The Abbott government ignored the advice of its own bureaucrats when it approved the lease agreement with former Family First senator Bob Day regarding his Adelaide electorate office in 2014.

Documents obtained under Freedom of Information reveal the Finance Department advised the Government not to allow Mr Day to relocate his electorate office from the Adelaide CBD to a building he owned in Kent Town, warning it had "concerns about how such a transaction might be perceived".

"Finance does not recommend the establishment of a new office for Senator-elect Day," the documents said.

Mr Day did not want to move into the CBD office, vacated by Labor senator Don Farrell, because of concerns about "parking, signage and traffic problems" and offered to sell the Kent Town building and make it a condition of sale that the new owner lease his office to the Commonwealth.

The Finance Department rejected the argument on the basis that the CBD office had been leased until August 2016 — at $99,000 per year — and that the distance between the two offices was less than 5 kilometres.

Despite this advice, the then special minister of state, Michael Ronaldson, wrote to Mr Day in March 2014 telling him he was willing to consider the arrangement as long as the Kent Town property met Commonwealth standards and that no rent would be charged to the Commonwealth until the lease ended on the CBD office space.

Mr Day sold the building to Fullerton Investments and last December, the company entered into a lease agreement with the Commonwealth under which no rent would be paid.

However, the office is now at the centre of a constitutional dispute with the Government seeking to challenge the validity of Mr Day's election on the basis that he has breached so-called pecuniary interest rules, which ban MPs from having contracts with the Commonwealth.

The Government points to the fact that Mr Day's company loaned Fullarton Investments money to make the purchase — and are ultimately liable for a National Australia Bank mortgage on the building.

Mr Day, who formally resigned from the Senate on Tuesday, has rejected the Government's argument, noting the fact that no rent has been paid by the Commonwealth, and said he was looking forward to the High Court resolving the matter.

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