Uber must pay more than $81 million in payroll tax to New South Wales after the High Court dismissed the rideshare giant's appeal on Wednesday, ending a years-long legal battle over whether the money it sends to drivers is wages. The court ruled the tax applies to Uber fares for the 2015 to 2020 financial years covered by the case, with one of the seven justices dissenting.
Uber had argued it was a "payment collection agent" and that funds passed to drivers were not wages. The High Court found that its contracts with drivers created a legal obligation for them to transport a rider once they had accepted a request, and that payments for completed rides were therefore "deemed to be wages" under the relevant law.
Payroll tax is administered by the states and territories rather than the federal government, and is levied on a business's total wage bill, including fringe benefits, super contributions, bonuses and contractor payments. Only businesses whose wage bill exceeds a threshold set by their jurisdiction are liable.
Revenue NSW had pursued Uber for the bill. In 2024 the NSW Supreme Court ruled Uber was not liable, finding it collected payments on behalf of its driver partners rather than paying their wages. The NSW Court of Appeal overturned that decision last year, and Uber then appealed to the High Court.
Wednesday's decision is expected to have wider ramifications for Uber and the broader gig economy, with the potential to set a precedent covering hundreds of millions of other transactions if replicated over a longer period and in other states. The outcome is understood to have blindsided Uber, which had such confidence in its appeal that it made no provision for the potential $81.5 million liability when lodging its financial results with the regulator earlier this year. Uber has long insisted its drivers are contractors rather than employees, and that it is not a transport provider but simply matches contractors with riders, an argument it has previously relied on in questions over driver misconduct, minimum wages and potential discrimination complaints.
The NSW government welcomed the decision. Finance minister Courtney Houssos said it reflected the government's "commitment to upholding the integrity of our tax system", adding: "Local businesses pay their fair share. Uber should pay their fair share too." Houssos described payroll tax as a key part of the state's tax base that helps fund essential services.
Business Council of Australia chief executive Bran Black said the appeal outcome has "concerning implications". "It means that under some contractor arrangements, businesses can face payroll tax on customer payments they collect and pass on to independent service providers," he said. Black said the impact could reach beyond one company or sector to health and care, financial services and technology platforms "and could see costs passed on to everyday customers". "Digital platforms have changed how businesses reach customers. State and territory governments need to check that payroll tax rules still suit today's contractor arrangements and give businesses clear, modern rules they can plan around," he said.
Analysis
Why This Matters
- The ruling confirms that, at least in NSW, payments routed through a platform to contractors can attract payroll tax, a model that other states could follow for other platforms and longer periods.
- Uber made no provision for the $81.5 million liability in its most recent financial results, so the cost lands on its balance sheet as an unbudgeted hit.
- Businesses that collect and pass on payments to independent service providers now face uncertainty over whether those flows are taxable wages.
Background
Australia's state and territory governments levy payroll tax on employers' wage bills, with each jurisdiction setting its own threshold. How that tax applies to gig economy platforms has been contested because platforms have argued their drivers and couriers are independent contractors rather than employees, and that the platforms merely connect them with customers. The High Court case turned on the wording of Uber's contracts with drivers and on whether the payments it collected and forwarded were, in legal terms, wages.
Key Perspectives
Courtney Houssos, NSW finance minister: says the decision reflects the government's commitment to upholding the integrity of the tax system, and that local businesses pay their fair share so Uber should too.
Bran Black, Business Council of Australia chief executive: says the outcome has concerning implications because businesses under some contractor arrangements can face payroll tax on customer payments they collect and pass on, with costs possibly passed to customers, and calls on state and territory governments to check the rules still suit modern contractor arrangements.
Uber: argued in its appeal that it was a payment collection agent and that funds sent to drivers were not wages, and has long insisted its drivers are contractors rather than employees and that it matches contractors with riders rather than providing transport.
What to Watch
- Whether other state and territory revenue offices pursue similar assessments against Uber or other platforms for periods beyond the years covered by this case.
- How Uber accounts for the $81.5 million liability in its next financial reporting, having made no provision earlier this year.
- Whether the Business Council's call for a review of payroll tax rules produces any commitment from state and territory governments.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedUber must pay $81 million in NSW payroll tax.Sydney Morning Herald - Latest News: “Uber will have to pay more than $81 million in payroll taxes to the state of NSW”
- SupportedThe ruling ends a years-long fight over whether payments to rideshare drivers are wages.Sydney Morning Herald - Latest News: “In a decision that put an end to a years-long legal battle on Wednesday, the High Court ruled the NSW payroll tax should be imposed on Uber fares”
- SupportedThe Business Council warned the ruling's impact could extend beyond Uber.Sydney Morning Herald - Latest News: “Black said the impact could go beyond one company or sector”
- SupportedOn Wednesday, the High Court ruled NSW payroll tax applied to Uber fares for the 2015 to 2020 financial years covered by the case.Sydney Morning Herald - Latest News: “the High Court ruled the NSW payroll tax should be imposed on Uber fares for the period between the 2015 and 2020 financial years that the case centred on.”
- SupportedUber had argued it was a “payment collection agent”.Sydney Morning Herald - Latest News: “the rideshare giant’s appeal arguing it was a “payment collection agent””
- SupportedThe court said payments for completed rides were “deemed to be wages”.Sydney Morning Herald - Latest News: “this meant payments to the drivers for the rides they completed were “deemed to be wages”, the justices ruled.”
- SupportedHoussos said the decision reflected the government’s “commitment to upholding the integrity of our tax system”.Sydney Morning Herald - Latest News: “Courtney Houssos, the state’s finance minister, said it reflected the government’s “commitment to upholding the integrity of our tax system”.”
- SupportedHoussos said: “Local businesses pay their fair share. Uber should pay their fair share too.”Sydney Morning Herald - Latest News: ““Local businesses pay their fair share. Uber should pay their fair share too,” Houssos said.”
- SupportedBlack said the appeal outcome had “concerning implications”.Sydney Morning Herald - Latest News: “The Business Council of Australia chief executive Bran Black said the appeal outcome has “concerning implications”.”
- SupportedBlack said some contractor arrangements could leave businesses liable for payroll tax on customer payments they collect and pass to independent service providers.Sydney Morning Herald - Latest News: ““It means that under some contractor arrangements, businesses can face payroll tax on customer payments they collect and pass on to independent service providers.””
- SupportedBlack said the impact could reach health and care, financial services and technology platforms, and costs could be passed on to everyday customers.Sydney Morning Herald - Latest News: “Black said the impact could go beyond one company or sector, to health and care, financial services and technology platforms “and could see costs passed on to everyday customers”.”
- SupportedBlack said digital platforms have changed how businesses reach customers and urged governments to check that payroll tax rules suit current contractor arrangements.Sydney Morning Herald - Latest News: ““Digital platforms have changed how businesses reach customers. State and territory governments need to check that payroll tax rules still suit today’s contractor arrangements and give businesses clear, modern rules they can plan around,” Black said.”