The tax watchdog has agreed to examine how the Australian Taxation Office deals with in-house fraud following the case involving one of its most senior officials.
The Inspector-General of Taxation Ali Noroozi has accepted a request of the Senate economics references committee for the review.
"The community is genuinely concerned about allegations of tax fraud, particularly where it may be linked to ATO officers," Mr Noroozi said in a statement on Wednesday.
"The community expects very high standards of integrity from the ATO and its staff," he added.
The review will examine the ATO's practices, procedures and structures to prevent, detect and address fraud or potential fraud and how these are applied in practice by ATO staff.
It will also identify any opportunities for improvement.
Former deputy commissioner Michael Cranston was caught up in an alleged $130 million tax-evasion racket involving his son, Adam Cranston, who was charged with conspiring to defraud the Commonwealth.
Separately, tax commissioner Chris Jordan told a Senate hearing last month 30 tax office workers have been investigated and 12 have been sacked over the unauthorised access of taxation records this financial year.
Shadow assistant treasurer Andrew Leigh welcomed Mr Noroozi's review.
"The recent arrests have highlighted the serious challenges the ATO faces in detecting and addressing fraudulent activity and back calls from Labor to give the office more tools to track down bad behaviour," he told AAP.
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