Beyond Uber: High Court confirms the broad reach of payroll tax contractor provisions

Summary

The High Court of Australia has ruled against Uber in Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40 (Uber decision), confirming that amounts remitted by Uber to drivers were taxable wages under the relevant contractor provisions in the Payroll Tax Act 2007 (NSW).

While the decision concerns Uber’s rideshare model, it provides important guidance for businesses engaging contractors, particularly where the business sits between the contractor and the end customer or has a role in collecting and remitting customer payments.

The High Court decision at a glance

By a 6:1 majority, the High Court held that:

• the Driver Contracts were “relevant contracts” because drivers were contractually required to provide driving services to particular standards;
• those services could be supplied to Uber even though the same services were also supplied to riders;
• the exclusion for services ancillary to the use of goods did not apply; and
• the amounts remitted by Uber to drivers were sufficiently connected with the performance of their work to be deemed wages.

 What does this mean for businesses?

The significance of the decision extends well beyond Uber and the gig economy.

For businesses engaging contractors, particularly those operating platform, marketplace or intermediary models, the decision is a timely reminder that the contractual label given to an arrangement will not determine its payroll tax treatment. Calling someone an independent contractor, or describing a business as merely a technology platform or payment intermediary, will not be enough if the underlying contractual rights and obligations point to a different outcome.

Perhaps more significantly, the fact that a contractor provides services directly to a customer does not necessarily mean those same services are not also being supplied to the business engaging the contractor. This was central to the High Court’s decision in Uber.

The decision also highlights that businesses cannot necessarily rely on contractors providing their own equipment to fall outside the relevant contractor provisions. In Uber’s case, the drivers supplied their own vehicles, but their driving services were not regarded as merely ancillary to the use of those vehicles.

For businesses that engage contractors, now is a good time to take a fresh look at:

• what contractors are actually required to do under their agreements, rather than simply how the relationship is described;
• who the services are contractually supplied to, bearing in mind that the same services may be supplied to more than one person;
• the standards and requirements imposed on contractors, including around quality, safety, conduct and performance;
• how payments flow between customers, the business and contractors, including who calculates, collects, adjusts or deducts amounts; and
• whether any payroll tax exclusions genuinely apply, particularly where contractors provide their own equipment as part of performing the services.

The decision does not mean that every contractor, platform or intermediary arrangement will be caught by the payroll tax provisions. What it does mean is that businesses should look beyond the labels in their contracts and carefully consider the rights and obligations that underpin how their arrangements operate in practice.

 How did Uber’s model work?

Uber’s business model will be familiar to most readers. Riders and drivers were connected through Uber’s digital platform, with Uber contracting separately with each.

Riders paid their fares electronically to Uber. Uber deducted its service fee and other applicable fees before remitting the balance to the driver. Importantly, the contractual arrangements described Uber as providing technology and lead-generation services, rather than transportation services, and as the driver’s “limited payment collection agent”.

But the High Court did not treat those descriptions as determinative. Instead, it focused on the rights and obligations actually created by the Driver Contract. Those obligations included requirements governing the provision and standard of the transportation services, together with vehicle, licensing and insurance requirements. Those contractual obligations proved critical.

The road to the High Court

Uber was assessed for approximately $81 million in payroll tax for the financial years ended 30 June 2015 to 30 June 2020.

Uber was initially successful in the Supreme Court of New South Wales. Although the Court found that the Driver Contracts were relevant contracts, it held that the amounts remitted to drivers were not deemed wages and revoked the assessments.

The New South Wales Court of Appeal overturned that decision, finding that the remitted amounts were captured by the relevant contractor provisions. Uber appealed to the High Court.

 Uber’s arguments

Uber’s appeal centred on three main arguments, all of which the majority disagreed with.

Part 1: Drivers supplied services to Uber, not just riders

The fact that riders physically received the transportation services did not mean that the services were supplied only to them.

Although drivers were free to accept or reject trip requests, once a driver took a rider on board and commenced the journey, the Driver Contract required the driver to transport the rider to their specified destination and to perform the driving services in accordance with particular standards. The majority considered that the obligation to provide the relevant services arose at the latest at that point.

The fact that the rider also received the transportation services did not prevent the same services from being supplied to Uber. The High Court confirmed that services can be supplied to more than one person at the same time. The majority was careful, however, not to equate commercial benefit with the supply of services. The fact that Uber benefited financially when trips were completed was not enough on its own. Critically, the drivers owed contractual obligations to Uber concerning the provision and standard of the driving services.

The takeaway is an important one: identifying who physically receives a service will not necessarily identify everyone to whom that service is supplied for payroll tax purposes.

 Part 2: Owning the car did not take the arrangement outside the rules

The fact that drivers used their own cars did not take the arrangement outside the relevant contractor provisions.

Uber argued that the driving services fell within the exclusion in section 32(2)(a) because those services were ancillary to the use of goods owned by the drivers, namely their vehicles. That argument also failed.

The joint judgment considered that the primary object of the Driver Contract was the supply of driving services. Neither Uber nor the rider sought the use of a vehicle independently of the driver. Both the vehicle and the work of driving it were integral to the transportation service.

Gageler CJ similarly concluded that the use of the vehicle was not of greater contractual significance than the work of driving it. Accordingly, the driving services could not be characterised as merely subsidiary or incidental to the use of the vehicle.

For businesses, the important point is that requiring a contractor to provide significant equipment does not, by itself, mean the exclusion for services ancillary to the use of goods will apply.

Part 3: The remitted amounts were deemed wages

Uber’s final argument focused on the flow of money.

Uber contended that it merely collected fares as the drivers’ payment collection agent and remitted money to which the drivers were already entitled. On that basis, it argued that the remittances were not payments by Uber for the drivers’ work. Again, the majority disagreed.

Section 35 creates its own statutory concept of wages. The key question was whether the necessary connection existed between the amounts paid or payable and the performance of work. That connection was established. As the joint judgment explained, the more driving services a driver provided, whether measured by distance, number of trips or both, the more Uber remitted to the driver.

Nor was the description of Uber as a “limited payment collection agent” decisive. Uber calculated the recommended fare, deducted its service fee and had rights to adjust payments or cancel a fare before amounts were remitted to drivers. The majority described Uber as having “substantive control over the fares before they are remitted to drivers”.

The amounts remitted to drivers were therefore paid for or in relation to the performance of work and deemed to be wages. In other words, describing Uber as a payment collection agent did not determine the character of the remittances for payroll tax purposes.

 Where to from here?

The Uber decision makes clear that contractor arrangements should not be set and forgotten.

If contractors are an important part of your business model, particularly where your business connects contractors with customers or sits in the middle of the payment flow, now is a good time to revisit the payroll tax treatment of those arrangements.

The High Court has confirmed that the relevant contractor provisions are broad enough to apply to modern business models, even where the arrangements look quite different from traditional employment.