Uber liable for $81m payroll tax after Appeal decision

In a landmark decision on 1 August 2025, the NSW Court of Appeal in Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172, found Uber Australia Pty Ltd (Uber) liable for $81 million in payroll tax on payments made to its drivers. This decision overturns an earlier decision of the Supreme Court and has far reaching implications for contractors and businesses across various industries. For more on the earlier decision, please see our article here.

On appeal, five judges of the Court of Appeal unanimously found that:

• Uber’s drivers performed driving services to Uber which were services performed ‘for or in relation to the performance of work’ under the contractor provisions of the Payroll Tax Act 2007 (NSW) (Act). As a result, Uber was employing its drivers under ‘relevant contracts’; and 

• Amounts paid by Uber to its drivers were deemed to be wages under section 35 of the Act and no exemptions applied.

This decision will likely have wider impacts for contractors in all industries, including workers in the gig economy, mortgage aggregators and medical centres. In the recent experience of the writers, the Chief Commissioner of State Revenue (Chief Commissioner) is applying compliance resources to investigate a wide range of businesses in different industries to bring them within the scope of the ‘relevant contract’ provisions. This decision is likely to have an adverse impact for taxpayers under investigation for payroll tax liability for the last 5 years on the amounts paid to contractors. For more information about the ‘relevant contract’ provisions, please see our previous articles: 

Payroll Tax Rulings for Medical Practices Released - No Amnesty in NSW and Victoria

Uber win pauses payroll tax $81m assessment under 'relevant contract' rules

This also has implications for liability for superannuation and worker’s compensation.

Key issues and implications 

There were 11 grounds of appeal raised by the Chief Commissioner and by Uber in its cross-appeal. Set out below are the 3 main issues addressed by the Court of Appeal. 

Issue 1 – Whether amounts collected by Uber from riders and remitted to the drivers are ‘for or in relation to the performance of work’ and therefore taxable wages

The critical issue in the Appeal was whether the payments made by Uber to its drivers were considered taxable wages. The primary judge erred in concluding that the amounts paid by Uber to its drivers were not taxable wages, because there was no ‘reciprocity or ascertainable calibration between the money paid and work done’.

The Chief Commissioner argued that these payments were directly related to the performance of work by the drivers.

The Appeal Court agreed, stating that there was a direct relationship between the work performed by the drivers, and the payments made by Uber to the drivers, including the service fee retained by Uber.

The Appeal Court emphasised that Uber's obligation to account for amounts received from riders, minus the service fee, did not alter the nature of the payments as being related to the performance of work.

The Appeal Court agreed with the Chief Commissioner that the primary judge had erred in departing from the decisions in Thomas & Naaz[1] and Optical Superstore[2]. Consequently, it overturned the decision that Uber’s payments were not taxable wages because Uber had been acting as a ‘payment collection agent’.

This is the basis that Uber was found on appeal liable to $81 million of payroll tax for payments made to its drivers. 

Issue 2 – Whether driving and passenger rating were services supplied by the drivers to Uber under the contracts

The Appeal Court examined whether the driving and passenger rating services performed by Uber drivers were services supplied to Uber under their contracts. The ‘driving services’ involve picking up and dropping off riders while the ‘rating services’ involve drivers rating passengers at the end of a trip. 

The Appeal Court found that transporting riders generated a financial benefit for Uber, as the company collected payment for rides and retained a portion as a service fee. This was central to Uber’s business model. The driver’s performance of these services activated Uber’s contractual rights to collect payments from customers.

The Appeal Court concluded that Uber’s contracts with its drivers were for the supply of driving services, as drivers performed these services to be paid. These services were performed ‘for or in relation to the performance of work’.

Regarding the rating services, the Appeal Court found that the drivers’ ratings of riders were necessarily provided to Uber under the drivers’ contracts. These services were also caught under the ‘relevant contract’ provisions of the Act. 

Issue 3 – Whether driving and rating were ancillary to the use of the driver’s vehicle

Contracts are not considered ‘relevant contracts’ for payroll tax purposes if services related to the performance of work are ancillary to the supply of goods.

In the primary judgement, the Court found that driving services were not ancillary to the use of the driver’s vehicle, and did not trigger the exclusion in section 32(2)(a) of the Act. However, the primary judge determined that the driver rating service was ancillary to the use of the vehicle.

On appeal, the Appeal Court overturned the primary judge’s finding regarding the driving services. The Appeal Court stated that the driving services are inseparable from the use of the vehicle, as they involve transporting the rider to their destination. Therefore, driving services cannot be considered ancillary to the use of the vehicle, because they are not ‘subsidiary, incidental, accessory or auxiliary’ to the use of the vehicle. 

However, the Appeal Court did not view the rider rating services as ancillary to the use of the vehicle. The Appeal Court found that these services are integral to the use of the vehicle, as they contributed to the overall safety of Uber’s platform. Despite this, the Appeal Court did not apply the exemption under section 32(2)(a) of the Act, stating that the use of the vehicle is not the principal or dominant characteristic of Uber’s contracts with the drivers. An ancillary rating service is insufficient to establish that the exemption applies. 

Key takeaways

The Court of Appeal’s decision may significantly impact contractors and businesses across Australia due to the harmonisation of the payroll tax provisions. It is crucial for businesses and contractors to seek specialist advice regarding their payroll tax obligations and potential liability arising from investigations, audit or reassessments for the last 5 years.

Practitioners should stay informed and be ready for a potential further appeal by Uber. If Uber decides to appeal, it must apply to the High Court for special leave within 28 days of the Court of Appeal’s judgement. 

If you have any questions or need advice about your payroll tax investigation, superannuation obligation or review of your contractor agreements, 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.