A contractor can be held liable for everything they do
For that reason, a contractor is unwise to do anything that falls outside of their skill set.
If the request from the principal falls outside the scope of the contract, the contractor can, and should, say “no”.
If, for whatever I’ll-considered reason, the contractor has agreed to do it in the contract then they can:
- break the contract and pay the damages,
- take out insurance,
- subcontract the work to someone who does have the skills.
If the “contractor” is really en employee
It is not uncommon in Australia for a person who is actually an employee at law to be described as a “contractor”. This is usually because someone (possibly both parties) is cheating on their employment, superannuation, insurance or tax obligations.
An employee asked to do something beyond their competency should raise that with their employer. Then, if the employer insists, they should do it provided it’s not unlawful or unsafe.
If they are actually an employee then in new-south-wales at least an employer cannot hold them liable for errors and omissions they make in the course of their employment.
The Australian Tax Office
The ATO holds the taxpayer liable for errors and omissions in tax returns - they do not cast the net wider than that.