Israel Folau has been found guilty of breaching Rugby Australia's code of conduct after posting anti-gay comments in a social media post.
Folau had requested a hearing last month following Rugby Australia's decision to terminate his multi-year, multimillion-dollar contract to play for the Wallabies and Super Rugby's NSW Waratahs.
This was in response to a post on Folau's Instagram account that said "Hell awaits" homosexuals.
A devout Christian, Folau has stood by his comments.
A three-person panel of lawyer John West, Rugby Australia representative Kate Eastman and John Boultbee from the Rugby Union Players' Association heard testimonies from Folau, Rugby Australia chief executive Raelene Castle and Waratahs chief executive Andrew Hore.
They found that Folau was guilty of a "high breach" of the code of conduct.
The panel will now take written submissions from both parties before deciding on Folau's sanction.
Folau, who has won 73 caps for Australia, had been set to play an integral part in his country's Rugby World Cup campaign in Japan later this year.
Alongside rugby union, Folau had also played professional rugby league and Australian rules football.
Since the 30-year-old made the comments, Australian Rugby League Commission chairman Peter Beattie has ruled out the possibility of the player returning to rugby league.