The Commonwealth Grants Commission is an independent statutory Australian body established in 1933 that advises the Australian Government on financial assistance to the states and territories of Australia under section 96 of the Australian Constitution. Now, the Commission recommends how the revenues raised from the goods and services tax (GST) should be distributed to the states and territories to achieve horizontal fiscal equalisation (HFE), a central feature of the Australian federation.
The Commission responds to terms of reference from the Australian Treasurer. These are generally requests for calculating appropriate ratios of per capita grants for distributing general revenue assistance from the Australian Government to the states and territories. The details of these references are usually negotiated between the Commonwealth, state and territory treasury departments before being formally issued by the Treasurer.
The Commission reports to the Commonwealth Government and immediately after provides copies to the states and territories. The Commission's recommendations are then considered at the annual meetings of the Treasurers of the Commonwealth, states and territories.
On 31 March 2016, the Commission received terms of reference asking it to inquire into and report by 7 April 2016, the per capita relativities to be used to distribute GST revenue among the states and the territories in 2016-17.