Act Party leader John Banks is defending charges over allegations relating to campaign donations, but could be kicked out of Parliament if found guilty.
Mr Banks has been called to court to answer allegations that he received money from internet entrepreneur Kim Dotcom and SkyCity during his run for the Auckland mayoralty in 2010 but declared them as anonymous.
Graham McCready, a retired accountant, is bringing the private prosecution against Mr Banks after police concluded last year they could not prove he had made a false return.
Yesterday, Mr Banks said he would defend the new charges because he had not committed an offence.
A conviction for knowingly filing a false return carries a maximum penalty of two years in prison or a fine of $10,000.
Under electoral law, a parliamentary seat is vacated if an MP is convicted of a crime punishable by imprisonment for a term of two years or more.
Electoral law expert Graeme Edgeler, of Wellington, confirmed that if Mr Banks was found guilty, he would be removed from Parliament, regardless of the sentence.
"If a conviction is entered, even if there is an appeal ... he ceases to be an MP."
Wellington District Court Judge Ian Mill ruled last month that Mr Banks should be called to court to answer the allegations, which concern two $25,000 donations made by Dotcom and his company Megastuff, and another made by SkyCity casino.
The case has been moved from Wellington to Auckland District Court.
The private prosecution follows a police investigation which found there was insufficient evidence to prosecute Mr Banks.
A lesser charge of making an unintentional false return could not be laid because the six-month limit for summary offences had passed.
If a trial goes ahead, Mr Banks could decide to be tried by a jury or a judge alone.
If he were convicted and removed from Parliament, it would prompt a byelection in the Epsom electorate.
Mr McCready, from Wellington, said the prosecution was not politically motivated.
"It's social justice. It goes to the centre of democracy if somebody is breaking the election laws. There's no crusade - I haven't ever met the guy."
Mr Banks said every citizen had the right of access to the courts, regardless of the merits of their case.
He also pointed out Mr McCready's past.
"He is a convicted tax fraudster who recently pleaded guilty to a charge of blackmail in the High Court in Wellington and is currently serving a sentence of community detention."
Mr McCready was found guilty of false tax returns in 2009, and was convicted of blackmail last month.
He took assault proceedings against then Labour Cabinet minister Trevor Mallard in 2009 after the MP's scrap with National MP Tau Henare in the lobby of Parliament.
Mr Mallard pleaded guilty to fighting in public and paid a $500 fine.
In hot water
• John Banks has been called to court to answer allegations he received donations from internet entrepreneur Kim Dotcom and SkyCity.
• During his run for the Auckland mayoralty in 2010 he declared the donations as anonymous.
• A conviction for knowingly filing a false return carries a maximum penalty of two years in prison or a fine of $10,000.
• Mr Banks will defend the new charges.