The Department of Finance has advised Rod Culleton he is legally required to pay back the salary he was earning as a senator as well as any superannuation, staff wages and other expenses after the High Court found he was never eligible to run in last year’s federal election.
“I will not be bullied or threatened by the government,” Mr Culleton said in a statement.
“This is going to set a very dangerous case precedent. My staff and I worked very hard and the government’s arrogance is sickening.”
The former senator has vowed to clear his name by taking his case to the highest court in the British legal system in an attempt to have the High Court’s January decision overruled.
“I am in the process of compiling a submission which will go to the Privy Council in London as this matter is now out of control," he said.
"I will be protecting not only my rights, but also the rights of my staff who have also been dragged into this serious attack and felt the effects of these bullying tactics.
"The Liberal government has sent a clear message to the people of Australia. That is, if you are going to run for parliament, you better have a mass amount of money behind you in case they turn around, kick you out and then try to sue you for all expenses incurred from doing your job.”
Special Minister of State Scott Ryan has told Sky News that anyone who receives such a letter can apply for a debt waiver.
"I'll have more to say on this before the Senate Estimates committee next week," Minister Ryan said.
"I need to be very careful in what I say here because I may have a future decision making role and I cannot prejudge."
Former Family First Senator Bob Day was also ruled ineligible to sit as a senator by the High Court after resigning last year over the liquidation of his building companies.
It is understood that he has also been issued with a similar debt notice.
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