Wayan Sudarsa's body was found on Bali's Kuta beach on 17 August with head and neck wounds.
Sara Connor, 46, and her British boyfriend David James Taylor, 33, are both on trial for Mr Sudarsa's murder.
In court on Tuesday, his widow Ketut Arsini said she would not accept "even a cent" from Ms Connor.
The Australian woman read extracts to the Denpasar hearing of a handwritten letter she had sent to Ms Arsini offering 25m rupiah (Â£1500; $1900).
"I am not a rich person but to express my sympathy and my sadness I would like you to accept a donation of 25 million rupiah to help you and your children in this difficult moment," Ms Connor said.
People in the courtroom applauded when Ms Arsini said she did not want any money.
"I want the court to give the maximum punishment that fits what she did, based on Indonesian laws," Ms Arsini said.
Ms Connor again claimed her innocence, saying she tried to separate Mr Taylor and Mr Sudarsa after they began fighting over her missing handbag.
She told Ms Arsini she felt "great pain" over the tragedy.
"I'm deeply sorry for you and your family now left alone without Mr Sudarsa to care for you and your children. You have been always in my prayers," Ms Connor said.
Both Ms Connor and Mr Taylor face up to 15 years in jail if they are found guilty of murder.
The British man is scheduled to appear in court on Thursday.
Bali is a popular destination for Western tourists, known for its tropical climate and palm-fringed beaches. Petty crime is common on the resort island, though more serious crime is rare.

Under the  Wales Bill, currently going through Parliament, Welsh ministers could vary income tax by up to 10p in the pound, subject to a referendum.
Mr Jones said that "on balance" a referendum would still be needed.
But opposition parties suggested extra powers being offered to other parts of the UK could make a poll unnecessary.
Assembly party leaders were giving evidence to the Commons Political and Constitutional Reform Committee, meeting in Cardiff Bay, which is holding an inquiry into the future of devolution.
Mr Jones said: "Is there a need to have a referendum specifically on income tax devolution in Wales?
"I think on balance I would say referendums still need to be held but given the pace of change elsewhere in Scotland...I am very wary of any suggestion, leaving aside what I've said on income tax, that every change in Wales needs to be approved by a referendum."
Plaid Cymru leader Leanne Wood said AMs should decide on income tax, if English regions were to gain tax powers without referendums.
"Given that there will be some tax powers offered, in all likelihood, to some of the English regions now, without the need for a referendum, we would argue that that changes the picture for Wales," she said.
"Tax powers should be able to be triggered by the representatives of the people of Wales via this institution."
Welsh Liberal Democrat leader Kirsty Williams also questioned the need for a poll, if parties put the issue of devolving income tax powers to Wales in their general election manifestos.
"I really wonder whether that's necessary, especially if all political parties had it in their manifestos in May and people were elected on the basis of that," she said.
Welsh Conservative leader Andrew RT Davies said he was "open-minded" about the need for a referendum, but noted that a specific question on income tax was included in Scotland's 1997 referendum which has not been put to voters in Wales.
The widow of a policeman allegedly murdered in Indonesia has rejected a "donation" from his accused Australian killer.
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A referendum still needs to be held before income tax powers are devolved to Wales, First Minister Carwyn Jones has told MPs.