Tukituki MP Lawrence Yule claims conflicting advice led to taxpayer-funded billboards being deemed candidate advertisements.
The Taxpayers' Union filed an official complaint with the Electoral Commission and the Parliamentary Speaker's Office over Yule promoting himself as the "Voice in Tukituki".
The Commission announced that any money spent on the billboards will be apportioned into the election period, and will count towards Yule's election spending limit.
The Commission declined to comment, citing the Electoral Act 1993, which requires advisory opinions and associated material to be kept confidential until after the return of the writ for the election.
Yule said the decision was "very disappointing" and that the billboards were approved by the Publicity Department of Parliament in January.
"The Electoral Commission issued a formal ruling in May that it was not an Electoral Advertisement and based on this, the billboards were left up. Last Friday the Commission issued an amended ruling," he said.
"There are a significant number of these types of billboards around New Zealand and this could have implications for other candidates and political parties."
Yule added: "The National Party is now reviewing the decision and deciding the next steps."
The MP did not disclose how much the billboards will cost his election spending fund.
Taxpayers' Union spokesman Louis Houlbrooke said the Electoral Commission has either made a remarkable U-turn, or Yule was "telling porkies".
"Yule claimed he had written approval to erect these billboards with taxpayer money, but now we see the Electoral Commission find against him," he said.
"The question now is whether taxpayers will get their money back. That's a matter for Parliamentary Services, who, according to Yule, approved the billboard."
Tukituki Labour candidate Anna Lorck declined to comment on the billboards, but said her priority is immersing herself in the "real issues" of jobs, building houses and better healthcare.
"In our electorate, we are focused on building a strong and sustainable economy from Covid-19, not being distracted by Lawrence and his billboard problem," she added.
Houlbrooke said now that the Electoral Commission has determined the billboards are candidate ads, Parliamentary Services must "demand Yule repay costs for the portion of time the billboards have stood during the election period".
The Taxpayers' Union has written to the Speaker of the House to ensure this action is taken.
In the nine weeks before election day – from 18 July – election signs up to 3sq m can be put up. However, they still need to comply with the local council's application processes and rules about where signs can be put up.