Tuqiri was said to have informed ARU officials of his decision on Saturday that he would not sign the preliminary offer from the ARU made a week last Thursday.
Tuqiri has been spotted with two rugby league fclub owners over the past couple of weeks, as well as Cronulla Sharks Head Coach Ricky Stuart, adding substance to the rumours that he is set to return to rugby league following the next Rugby World Cup.
"I've knocked back their offer,'' Tuqiri confirmed on Saturday.
"At this stage there are some key components that we spoke about but haven't appeared in the contract.
"At the moment, the deal from the ARU isn't satisfactory, but you don't always knock over a deal at the first go. This is the biggest contract of my career and I want to get it right."
The contract offer from the ARU would take Tuqiri, 27, through to the 2011 Rugby World Cup in New Zealand, as well as making him the second-highest earner behind Matt Giteau.
However, that may not be enough, as Tuqiri also revealed a forming bond with Stuart at Cronulla.
"We had a good meeting," Tuqiri said.
"Ricky spoke about his plans for the club and he's certainly an attraction.
"I always said I'd leave no stone unturned in reaching my decision and meeting the Sharks was the first step."
Tuqiri, will meet with Melbourne and rugby union's Queensland Reds this week, also mentioned that the possibility of him playing at centre in the 13-man code was attractive.
"I wouldn't mind a crack there," he said.
"You get a lot more one-on-one contests in the centres and I think that could suit me."
Tuqiri's wife Rebekka is also disillusioned with the amount of time her husband spends overseas away from their young son Samson, and would welcome him returning to the NRL.
"It can be quite alarming to see how much time he is away and they're kept to themselves quite a bit," she told the Courier Mail.
"There's not much opportunity for families to be accommodated too much in the travel."
Tuqiri, who played 99 games with the Brisbane Broncos between 1999 and 2001, has already held talks with his former club as well as Cronulla and Sydney Roosters.
And although the Australian Rugby Union has offered Tuqiri a lucrative four-year deal, he has expressed his disappointment with the financial aspects.
"It wasn't quite up to the mark of what we thought I'm worth," Tuqiri told Channel Nine.
"That goes back to a lot of things, and the ARU know about that."
ARU boss Gary Flowers was unhappy with the winger's comments, but the organisation is unlikely to give up on Tuqiri without a fight.
"We communicated our view and while I'm not going to canvass what was said, it's fair to say we weren't feeling overly positive," Flowers said.
Tuqiri captained Fiji in the 2000 Rugby League World Cup before being selected for Australia in 2001, when he debuted with a try against New Zealand in a 28-10 victory.
He switched codes the following year to join the NSW Waratahs, and made his international debut for the Wallabies in 2003 against Ireland.