Source : THE AGE NEWS
Uber will have to pay more than $81 million in payroll taxes to the state of NSW after the High Court dismissed the rideshare giant’s appeal arguing it was a “payment collection agent” and that funds sent to drivers were not wages.
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 for the period between the 2015 and 2020 financial years that the case centred on.
The ruling, in which one of the seven justices dissented, found Uber’s contracts with drivers meant there was a legal obligation for them to transport a rider once they’d accepted a request. In the eyes of the relevant law, this meant payments to the drivers for the rides they completed were “deemed to be wages”, the justices ruled.
In 2024, the NSW Supreme Court ruled that Uber was not liable for the payroll tax bill that Revenue NSW had sought. The court found Uber collected payments for its driver partners, rather than paying their wages. That ruling was overturned by the NSW Court of Appeal last year, a decision that Uber subsequently appealed to the High Court.
Wednesday’s High Court decision is expected to have larger ramifications for both Uber and the broader gig economy as the ruling may set a precedent for hundreds of millions of other transactions if replicated over more time and in other states.
The decision is understood to have blindsided Uber. The rideshare giant had such confidence in its appeal succeeding that it made no provisions for the potential $81.5 million liability when lodging its financial results with the regulator earlier this year.
Uber has long insisted its drivers aren’t employees but contractors, and that it isn’t a transport provider but simply matches contractors with riders – an argument it has previously leant on in questions over driver misconduct, minimum wages and potential discrimination complaints.
The NSW government welcomed the decision. Courtney Houssos, the state’s finance minister, said it reflected the government’s “commitment to upholding the integrity of our tax system”.
“Payroll tax is a key part of the state’s tax base … and it helps fund essential services that families and households rely on,” she said. “Local businesses pay their fair share. Uber should pay their fair share too,” Houssos said.
Payroll taxes – distinct from federal income tax – are administered by states and territories and levied on a business’s total wage bill, including fringe benefits, super contributions, bonuses and contractor payments. Only businesses with a wage bill that exceeds a threshold set by the state jurisdiction are liable for payroll tax.
The 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.”
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”.
“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.
Uber was contacted for comment.
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Elias Visontay is a National Consumer Affairs Reporter at The Sydney Morning Herald and The Age.Connect via email.
