Updated May 25, 2017 19:11:18

Photo: Bob Day (right) requested his debts be waived; the option is also available to Rod Culleton (left). (ABC News)

The Federal Government has agreed to waive debts owed by former senator Bob Day, after receiving advice that he may not be able to repay the money.

Special Minister of State senator Scott Ryan told a Senate estimates committee he decided to waive the debts in line with decisions made in similar cases in the past.

In April, the High Court ruled Mr Day was not validly elected to the Senate last year, due to a complex arrangement involving a building previously owned by Mr Day being leased by the Commonwealth.

It was recently revealed the Senate and Department of Finance were pursuing Mr Day and fellow disqualified senator Rod Culleton, seeking the repayment of their salaries and other allowances.

Both men received letters informing them of the situation, potentially owing hundreds of thousands of dollars between them.

Senator Ryan told the estimates hearing Mr Day took up an option to formally request the debt be waived.

The Minister said he was advised pursuing the debts may not be fair.

"It may be seen to be inequitable for the Commonwealth to recover the debt, given Mr Day performed his duties as a senator in good faith," he said.

"The [advisory] committee also noted Mr Day's personal financial circumstances."

In a written statement, Mr Day said it was a fair outcome.

"I thank the Minister," he said.

"The Section 44 case in the High Court was an important test case which is why the Government funded the case.

"No-one was aware of Section 44 until well after the event."

Deputy Prime Minister Barnaby Joyce said the decision to waive the debt was common sense.

"I'm sure that Bob Day, he was actually doing a job, he was down here, he was at work … it's not as if he was employed somewhere else, so you know I think it's a fair call," he told ABC RN Drive.

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Senator Ryan also responded to criticism of the way the pursuit of the debts has been handled, arguing the letters sent to both men provided clear options for resolving the debts.

He said Mr Culleton was welcome to walk the same path as Mr Day.

"The letters provided Mr Day and Mr Culleton with options in relation to this debt," he said.

"Mr Day has elected to take one of those options, which was to apply for a waiver.

"The options outlined in the letters remained open to Mr Culleton."

Mr Joyce said Mr Culleton deserved the same treatment.

"Rod Culleton, for all his sins, I think he was genuinely at work and trying to do things — just that he shouldn't have been here in the first place," he said.

"That was a problem, so you've got to have some leniency. They've had a look at it and said, 'look we'll waive it' — well they've offered to him that they'll waive it.

"If I was him, and Rod if you're listening out there, I would reply."

Topics: federal-parliament, australia, sa

First posted May 25, 2017 18:39:43