claims?
The tax office runs data matching across the returns it receives, comparing them against banking information, business registration records, and other data it holds. A newly created Australian Business Number that immediately lodges statements claiming large refunds, with no sign of trading, wages, or supplier activity, stands out. So does a cluster of similar claims linked by shared bank accounts or devices.
Once a claim is flagged, the money can be held before it is paid, and the file can be referred on for investigation. In the serious cases the AFP and the tax office execute search warrants and seize phones and computers, which are then examined for the account details, the messages, and the records that show who set the scheme up and who knew what. The devices tend to tell the story, which is one reason deleting material after contact is a poor idea and can add a further charge.
Can you go to jail for a first GST fraud offence?
Yes. A person with no record can be sent to prison for GST fraud where the amount is large or the offending was planned. Federal fraud is sentenced under section 16A of the Crimes Act 1914 (Cth), which lists the matters a court must weigh, including the nature and seriousness of the offence, the loss caused, the person's cooperation, any plea of guilty, and their character and prospects.
Courts treat this kind of fraud as an attack on the tax system that everyone else pays into, so general deterrence carries real weight. Sentences in Operation Protego cases have run up to seven years and six months. At the lower end, for a modest amount, an early plea, full repayment, and genuine cooperation, a court may reach a sentence served in the community, such as an intensive correction order or a recognizance release order under section 20 of the Crimes Act 1914. Those outcomes are possible, not promised, and the larger the amount the harder they are to reach.
Does the debt disappear if you are convicted, and can they take your assets?
No, and yes. The criminal case and the money are two different things. A conviction and a sentence punish the offence. The refund itself is treated as a debt owed to the Commonwealth, and the tax office will chase it. That means interest, and it means future tax refunds being kept and applied to the debt. People are often surprised that the debt outlives the sentence, but it does.
On top of that, the Commonwealth can move against property under the Proceeds of Crime Act 2002 (Cth). Assets bought with the refund, or restrained as its value, can be frozen and then forfeited. In the reported cases that has included cars, watches, and real estate. So a person can face a conviction, a term of imprisonment, a standing debt to the tax office, and the loss of what the money was spent on, all from the one scheme.
What we do for a person charged with GST fraud.
The first work is on the dishonesty element, because that is what the whole prosecution rests on. What did this person actually know and believe. Were they the organiser, or someone talked into lodging a claim on advice they trusted. Did they understand there was no business. The answers sit in the messages, the bank records, and the account of how the person came to lodge the statements, and they have to be gone through carefully.
Where the evidence of dishonesty is strong, the work shifts to outcome. Early repayment, cooperation with the tax office, and a timely plea are worth a great deal on a federal sentence, and how they are handled matters. Our note on the early guilty plea discount explains why timing counts, and our guide to the first thirty days after a charge sets out the early steps. If the amount is smaller, there may be room to keep a client out of full-time custody. If it is large, the task is to build the strongest case for the lowest sentence the facts allow.
GST fraud sits within the wider field of Commonwealth dishonesty offences, alongside investment and online scams and state offences such as fraud under section 192E of the Crimes Act 1900 (NSW) and dealing with the proceeds of crime. The one rule that holds across all of them is the same: say nothing to investigators until you have spoken to a lawyer.
Frequently asked.
What is the penalty for GST fraud in Australia?
The main charge for GST fraud is obtaining a financial advantage by deception under section 134.2 of the Criminal Code (Cth), which carries a maximum of 10 years' imprisonment. Related charges include conspiracy to defraud the Commonwealth under section 135.4 (also 10 years), general dishonesty under section 135.1 (5 years), and obtaining a financial advantage under section 135.2 (12 months). The sentence actually imposed depends on the amount claimed, the planning involved, and the person's role and history. Sentences in Operation Protego cases have run up to seven years and six months.
What was Operation Protego?
Operation Protego is an Australian Taxation Office led investigation into large-scale GST refund fraud, launched in April 2022. The fraud involved people inventing a fake business, obtaining an Australian Business Number, and lodging false business activity statements to claim GST refunds they were not entitled to. It was promoted heavily on social media, often as a way to get a loan or a government payment from the ATO. The ATO has said it stopped about $2.7 billion in fraudulent refunds, and the operation has produced a large number of convictions.
What is the difference between a GST mistake and GST fraud?
A mistake is an error in a return that is corrected through the tax system, usually by repaying the money with interest and, in some cases, an administrative penalty. Fraud requires dishonesty. To convict under section 134.2 of the Criminal Code, the prosecution must prove the person used a deception and acted dishonestly by the standards of ordinary people, knowing that conduct was dishonest by those standards. A genuine error, or an honest but wrong belief about entitlement, is not fraud.
How does the ATO detect false GST refund claims?
The ATO uses data matching and analytics to compare business activity statements against banking data, business registrations, and other records. A new Australian Business Number that lodges statements claiming large GST refunds with no sign of real business activity is a common trigger. Suspected fraud is referred to the Serious Financial Crime Taskforce, an ATO led joint agency body that works with the AFP and others to investigate and prosecute the most serious cases.
Can you go to jail for a first GST fraud offence?
Yes. GST fraud is a Commonwealth offence and a full-time custodial sentence is a real outcome, even for a person with no criminal history, where the amount is large or the offending was planned. A federal court sentences under section 16A of the Crimes Act 1914 (Cth), weighing the seriousness of the offence against the person's circumstances. For smaller amounts, and with early cooperation and repayment, options short of full-time custody can be available, but they are not guaranteed.
Does the tax debt go away if you are convicted of GST fraud?
No. A criminal conviction and a sentence deal with the offence. The money is a separate matter. The ATO treats a fraudulent refund as a debt owed to the Commonwealth and will pursue it, including by taking future tax refunds and charging interest. The Commonwealth can also seek to restrain and forfeit assets under the Proceeds of Crime Act 2002 (Cth). A person can end up with a conviction, a sentence, an ongoing debt, and the loss of assets bought with the money.
What should you do if the ATO or AFP contacts you about GST refunds?
Get legal advice before you answer questions or take part in an interview. Anything said to investigators can be used in a prosecution, and a well meant explanation can do harm. You are generally not obliged to take part in a police interview, and you should not until you have spoken to a lawyer. Do not delete records or devices. Early, careful advice on cooperation, repayment, and how to respond can make a real difference to the outcome.
To speak to a criminal defence lawyer, call Aaron Kernaghan on 0421 717 019.
This article is written by Aaron Kernaghan, criminal defence lawyer at Good Legal Lawyers, as at 30 July 2026. It is commentary and reflects the personal opinion of the author only. It is not legal advice, it is not a substitute for advice on your own matter, and it does not purport to be accurate or complete. Any matter referred to may be before the court and any person charged is presumed innocent. For advice on a specific matter, contact Aaron Kernaghan on 0421 717 019 or contact the firm.
More criminal-law commentary by Aaron Kernaghan.
Sources: Criminal Code Act 1995 (Cth), ss 11.1, 130.1, 130.3, 133.1, 134.2, 135.1, 135.2, 135.4, 137.1, 137.2 · Crimes Act 1914 (Cth), ss 16A, 20 · Proceeds of Crime Act 2002 (Cth) · ATO, Operation Protego · CDPP, Tax Fraud · Peters v The Queen (1998) 192 CLR 493 on JADE · AFP, NSW man charged over alleged $1.3 million GST fraud, 28 July 2026