Australia’s highest court has dismissed Uber’s appeal against payroll tax assessments on fares paid to drivers, upholding a bill of about A$81m in New South Wales and setting a national precedent for how platform businesses are taxed.
The High Court ruled 6-1 on 4 November that the contracts between Uber and its drivers were relevant contracts and that the fares Uber collected and remitted were deemed wages under state payroll tax law.
What the court decided, and what it did not
The majority applied a statutory deeming rule rather than a common law test of employment. The judgment does not establish that Uber drivers are employees, and it does not create entitlements to minimum wage, leave or unfair dismissal protection.
What it does establish is that, for payroll tax purposes, the money Uber passes to drivers counts as wages. That means the company must pay the tax on those amounts, backdated to the years covered by the assessments, which run from 2015 to 2020.
Justice Steward dissented and would have allowed the appeal. The assessments cover the years ending 30 June 2015 to 30 June 2020.
The size of the bill
New South Wales payroll tax is charged at 5.45 per cent on taxable wages above an annual threshold of A$1.2m. The assessments total about A$81m, and the ruling opens the way for other states to pursue similar claims for the same period and beyond.
Uber said the decision could have significant unintended consequences beyond rideshare, naming mortgage brokers, service marketplaces and medical practices as businesses that rely on contractor models and could face similar treatment.
That warning has some substance. Payroll tax deeming provisions have been applied to contractor-heavy industries for decades, and the ruling clarifies that a platform arranging the work does not sit outside them simply because it describes its workers as independent.
Why it matters beyond Australia
Governments in several countries have been trying to work out how to tax and regulate platform work without forcing platforms to reclassify workers as employees. The Australian judgment offers a middle path: treat the payments as wages for tax purposes while leaving the employment relationship untouched.
That approach is attractive to revenue authorities because it raises money without requiring a rewrite of labour law. It is unattractive to platforms because it increases the effective cost of their business model without giving them the control over workers that employment would bring.
Uber has argued that its model gives drivers flexibility that employment would remove, and that higher costs would be passed on to consumers through higher fares. Its critics argue that the flexibility has always been subsidised by the absence of employment protections and by the tax treatment the court has now rejected.
What happens next
Uber has said it will review the judgment and has called on state governments to modernise payroll tax laws. Several states are likely to review their own arrangements, and the company faces the prospect of assessments in other jurisdictions covering similar periods.
For drivers, the direct financial effect is nil, since the tax is paid by the platform rather than deducted from their payments. The indirect effect could be higher fares or changed incentives if Uber adjusts its pricing to recover the cost.
The judgment also adds to a growing body of cases in which courts have looked through the contractual labels that platforms use and asked what the arrangement actually is. That pattern is now visible in Europe, North America and Australia, and it is unlikely to reverse.
