Companies and individuals could face random audits from early 2016 under a plan being considered by the Australian Taxation Office.
The ATO has received advice from its counterparts in Britain and the US that not having a random audit program in Australia meant it is "unlikely to provide credible estimates" of revenue, a new report says.
The ATO told parliament's standing committee on tax and revenue it is "actively considering" the benefits of a random audit program.
The agency will consult industry before July and, if commissioned, the program will start in early 2016.
However, Inspector-General of Taxation Ali Noroozi told the committee - in a report tabled in parliament on Monday - such a program is unlikely to be popular with taxpayers.
"If they are perfectly compliant, then they are not going to appreciate somebody knocking on their doors and wanting to go through everything," he said.
But he said the program could help reduce the "tax gap" - the difference between the amount of tax legally payable and the amount of tax actually collected.
Deputy Inspector-General of Taxation Andrew McLoughlin told the committee the ATO could consider paying compensation to people who are picked for random audits but found to be doing the right thing.
"Obviously you do not want people feeling as though they are being shaken down when they are not doing anything wrong whatsoever," he said.
The ATO estimates the GST tax gap at $3.1 billion, while the luxury car tax gap was $21.4 million in 2013-14.
The agency is working on tax gap estimates for high-wealth individuals, business income tax and excise revenue products among other areas.
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