The integrity of the Australian Taxation Office has taken a hit following charges against Deputy Commissioner Michael Cranston who allegedly abused his position as a public official after he accessed an audit into his son, acting ATO boss Andrew Mills says.

Mr Cranston allegedly sought to pressure colleagues to cut a deal with his son after he learnt his son Adam was the subject of a major tax fraud investigation.

It is believed Tax Commissioner Chris Jordan - who just weeks ago was reappointed by Treasurer Scott Morrison for another seven years - is on sick leave.

Mr Mills has been acting in his place, and on Monday sent a note to the agency's 20,000 staff asking them to refrain from speaking publicly about the case.

"As you'd appreciate, with the events of the last few days and associated media attention, we are expecting to face ongoing higher levels of scrutiny from the public, the media and the government," Mr Mills said. "I cannot overstate the seriousness of these matters.

"I understand the impact of the other aspects of the media stories about a handful of our staff, that strikes at the heart of what matters most - our integrity. People are feeling this deeply across our organisation, and I want to acknowledge those reactions."

Mr Cranston has for the time being been stood down from his position as head of the private groups and high wealth individuals, as have two other ATO officers who are also being investigated internally for potential code of conduct breaches after they reportedly tried to look up information on the ATO's audit at the behest of Mr Cranston.

It is believed that Mr Cranston was on SES band 2, which has a total remuneration package of up to $320,000 while his underlings were on a SES band 1 - a package of up to $260,000.

ATO urges staff: Don't go public

Mr Mills reminded staff about the ATO's media management and social media guidelines and urged employees to refer all media inquiries to the ATO media unit.

"Given the sensitive nature of all of the matters under investigation by us and the AFP, I ask that you respect those involved and let the processes run their course," Mr Mills said."Any media queries must be referred to our media unit, and I ask all staff to refrain from any commentary on these matters, both internally and externally. It is so easy for people to be misquoted."

Adam, 30, and Michael's daughter Lauren Cranston, 24, were allegedly involved in the tax fraud syndicate involving Sydney-based payroll company Plutus Payroll.

Companies paid money to Plutus on the basis it would be used to pay employees' wages and salaries as well as PAYG contributions to the Tax Office. But the AFP alleges a percentage of the funds that should have been paid to the ATO was skimmed off by the syndicate and spent on lavish lifestyle expenses.

Tax professionals have described the news of charges of one of the Tax Office's most senior officials abusing his position as "shocking" and "disgusting". Some fear that stains may be far wider at the ATO.

But Mr Mills sought to assure staff that everything was under control. "The Commissioner [Chris Jordan] although currently on unavoidable leave, has asked me to reaffirm his support and confidence in the people of the ATO - a sentiment fully shared by me and the rest of the executive team," he said.

When asked whether Mr Jordan was on sick leave, a Tax Office spokeswoman said: "Due to privacy considerations the ATO is unable to comment on individual employees."

Mr Mills said the "investigative work" of the Tax Office and the AFP proved that the agency had a "commitment to find those who seek to game the system or engage in tax evasion".

"The reports are a very positive reinforcement of our capability to detect and deal with those who are not doing the right thing," he said.

ATO policy on conflicts of interest

The ATO has a policy for all staff regarding conflicts of interest and notes that "ATO employees who breach this policy may be in breach of the APS code of conduct".

The policy requires that staff avoid conflicts of interest where possible and ensure "disclosure to managers as soon as the likelihood of a conflict of interest arises".

It states: "Ensure you are not improperly influenced by family, personal or other relationships."

And that: "Non-financial conflicts of interest could occur when a person's non-financial affairs conflict with their ATO duties" including "working on tax returns or records of a company in which your partner or a relative holds a significant position". It has a specific subhead on "personal relationships", noting that "In situations where a decision would directly affect a person with whom you have a personal relationship, the ideal approach would be for another non-conflicted officer to act as the decision maker."

Senior Executive Service (SES) officers are required to "declare in writing annually, their financial and other personal interests that could involve a real or apparent conflict of interest" and "declare immediate family members' (spouse and dependent children) interests to the extent they are aware and with family members' consent".

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