Recent Developments in GST Refund Fraud: A Closer Look at Operation Protego and Its Implications for Compliance
- Alvin Fung
- Apr 24
- 3 min read
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The Australian Taxation Office (ATO) has recently exposed multiple cases of fraudulent GST refund claims, reinforcing the momentum of its national enforcement initiative, Operation Protego. This article aims to help business owners and sole traders understand the risks, through case analysis and official data, and strengthen their awareness of compliance obligations.
What Is "Operation Protego"?
Operation Protego is a nationwide enforcement initiative launched ATO in 2022 in response to a surge in fraudulent GST refund claims. The operation specifically targets tax scams promoted on social media platforms that falsely promise “quick refunds” with little or no verification. Its core objective is to protect the integrity and fairness of Australia’s tax system.
Common features of this type of fraud include:
Inventing or falsifying business identities.
Submitting fraudulent Australian Business Number (ABN) applications.
Lodging fabricated Business Activity Statements (BAS) to claim illegitimate GST refunds.
As early as May 2022, ATO issued public warnings, urging the community to remain vigilant against such scams and encouraging those involved to come forward voluntarily. Cases with serious criminal elements are referred to the Serious Financial Crime Taskforce (SFCT), a multi-agency taskforce combining resources from tax compliance, law enforcement, and financial regulation bodies. The SFCT focuses on investigating and prosecuting complex and coordinated financial crimes.
Compliance Alert: Inaccurate GST Claims Can Lead to Criminal Charges – The Merrett Case
In a recent high-profile case, ATO revealed that Melbourne resident Joshua Merrett was sentenced to 2 years and 11 months in prison for fraudulently claiming GST refunds. The court also ordered him to repay AUD 394,801, the full amount of the unlawful refund obtained.
An investigation found that during the 2021–2022 financial year, Merrett registered a shell company falsely claiming to operate in staircase manufacturing and furniture restoration. Despite having no actual business operations, he submitted 31 fabricated BAS statements over a three-month period, fraudulently obtaining nearly AUD 400,000 in GST refunds. A subsequent attempt to claim an additional AUD 330,000 was blocked by ATO’s risk detection systems.
A search of Merrett’s premises, jointly conducted by ATO and the Australian Federal Police (AFP), uncovered no evidence of legitimate business activity—no equipment, no inventory, and no transactional records. In addition to tax fraud, Merrett was charged with obstruction of justice for refusing to provide the password to unlock his mobile phone during the investigation.
He will be eligible for release after serving 1 year and 8 months. The conditions of his release include a recognizance of AUD 1,000 and a 2-year good behavior obligation. In addition, he was ordered to pay reparations totaling AUD 392,917.74.
Enforcement in Progress: Criminal Penalties and Regulatory Trends in GST Refund Fraud
The Merrett case is far from isolated. It represents a growing pattern of fraudulent GST refund claims that Operation Protego is designed to detect and prosecute. Since the operation began, ATO has significantly intensified its review of suspicious refund activity and has strengthened coordination across regulatory and enforcement agencies to establish a robust, high-alert oversight framework.
According to official data released by ATO, as of March 31, 2025:
More than 57,000 suspected participants have been subject to compliance action.
Over AUD 300 million in refunds, penalties, and interest has been recovered.
103 individuals have been convicted, with maximum sentences reaching 7 years and 6 months.
Numerous other cases remain under active investigation or prosecution.
ATO has reiterated the broader impact of such fraud: “GST refund fraud significantly undermines Australia’s public finances and directly affects the funding of essential services such as healthcare, education, and infrastructure.” They will continue to pursue fraudulent activity through criminal investigations, debt recovery, and multi-agency cooperation to uphold the fairness and integrity of the tax system.
For businesses and sole traders, the Merrett case serves as a timely reminder. With tax scams increasingly circulating on social media—promising “fast refunds” or “no-repay cash incentives”—it is critical to exercise caution. Do not fall for misleading promotions and never engage in or assist with false tax filings.
If you have any doubts about your GST reporting obligations, refund eligibility, or a notice received from ATO, we encourage you to contact our professional team. We are here to support you with reliable, compliant, and secure tax advisory services tailored to your situation.
Source: Stairway to jail over GST fraud and Operation Protego, ATO website, viewed on 24th April 2025.
