Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40
The High Court has, by a majority, confirmed the New South Wales Court of Appeal’s view that payments made to Uber drivers are deemed to be wages for payroll tax purposes under the relevant contract provisions.
Our earlier article on the New South Wales Court of Appeal decision is here:
The New South Wales Court of Appeal had overturned an earlier Supreme Court decision (see our discussion here) and held that payments made by Uber to Uber drivers were subject to payroll tax as deemed wages.
The High Court has confirmed the Court of Appeal decision. This decision will have wide ramifications for the “gig economy”.
While welcomed by State Governments – this will likely factor into price increases for consumers used to the flexibility and lower prices offered by similar businesses.
Decisions like this may also hasten the adoption of self-driving vehicles (already available overseas) which will eliminate payroll tax as a cost.
Crucially, this decision is only for payroll tax – it does not deem uber drivers to be employees at law or have any influence on the employment law protections for those working in the “gig economy”.
Relevant contract provisions
Payroll tax typically applies to wages paid by employers to employees.
The provisions have been extended over time to cover payments made under “relevant contracts”. These were introduced to tax payments made to independent contractors in a similar way as if they are had been employees.
Paragraph 32(1)(b) of the Payroll Tax Act 2007 (NSW) (the Payroll Tax Act) provides:
(1) In this Division, a "relevant contract" in relation to a financial year is a contract under which a person (the "designated person" ) during that financial year, in the course of a business carried on by the designated person-
…
(b) has supplied to the designated person the services of persons for or in relation to the performance of work, or
…
There are exclusions from payroll tax under relevant contracts, which include where a person in the course of a business carried on by that person is supplied:
“with services for or in relation to the performance of work that are ancillary to the supply of goods under the contract by the person by whom the services are supplied or to the use of goods which are the property of that person” (under paragraph 32(2)(a));
High Court decision
The majority in the High Court (Gordon, Edelman, Gleeson, Jagot and Beech-Jones JJ with Gaegler CJ writing a separate judgement) held that Uber drivers were providing services to Uber under relevant contracts and the payment made to the drivers were deemed wages for the purposes of the Payroll Tax Act. No exemption was available.
Uber’s contracts
The contract between Uber and a driver:
contains an acknowledgement that “Uber does not provide transportation services and is not a transportation carrier, but that its business is to provide access to its lead generation services rendered via the apps”;
contains an acknowledgement that “in providing services to riders, the driver or partner has a legal and business relationship with the rider and not Uber”;
“provide that the driver is entitled to charge the rider a fare for each completed trip and that Uber is appointed as a limited payment collection agent for the driver or otherwise will collect the fare from riders for and on behalf of the driver”;
“provide that Uber will determine the fare calculation but allow the driver to charge fares lower than those calculated by Uber”; and
“provide that Uber will remit to the driver the fare less any applicable service fee charged by Uber”.
The contract between Uber and a rider:
contains a description of the Uber’s services “as constituting a technology platform that enables users of the Rider App to arrange and schedule transportation with independent third-party providers of such services”;
contains an acknowledgement by the rider “that Uber does not provide transportation services or function as a transportation carrier and that all such transportation is provided by independent third-party contractors who are not employed by Uber”; and
includes confirmation by the rider “that use of the services may result in charges to the rider for the services they receive from a third-party provider”.
Earlier decisions
At first instance, the Supreme Court held that the contracts between Uber and its drivers were “relevant contracts” - holding that Uber was supplied with the services of persons for or in relation to the performance of work (being driving the riders, rating the riders and referring other potential drivers).
However, the payments to drivers were not deemed wages as they were “not for or in relation to the performance of work relating to the relevant contract”. Instead, Uber was merely acting as “payments collection agent” for the driver – the driver being directly paid by the rider.
The Court of Appeal overturned that finding and held that the payments by Uber to drivers were payments related to the work performed by the drivers in transporting riders, notwithstanding that these amounts were part of the payments received by Uber from riders in discharge of the riders’ obligation to pay for the transportation service obtained through use of the Rider App and therefore subject to payroll tax.
High Court’s view
There was a relevant contract
The majority took the view that the driver’s contract obliged drivers to perform driving services in the course of Uber’s rideshare system business (see paragraph 65). Further, at paragraph 67, the driving services provided by the driver are done for the benefit of Uber’s business from which Uber derives a fare which allows for the payment to the driver. While a benefit is not sufficient in itself, the benefit provided was an essential component of Uber’s rideshare system business (at paragraph 70).
The majority considered the contracts between the driver and Uber and between Uber and a rider.
The High Court’s view (at paragraph 38) was that it was of critical importance that, under the driver’s contract – that all riders “should be transported directly to their specified destination … without unauthorised interruptions or stops”.
No exemption for services ancillary to the supply of goods
The High Court held that the exemption for contracts where services are supplied that are ancillary to the use of goods which are the property of the person supplying the services did not apply.
The majority’s view (at paragraph 80) was the at the primary object of the Driver Contract is the supply of driving services. The driving services were not ancillary to the use of the car.
With respect to the majority, given the rise (at least overseas) of self-driving vehicles. It is hard to see how this is justifiable in the long-term. The exact same contract and experience applies for a rider booking a self-driving vehicle as compared to booking a vehicle with driver. The point of the service from a rider’s perspective is to get from A to B in a car – not necessarily to have a driver provide driving services.
Remitted fares paid to drivers were deemed wages
Lastly, the majority held that the payments made to drivers (ie the fares paid by riders less the service fee paid to Uber) were deemed wages as they were payable for or in relation to the performance of work relating to a relevant contract. This was on the basis that Uber was in control of the fare set and could adjust the fare at anytime prior to payment of the amount to the driver.
Please contact us with any questions on State Tax issues.
