Hornsby City Council in NSW is leading a high court challenge to the validity of GST taxes imposed on local governments.
An exclusive report from the The Guardian says the legal challenge could be worth tens or hundreds of millions of dollars to councils across Australia.
The claim centres on the arrangement where councils are required to pay notional GST or equivalent amounts will be deducted from grants.
The council argues that it is a breach of the constitution, a claim that is contested by the commonwealth.