There are new allegations a Tasmanian forestry contractor who was paid millions to leave the industry may have breached the terms of his exit grant.

Contractors were eligible to receive up to $3 million to exit the industry for 10 years as part of $45 million made available by the Gillard Labor government in 2011.

In 2013, 7.30 confronted north-west contractor David Scott who was paid $1.9 million to leave native forestry but instead exploited a loophole in the exit grant guidelines and started a new business called DTS Transport with his then 19-year-old son Dylan in charge.

When asked why he had set up the business in January that year with his son as the sole director, Mr Scott replied: "That's my business decisions".

Mr Scott denied he was doing anything wrong, saying he was no longer the boss and provided no financial support to his son's new business.

"I work for the business. I'm just a worker," he said.

However, the ABC learned Dylan Scott was working as an apprentice mechanic for WB Truck 'N' Trailer in Wivenhoe until December 2013, when he was also meant to be running DTS Transport.

Rival Burnie contractor Jason Weller is sceptical about whether it would be possible to run a forestry business and be a mechanic for another company for almost an entire year.

"That just wouldn't happen, your phone would be ringing constantly and you wouldn't last a week, unbelievable is what I'd call it," he said.

Company documents show Dylan Scott took out a motor vehicle loan with Marubeni Equipment Finance, a company which sells forestry vehicles.

His father David Scott also appeared to be a party to the loan through another family company - DJ & SM Scott, raising questions about his claim he was providing no financial support to his son's business.

Mr Scott was not at his Stowport house when the ABC visited. Both David and Dylan Scott declined to be interviewed about the new information.

Scott case should be investigated: contractor

Mr Weller is calling on the federal Department of Agriculture, which administers the exit grants program, to investigate Mr Scott.

"Exit means out, so for him to be borrowing money, to me, that's against all rules," he said.

In a statement, the Department of Agriculture said it could not comment on individual cases but it would consider the new information.

The department subjects exit grant recipients to ongoing monitoring and compliance, including annual declarations that they have exited and remain out of the industry.

Earlier this week, 7.30 revealed Smithton contractor Max Gillie, who was also paid to exit the industry, was still logging a private forest near Edith Creek.

Mr Gillie denied he was doing anything wrong and cited a letter from the Department of Agriculture which said he could log native forest if it was on private property, and if he owned the land and the trees.

However, Mr Gillie conceded he did not own the property that 7.30 found him logging.

Sorry, this video has expired More claims of forest industry payout rorting ( Michael Atkin )

The department confirmed last month, following an investigation, it found one case of fraud and two cases of non-compliance among forestry contractors.

The department did not say which contractors were involved or detailed what activities led to the breaches.

In 2013, a scathing report by the Commonwealth Auditor-General found the exit grants program had been poorly implemented by the department, lacked transparency and resulted in millions being misspent.

It found money was given to people who may not have been eligible under the rules of the program.

Federal Agriculture Minister Barnaby Joyce and parliamentary secretary Richard Colbeck declined to be interviewed.

Members of the public can report suspected wrongdoing to the department on 02 6272 4477 or via its website.