High Court confirms Uber liable for $81 million payroll tax

The High Court has dismissed Uber Australia Pty Ltd’s (Uber) appeal in Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40, confirming that amounts remitted by Uber to its drivers were subject to payroll tax under the contractor provisions of the Payroll Tax Act 2007 (NSW) (Act).

The decision brings another stage of Uber’s long-running dispute to an end, concerning approximately $81 million in assessments for the financial years ending 30 June 2015 to 30 June 2020.

As discussed in our previous article, the NSW Court of Appeal unanimously found in August 2025 that Uber’s arrangements with its drivers fell within the Act’s "relevant contract" provisions and that amounts paid to drivers were deemed wages under section 35 of the Act. The High Court has now upheld that result.

How did the dispute arise?

The Chief Commissioner assessed Uber for payroll tax on the basis that its contracts with drivers were "relevant contracts" under Division 7 of Part 3 of the Act and that amounts collected from riders and remitted to drivers, after deducting Uber’s service fee, were deemed wages.

At first instance, Hammerschlag CJ in Eq found that the Driver Contracts were "relevant contracts". However, his Honour revoked the assessments because the amounts remitted by Uber to drivers were not payments "for or in relation to the performance of work" under section 35 of the Act.

The NSW Court of Appeal unanimously overturned that conclusion, finding that the payments were sufficiently connected with the drivers’ work to constitute deemed wages.

Uber appealed to the High Court. By a 6:1 majority, the High Court dismissed Uber’s appeal with costs.

A refresher: how does Uber's business model work?

The contractual arrangements between Uber, its drivers and riders were central to the High Court’s decision.

Drivers contracted with Uber under standard form Driver Contracts and obtained access to Uber’s Driver App. Riders separately contracted with Uber and used the Rider App to request transportation.

Drivers could decide whether and when to use the Driver App and whether to accept a trip. But, once a driver accepted a request and commenced the trip, the Driver Contract imposed a number of obligations on the driver relating to the transportation of the rider, skill and care, professionalism, vehicle standards, insurance, safety and compliance with Uber’s Community Guidelines.

At the end of the journey, the rider paid the fare electronically. Uber deducted its service fee and other applicable amounts before remitting the balance to the driver.

Those contractual obligations and payment arrangements were critical to the High Court's conclusions.

What did the High Court decide?

Uber challenged the assessments on three principal grounds:

1.         drivers supplied transportation services to riders, rather than services to Uber;

2.         the drivers’ services were ancillary to the use of their vehicles and therefore fell within the exclusion in section 32(2)(a) of the Act; and

3.         Uber’s remittance to drivers were not payments "for or in relation to the performance of work" under section 35 of the Act.

The majority rejected all three arguments.

Issue 1: Drivers supplied services to Uber

Uber argued that drivers transported riders and therefore supplied services to riders, not Uber.

The majority rejected that distinction.

Once a driver accepted and commenced a trip, the Driver Contract required the driver to perform obligations owed to Uber. The contractual obligations were not incidental to the arrangement. They required the driver to perform the driving service in accordance with standards imposed under the Driver Contract.

Importantly, the Court confirmed that the same service could be supplied to more than one person. A driver could provide transportation service to the rider while simultaneously supplying driving services to Uber by performing obligations owed under the Driver Contract.

This is an important point for business operating intermediary or platform models.

It is not enough to say that the end customer receives the service. Businesses also need to ask whether the contractor, in performing that service, is satisfying substantive contractual obligations owed to the business itself.

At the same time, the decision does not mean that every commercial benefit derived from another person's work creates a relevant contract. The majority recognised that simply obtaining an economic benefit from services is not enough. The contractual relationship remains critical.

The Driver Contracts were therefore "relevant contracts" under section 32(1)(b) of the Act.

Issue 2: Driving was not ancillary to the use of the vehicle

Uber also argued that the driver's services were ancillary to the use of the driver’s vehicles bringing the arrangements within section 32(2)(a) exclusion.

The majority rejected that argument that the Court treated "ancillary" as referring to something subsidiary, incidental, accessory or auxiliary. The exclusion is directed to arrangements where the primary object is the use of goods, and the associated services are secondary.

Uber's arrangements were different.

The vehicle was the means by which the driver performed the service. Neither Uber nor the rider sought the use of the vehicle independently of the driver. The driving services were therefore central to the arrangement rather than ancillary to the use of the vehicle.

Issue 3: Payments to drivers were deemed wages

Uber characterised itself as the drivers' "limited payment collection agent". On that analysis, riders paid the drivers and Uber merely facilitated the payment.

The majority rejected this characterisation.

Uber exercised significant rights in relation to the payments. It calculated recommended fares, deducted its service fee, could adjust amounts and, in some circumstances, cancel fares. There was also a direct relationship between the work performed and the amounts remitted. Broadly, the more driving services a driver performed, the more Uber remitted to that driver.

The Court emphasised an important feature of payroll tax law: section 35 creates a statutory concept of wages. A payment does not need to resemble a conventional salary or payment to an employee.

The amounts Uber remitted to drivers were sufficiently connected with the work performed under the Driver Contracts to constitute deemed wages.

Steward J’s dissent: where should the line be drawn?

Steward J would have allowed Uber’s appeal and his dissent highlights the broader policy question raised by the decision.

His Honour took a narrower view of  the contractor provisions, informed by their legislative history and their role in addressing contractual arrangements used to avoid payroll tax on relationships resembling employment.

On his analysis, the commercial relationship operated differently. Drivers were independent business people supplying transportation services to riders. Uber supplied technology and lead-generation services to those riders and charged them service fee.

Uber undoubtedly benefits when drivers completed rides, but Steward J drew an important distinction: benefiting economically from a service is not necessarily the same as receiving that service. On that basis, the Driver Contracts were not "relevant contracts" under section 32(1)(b) of the Act.

His Honour also disagreed with the  majority's treatment of the rider fares. Steward J considered that Uber collected the fares as the drivers' payment collection agent and was obliged to remit those amounts, less applicable fees.

His Honour also considered that the fares represented payments by riders for transportation services. Uber collected those amounts as payment collection agent and remitted them to drivers after deducting its fees. Although the majority ultimately rejected that analysis, the dissent highlights how difficult the boundary can become where technology platforms connect independent businesses with customers.

What does the decision mean for businesses engaging contractors?

The High Court's decision confirms that the contractor provisions can extend beyond conventional employment-like relationships and apply to platform and intermediary business models.

Importantly, a business will not necessarily fall outside the contractor provisions simply because:

• workers are genuine independent contractors;

• services are physically provided to customers or other third parties;

• contractors provide their own equipment;

• the business describes itself as an intermediary or payment collection agent; or

• payments ultimately originate from customers.

The decision should prompt businesses to look at the substantive contractual arrangements, including what services contractors perform, to whom contractual obligations are owed, the degree of control exercised over the performance of services, and how payments flow between customers, the business and contractors.

A genuine contractor relationship does not automatically take an arrangement outside the payroll tax contractor provisions. This analysis matters well beyond the gig economy. Similar issues can arise wherever a business sits between contractors and customers, particularly where the business controls important aspects of the contractual framework or payment process.

The broader lesson

The High Court decision reinforces that payroll tax liability under the contractor provisions requires a separate statutory analysis from the question of whether a worker is an employee or independent contractor.

For Uber, the critical features were:

• that drivers owed contractual obligations to Uber in performing driving services;

• those services could be supplied to Uber as well as riders;

• the driving services were not ancillary to the use of the driver's vehicle; and

• the amounts remitted by Uber were sufficiently connected with the work to constitute deemed wages.

A business may have contractors who are genuinely operating their own businesses for employment law, superannuation or other purposes and still face payroll tax under the extended contractor provisions.

For businesses relying extensively on contractors, the practical response should not be limited to checking whether agreements describe workers as independent contractors. The review needs to go further and test the entire arrangement against the statutory contractor provisions. That means examining the contracts, how the relationship operates in practice and the payment flows together.

Given the potential for assessments to extend across multiple years, together with interest and penalties, identifying that exposure before a Revenue NSW investigation begins can make a substantial difference.

Businesses operating contractor, platform or intermediary models should therefore review their contractor agreements now, particularly where contractors provide services to customers while also performing substantive contractual obligations owed to the business.

If you have questions about how the High Court's decision may affect your contractor arrangements, payroll tax obligations or an existing Revenue NSW investigation or assessment, please contact the writers.

Authors: Lisa To & Emma Swanson

 

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.