Smith will serve a year-long suspension and will be unable to captain his nation for two years, while vice-captain David Warner has also been issued with a 12-month ban and will no longer be considered for future leadership roles due to his involvement in the incident.
Cameron Bancroft, who was seen hiding a piece of sandpaper down his trousers after using it on the ball during the second Test against South Africa in Cape Town, has been hit with a nine-month suspension.
After the punishment was announced, Vaughan tweeted: "Steve Smith I think is a good guy who made a huge mistake ... He needed punishing but I think this is too harsh ... Bancroft who I don't know was led astray but deserved punishing but again too harshly IMO ... The other guy I really don't care about ..."
An internal investigation from Cricket Australia found that Warner came up with the ball-tampering plan and demonstrated to Bancroft how to carry it out.