The government has launched an investigation into the conduct of the Australian Taxation Office following allegations of unfair treatment of small businesses and individuals.
An investigation has been launched into claims the Australian Taxation Office has unfairly left small business owners in the lurch.
Fairfax and the ABC's Four Corners reported on Monday a series of errors and actions by the ATO which led to small businesses and individuals being financially crippled.
A spokesman for Revenue Minister Kelly O'Dwyer told AAP she was deeply concerned about the allegations and had asked for a thorough investigation of all claims made in the report.
"The government will be responding once it has had an opportunity to consider that in detail," the spokesman said.
Labor leader Bill Shorten said ATO staff were being asked to do more with less and whistleblowers were to be commended for identifying "scandalous" problems.
"I have no doubt the cutbacks at the ATO have undermined the ability to do its job properly," Mr Shorten told reporters in Perth on Tuesday.
"This is an issue we'll investigate when we return to parliament."
However, the minister's spokesman said the Coalition government had established the Inspector General of Taxation in 2003, and in 2014 boosted its powers to provide taxpayers with more specialised and focused complaint handling.
It also set up the Small Business and Family Enterprise Ombudsman in 2016.
The previous Labor government had announced 4,700 staff redundancies at the ATO between 2014 and 2018, but that figure dropped to 4,000 under the coalition government.
Council of Small Business chief Peter Strong said in 95 per cent of cases the ATO provided an "excellent service" to small business people in difficulty.
"That will be small solace to those people who are victims of poor management practices that escaped normal scrutiny and quality control or were part of unacceptable 'normal practices'," Mr Strong said.
He said the small business ombudsman must be involved before key decisions were made, such as before bankruptcy procedures, before garnishees are issued and prior to any action that can bring "stress and unmanageable demands" onto a small business person.
The ombudsman should also be involved in the process of removing ABNs from businesses.
As well, an independent body must determine compensation for businesspeople that have been wronged or suffer monetary and personal losses through unfair processes.
Mr Strong's organisation will soon hold a forum to discuss a better definition of "contractor", which is the cause of many problems involving the ATO.