ATO director Tyson Fawcett threatened to 'cease and desist' robodebt data before backing down

But the top official added he could not recall why he ultimately backed down shortly after receiving an email from a Department of Human Services representative, inferring political pushback.

Australian Taxation Office data director Tyson Fawcett appeared at a royal commission hearing into robodebt on Monday but struggled to recall much of his role years earlier in questioning the legality of the controversial income averaging scheme.

Run by Services Australia, then called the Human Services Department, it used annual income data provided by the tax office to calculate debts of those it deemed had received incorrect amounts of welfare.

Mr Fawcett said he had been essentially unaware of how the data was being used until issues began airing in the media.

According to email records in July 2017, the tax executive told the DHS either to agree to an urgent meeting to discuss how the data was being used or "cease and desist" with the scheme.

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While being unable to recall any memories beyond the documents presented by senior counsel Justin Greggery, he admitted his position was about gaining "much stronger assurance around what was happening".

The tax executive agreed with Mr Greggery's description of the ATO's role until that point as being "passive".

"It was [a] request, which was followed by a big stick, a request to cease and desist in the absence of that assurance," the senior counsel said, which Mr Fawcett agreed with.

From 2015 until 2020, the scheme wrongly recovered more than $750 million from 381,000 people, with several victims taking their lives while being pursued for the false debts.

An earlier email to the DHS that included the "cease and desist" line received a response from DHS representative Ali McRae.

Ms McRae agreed to work more closely on the scheme, following Mr Fawcett's strong language, but suggested there was political pressure to keep it going.

"There are currently a range of measures the government has asked us to deliver which rely on the data matching capabilities of our organisations and this work needs to continue," she said in a reply.

Commissioner Catherine Holmes suggested to Mr Fawcett, "it looks very much as if she's telling you to back off because this is what the government wants".

"If I read it as it is, it definitely could imply that," Mr Fawcett replied.

Mr Fawcett added he could not remember why he accepted Ms McRae's response and didn't push back further after his "cease and desist" comment.

Former prime minister Scott Morrison and ex-foreign minister Marise Payne are due to front the commission on Tuesday.

- with AAP