Liberal candidate Hollie Hughes "forfeited the opportunity" to benefit in any future recount of ballot papers by taking up a taxpayer-funded job, the High Court has found.
The court on Wednesday published its reasons for rejecting the special count that would have handed Ms Hughes the seat vacated by former minister Fiona Nash, who lost her job over her dual citizenship.
Ms Hughes was appointed to the Administrative Appeals Tribunal in June this year, resigning in October just 45 minutes after the court ruled on Ms Nash's case.
Section 44 of the constitution disqualifies from parliament anyone who holds an "office of profit under the Crown".
While the fact that Ms Hughes held an "office of profit under the Crown" was not disputed, at issue in the case was whether holding the office between July 1 and October 27 this year was enough to render Ms Hughes "incapable of being chosen".
The court found Ms Hughes' acceptance of the AAT job was "understandable".
"But it was a voluntary step which she took in circumstances where reference by the Senate to the Court of Disputed Returns of a question concerning whether a vacancy existed in the representation of New South Wales in the Senate by reason of the disqualification or lack of qualification of a senator who had been returned as elected was always a possibility," the judgment states.
"By choosing to accept the appointment for the future, Ms Hughes forfeited the opportunity to benefit in the future from any special count of the ballot papers that might be directed as a result of such a vacancy being found."
It is now up to the Commonwealth to file a summons seeking directions on how to fill the Senate position.
It is expected the next candidate on the NSW coalition Senate ticket for 2016, Jim Molan, will get the nod in another special count.
University of NSW constitutional law expert George Williams said it was a "strict reading" of the constitution.
"This will no doubt cause great inconvenience to such candidates, as they will be unable to, for example, take up any public service position, even say as a teacher or police officer," Prof Williams told AAP.
"It is another strong reason why section 44 should be changed."