A senior tax office bureaucrat has been linked to a $165 million conspiracy to defraud the Commonwealth with the prime minister saying the case proves even high-ranking officials "are being watched".
Michael Cranston, a deputy commissioner at the Australian Taxation Office, has been issued with a court attendance notice for allegedly abusing his position as a public official.
His 30-year-old son, Adam, and daughter, Lauren, 24, are among a group of nine people charged on Wednesday over the scam uncovered by Australian Federal Police during an eight-month investigation.
"The scale of this allege fraud is unprecedented," AFP deputy commissioner Leanne Close told reporters in Sydney on Thursday.
The alleged conspiracy saw a company set up in Sydney to provide payroll services to legitimate clients.
But their payments were transferred to subcontractors controlled by syndicate members who pocketed the money instead of sending it to the ATO.
The alleged theft dating back to June 2016 is estimated at $165 million but could be much more.
Malcolm Turnbull says the case was "very much to be regretted" and the government took a "zero tolerance" approach.
"Nobody should imagine they can escape our law enforcement agencies no matter how high they may be in a government department," he said in Brisbane when congratulating police.
Labor's Chris Bowen said while the case was "disturbing" justice should be allowed to proceed "without political commentary", he said in Hobart.
Police believe Adam Cranston asked his father to access "some information".
The AFP believes a "shocked" Michael Cranston may not have had any knowledge of the conspiracy.
Acting taxation commissioner Andrew Mills says the 58-year-old had had an "illustrious career" until Thursday.
"It is of concern that a long-standing officer has been alleged to have been involved in this," he said.
An internal investigation has been launched into four ATO employees who've been suspended without pay.
Mr Mills reassured taxpayers the office's systems hadn't been compromised.
Syndicate members interacted socially and had business obligations together.
Their proceeds funded lavish lifestyles, with police seizing 25 cars - luxury, vintage and racing vehicles - 18 residential properties, 12 motorbikes, in excess of 100 bank accounts and share trading accounts and two aircraft.
Firearms, jewellery, artwork, vintage wines and at least $1 million located in a safety deposit box were also confiscated.
Adam Cranston, who was arrested in Bondi amid 27 raids on homes and businesses across Sydney on Wednesday, was released on bail on a surety of $300,000 after an appearance via video link in Sydney's Downing Centre Local Court on Thursday.
He was also required to surrender his passport.
The 30-year-old was charged with conspiracy to defraud the Commonwealth while his sister Lauren is due to face court on June 13 charged with the same offence plus another of dealing with the proceeds of crime.
Michael Cranston will face court on the same day when he will be officially charged.
The seven others arrested on Wednesday include Dev Menon, Devyn Michelle Hammond, Daniel Rostankovski, Jason Cornell Onley, Christopher James Guillan, Aaron Leo Paul and Daniel Simon Hausman.
The AFP says it will take time to see where the conspiracy ends and whether further charges should be laid.
© AAP 2017