Josh Frydenberg's citizenship challenged in court

Federal Treasurer Josh Frydenberg's lawyers say the case against him is baseless because his mother was stateless after fleeing from Hungary.

Treasurer Josh Frydenberg has rejected Labor's call for a 'wellbeing budget', similar to New Zealand's. Source: AAP

Josh Frydenberg is ineligible to sit in Federal Parliament because of his Hungarian-born mother, a court has been told.

One of the federal treasurer's constituents in the Melbourne seat of Kooyong argues Mr Frydenberg falls foul of Australia's constitution because he is entitled to Hungarian citizenship through his mother.

Erica Strauss, also known as Erika Strausz or Erika Strauss, was born in Budapest in 1943.

But her family fled Hungary's communist regime when she was six.

Treasurer Josh Frydenberg during the federal election campaign. Source: AAP

Kooyong resident Michael Staindl argues Ms Strauss passed on Hungarian citizenship to her son, making him ineligible to stand for re-election in 2019.

"The evidence shows that the respondent's mother bore the status of a citizen of Hungary," Mr Staindl's barrister, Angel Aleksov, told the Federal Court sitting as the Court of Disputed Returns on Tuesday.

"There is a significant public interest in a person sitting in parliament without an allegiance to a foreign power."

But Mr Frydenberg's lawyers say the challenge is baseless because the Strauss family was recognised as stateless when they docked at Western Australia in December 1950.

"They believed they had rid themselves or had become separated from their Hungarian citizenship," John Sheahan QC, acting for Mr Frydenberg, said.

He added there was a letter from the prime minister's office on 19 November last year confirming Mr Frydenberg's Hungarian citizenship had not been established.

"A pre-condition to renounce (citizenship) is establishing to the satisfaction of the government that you are a citizen and in this case the Hungarian government does not recognise the respondent as a citizen," Mr Sheahan said.

A string of MPs have previously been tripped up over their citizenship.

In 2017, deputy prime minister Barnaby Joyce, deputy Nationals leader Senator Fiona Nash, former Greens senators Scott Ludlam and Larissa Waters and One Nation senator Malcolm Roberts were found by the High Court to be subject or citizens of a foreign power when they nominated for the previous year's federal election.

Three judges overseeing Mr Frydenberg's case - Chief Justice James Allsop, and justices Susan Kenny and Alan Robertson - have reserved their judgment and will hand down a decision at a later date.