TITLE: High Court Confirms Uber’s $81 Million NSW Payroll Tax Liability: What Contractor-Based Businesses Need to Know
Look beyond contract labels to understand your exposure
Uber’s contracts described drivers as “independent transport providers” and Uber as their “limited payment collection agent”. Uber argued it collected riders’ fares, deducted a service fee and passed the balance to drivers. In its view, those remittances were the drivers’ money, not payments by Uber for work.
The dispute concerned the contractor provisions in Division 7 of Part 3 of the Payroll Tax Act 2007 (NSW). At first instance, the Driver Contracts were found to be “relevant contracts”, but the remittances were not treated as wages because Uber was considered to be collecting fares as the drivers’ agent. The NSW Court of Appeal overturned that outcome in 2025. The High Court has now dismissed Uber’s appeal in full.
The majority looked at the rights and obligations created by the arrangements, not simply the names the parties used. This distinction matters: describing an arrangement as agency or contracting does not, by itself, determine its payroll tax treatment.
Check whether contractors supply services to your business
The Court held that a service may be supplied to more than one person at the same time. Riders received transportation, but that did not prevent drivers from also supplying driving services to Uber under their contracts.
Drivers did not have to accept every trip. But once a trip began, their contracts required them to take the rider directly to the destination and meet standards for safety, professionalism, vehicle condition and service quality. Uber could restrict a driver’s access to the app for non-compliance. The Court compared this to a casual employee who can decline a shift but is subject to work obligations once the shift starts.
For your business, consider more than who receives the service at the end. Ask whether your contractors also owe you obligations about how they perform that service.
Review equipment exclusions carefully
Uber also argued that the driving services were ancillary to the use of drivers’ vehicles, an exclusion it relied on under section 32(2)(a). The Court rejected that argument. It found that the principal object of the contracts was providing driving services, not hiring or accessing vehicles. Both driver and vehicle were essential to the transport service.
If your contractors supply equipment alongside labour, check whether the relevant exclusion genuinely applies to the substance of your arrangement. Do not assume that supplying valuable equipment makes the work secondary.
Treat payment controls as a compliance signal
The Court also rejected the “payment collection agent” characterisation. Uber recommended fares, deducted its service fee and had rights to adjust or cancel fares and seek reimbursement from drivers. The amounts remitted were directly connected to trips completed and distance travelled.
Taken together, those rights were inconsistent with Uber acting only as an administrative conduit. The majority concluded that the remittances were paid by Uber for or in relation to work performed under relevant contracts, so they were deemed wages for NSW payroll tax purposes.
This reasoning builds on earlier cases, including Commissioner of State Revenue v The Optical Superstore and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue. It may be relevant where a business facilitates services between contractors and customers, then collects or distributes customer payments. For further detail, see Pitcher Partners’ technical summary and ABC News’ report on the decision.
Review your contractor and payment processes now
Start with a practical review of your business records and arrangements:
- Identify contractors who provide services to your customers or clients.
- Check whether contracts set service standards, pricing or requirements for how work is performed.
- Confirm whether you can suspend or remove contractors for failing to meet those requirements.
- Map how customer payments are collected, adjusted, withheld, refunded and paid out.
- Keep evidence supporting any contractor exclusion you rely on.
- If you operate in multiple states, check each jurisdiction’s rules, rates and thresholds.
The case was decided under NSW law, but businesses in Sydney and across New South Wales should not assume its reasoning stops at the state border. Payroll tax laws, rates and thresholds vary across NSW, Victoria, Queensland, Western Australia, South Australia, Tasmania, the ACT and the Northern Territory. The ATO administers federal taxes; payroll tax is administered separately by each state or territory.
The NSW Government welcomed the outcome in a ministerial statement on 4 November, saying the ruling confirmed the Chief Commissioner’s interpretation of the law and the government’s commitment to the integrity of the tax system. “Local businesses pay their fair share. Uber should pay their fair share too.”
The ruling was not unanimous. Steward J would have allowed Uber’s appeal, viewing drivers as supplying transportation to riders and the payments as fares collected for drivers. His dissent shows the issue was finely balanced, but the majority decision now sets the outcome in this case.
Why did the High Court find Uber owed payroll tax?
The majority found that drivers supplied services to Uber as well as riders, and that the remittances related to work performed under relevant contracts. The “payment collection agent” label did not decide the issue; the substance of the contractual rights and obligations did.
How much payroll tax does Uber owe NSW?
Approximately $81 million for the 2015–2020 financial years, plus the Chief Commissioner of State Revenue’s costs.
Could this decision affect my contractor arrangements?
Possibly. Review your arrangements if you set standards for contractors’ work and collect or control customer payments. The reasoning may be relevant to digital platforms, medical and allied health practices, professional services and intermediaries.
Does payroll tax apply the same way across Australia?
No. Each state and territory has its own legislation, rates and thresholds. This case concerns NSW law, but its reasoning may influence how similar arrangements are assessed elsewhere.
Sterlinx Global operates as a Global Tax Compliance Suite, delivering structured compliance processes for businesses operating across borders. If you need support with ongoing bookkeeping, tax calculations, filings or year-end accounts, Book a call with our team.