The moves comes after the 20-year-old celebrated his stage 3 victory on Wednesday by 'flipping the bird' as he crossed the finish line in Porrentruy after he escaped in an uphill sprint from Jordi Simon (Spain) and Christopher Juul-Jensen (Denmark). Having won the Tour's prologue time trial on Sunday, Hepburn's second success of the week had moved him up the general classification order from 15th to second place, with Canada's David Boily 28 seconds ahead.
Vision of Hepburn's win shows the talented Queenslander raise his fist in celebration before the offending gesture was made, raising the ire of team manager Neil Stephens who not only made the decision to withdraw his charge from the race, but also impose a fine of 1500 Euros.
A response from Cycling Australia explained that the "inappropriate gesture" was a reaction to a 30 second time penalty he was given by officials the day before for not holding his line during the final sprint.
"That's not acceptable behaviour for a rider in an Australian team and as a result, in consultation with the race organisers, he was taken out of the race," spokeswoman Gennie Sheer said in a statement to Cyclingnews.
"Michael has formally apologised to the organisers and officials and accepted the decision."
It is not yet known what affect the penalty will have, if any, on Hepburn's selection in the Australian team for the UCI Road World Championships in Copenhagen later this month. Hepburn was named on the long list for both the Under 23 road race and time trial and is considered to be a genuine medal chance.
"Selections will be made in accordance with the 2011 team selection policy taking into consideration all factors including the performance criteria and the athlete code of conduct," Sheer continued.
The Australian team is set to be named on September 12.
Stage 4 of the Tour l'Avenir was won by Germany's Nikias Arndt in a bunch sprint.