The federal opposition also said it was worried and warned of a huge risk of conflicts of interest for big accounting firms, which stand to reap tens of millions of dollars in auditing work outsourced from the ATO.

But the Taxation Office said the plan, which could be trialled as early as May, was about efficiency and transparency.

Details of the ATO's External Compliance Assurance Process, which would allow companies to hire their own auditors to sign off on their tax returns, were revealed by Fairfax Media on Thursday to the dismay of Labor and lobby group Taxpayers Australia.

The group's spokesman, Mark Chapman, said a result of the move would be that the ATO freed up resources to put the heat on the family finances of millions of ordinary Australians and small businesses.

''I've seen people attempt to link this to cutting red tape and saving resources, but in reality what I suspect we'll see is that resources will be freed up in the Tax Office from the top end of town and that resources will be reallocated to look at small businesses and individuals,'' Mr Chapman said.

''They're not going to have the opportunity to go down to their accountants and ask them to audit them on behalf of the Tax Office; it will be the Tax Office that will be doing the job.

''The man on the street will be having more interactions with the Tax Office while the big end of town is getting cozy with them.''

Mr Chapman, himself a former tax officer, said his organisation was also worried about the potential for conflicts of interest under ECAP.

''You've got one part of a big four accounting firm, its tax department, which is advising companies on how to minimise their tax liabilities,'' he said. ''Then you've got another part of that firm, the auditing department, which is then basically acting as a subcontractor for the Tax Office, there's clear potential for that arrangement to go badly wrong.

''From the perspective of the general public, that seems to be undermining the reputation of the Tax Office. I don't think it's going to look good to people looking from the outside.''

Labor's shadow assistant treasurer, Andrew Leigh, said the plan could see less tax collected, leaving ordinary working families to pick up the slack.

''This is likely to result in less tax revenue being collected,'' Dr Leigh said.

''That means Australian families will need to pay more to make up the difference.

''Why should families have their tax audited by the ATO but big businesses are given the option of using their own accountants to sign off on their tax bills?''

The ATO issued a statement on Thursday, saying the proposed arrangement would allow it to make more efficient use of its resources.

''Using our existing resources more efficiently and with less impost on taxpayers is a priority for the ATO. [The] aim is to achieve quicker and cheaper certainty and transparency for both parties.''