In an address to the Trans-Tasman Business Circle, Human Services Secretary Renee Leon said the trial was designed to be more efficient for Centrelink recipients, the agency and the employer. She hopes it will lead to fewer debts, which have been causing controversy for the department.

Centrelink using Tax Office data to ensure the accuracy of income reporting is not new, but until now that has only been with total annual income. The automated matching of tax data and Centrelink income reports led to the robo-debt controversy, where many debts were incorrectly raised and then reduced or wiped out.

"We'll be able to adjust the fortnightly payments automatically, they'll avoid debt, which will be a much less painful experience for them, and a much better use of resources," she said.

People who receive Centrelink payments are required to declare how much money they earn each fortnight, and if they earn above a certain threshold their payment is gradually reduced.

"One large Australian employer told us they field about 500 contacts per week from their staff asking them for income information so they can report to Centrelink," Ms Leon said.

"That's a burden on the employer but if the customer fails to do it or does it inaccurately it means they end up running up a debt."

During the six-month trial the major employer "directly sent us their payroll data for their employees who were Centrelink customers," Ms Leon said.

While Ms Leon did not mention the employer involved, Woolworths has confirmed it took part in the trial. Human Services confirmed the trial ran from June 2017.

"Woolworths employs tens of thousands of young Australians, many of whom are studying or undertaking apprenticeships as well as working in our stores," a Woolworths spokesman said.

"We wanted to see if there was a way to make it easier for our team members on Youth Allowance or other social benefits to comply with their income reporting obligations."

"The voluntary salary reporting trial with the Department of Human Services provided a great opportunity to do just that and we've heard positive feedback from the team members who participated."

The trial could be just the start of Centrelink obtaining earnings reports straight from employers. From July 1, employers with 20 employees or more will report salaries and wages to the Tax Office each time they pay their employees, with that data then available to be shared with Centrelink. While the data will be available, Human Services hasn't confirmed if it would be used as part of income reporting.

Human Services spokesman Hank Jongen said "the department is considering how this trial can be used more broadly in future".

Human Services and Woolworths said the trial was voluntary and participants had to consent before being included.

"For a period of the trial, the department asked the voluntary participants to continue reporting their income details manually, allowing the department to compare the accuracy of manually reported income to that received directly from the employer," Mr Jongen said.

"The trial revealed that automated reporting from the employer delivered more accurate information, and an easier process for customers."