Mr Noroozi also said his review of the ATO's fraud control management, following the scandal involving one of the ATO's former highest-ranking officer's Michael Cranston and alleged abuse of his position, would be complete by the end of this month. Mr Noroozi's review would include recommendations for improvement to the ATO and the government.

Mr Noroozi has long been calling for a new second commissioner to head a separate appeals area within the ATO - a move which Tax Commissioner Chris Jordan has been resisting.

Mr Noroozi's idea is seen as a compromise from a 2013 proposal by then shadow treasurer Joe Hockey to split the ATO into two separate agencies so that its policing and regulatory functions are separated.

Mr Jordan has said that as a way to offer greater independence when a taxpayer appeals an ATO decision, the agency had already moved taxpayer objections out of the compliance unit to the legal/technical area. Mr Noroozi said this did not go far enough.

Neither the government nor Labor have committed to having a new second commissioner, and the creation of a such a role requires legislative change. But Mr Noroozi said, "it is inevitable that a separate appeals area, if it doesn't happen in the next year or so, it is inevitable that it will be required in the future".

He said the "ATO needs to be seen to be independent and that taxpayers have confidence that their matters are being considered completely afresh without involvement from the original decision makers".

Mr Noroozi said small businesses make up 25 per cent of the total number of complaints to his office, and that as more people become aware that his office exists more are lodging complaints about the ATO.

The ATO's inappropriate use of debt recovery tactics is now the subject of a new review by Mr Noroozi's office, which resulted from the media investigation.

ATO whistleblower Richard Boyle told the media investigation that staff in the Adelaide office were "quite clearly and categorically to start issuing standard garnishees on every case" as a "cash grab" towards the end of the 2016–17 financial year - which was not in sync with reasonable use of the debt collection tool.

In addition to Mr Noroozi's review, Revenue and Financial Services Minister Kelly O'Dwyer launched a probe headed by Treasury into the alleged unfair treatment of small businesses and individuals, uncovered during the investigation.

Last week Mr Jordan - in a direct response to concerns raised during the media investigation - said the ATO will trial independent reviews when small businesses are in dispute with the agency over a tax matter.

Mr Noroozi has welcomed the trial as a first step, saying his office has called for the review function to be available to all individuals and small businesses but that this would require extra government funding.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell had in the media investigation called for Mr Noroozi's decision to be binding on the ATO.

But Mr Noroozi told Senate Estimates that similar watchdog agencies worldwide did not all have these powers, and while there would always be some natural tension between his office and the ATO, that the two agencies did work together to resolve disputes.

He said in the meantime, Australia could look to a United States model where taxpayers who cannot afford to fight the ATO in court can get funding to take their cases forward.

Mr Noroozi thinks the ATO makes mistakes in about 5 per cent of cases (one in 20) and on Tuesday stood by this figure despite Mr Jordan disputing the number.

Mr Noroozi  said the compensation process - when the ATO makes mistakes - also needed to be reviewed. As the media investigation revealed, some people were not being appropriately compensated when the agency made an error, with the median payout last year at about $500 and average at about $8000.