Uber will be forced to pay A$81 million in payroll tax to the New South Wales (NSW) tax office after Australia’s High Court dismissed the rideshare giant’s appeal, ruling that fare payments remitted to drivers qualify as wages for tax purposes.
The decision, delivered on Wednesday, concludes a lengthy legal battle challenging six payroll tax assessments covering the 2015 to 2020 financial years.
Uber had argued in court that it functioned merely as an administrative payment collection agent, transferring fares to drivers after deducting its platform service fees. The company maintained that these operational arrangements should not be subject to payroll tax liability.
However, the High Court rejected Uber’s argument by majority, finding a direct contractual relationship between the driving services provided and the remuneration received.
Chief Justice Stephen Gageler noted that the direct connection between driver performance and payouts qualified the fares as wages under existing tax legislation.
In a joint judgment, Justices Michelle Gordon, James Edelman, Jacqueline Gleeson, Jayne Jagot, and Robert Beech-Jones emphasized that anti-avoidance provisions in contractor tax laws were specifically drafted by parliament to cover such operational arrangements:
”Drivers clearly ‘supply’ a service to Uber by doing something that is necessary for Uber to derive service fees and to continue its business,” the joint judgment read. “The remitted amounts from Uber to a driver are paid or payable for or in relation to the performance of work relating to a relevant contract… and are therefore deemed to be wages.”
Justice Simon Steward was the sole dissenting judge on the panel.
The ruling opens the door for other Australian states to apply similar broad interpretations of payroll tax provisions to gig-economy business models.
Accepting the verdict while raising economic concerns, Uber warned that the decision creates a risky precedent for traditional marketplace intermediaries. ”This decision could have significant unintended consequences beyond rideshare, affecting intermediary business models across the economy, including mortgage brokers, service-based marketplaces, medical practices, and healthcare services,” the company stated, calling on state governments to modernize tax frameworks.
”This decision could have significant unintended consequences beyond rideshare, affecting intermediary business models across the economy, including mortgage brokers, service-based marketplaces, medical practices, and healthcare services,” the company stated, calling on state governments to modernize tax frameworks.
Transport Workers’ Union (TWU): TWU National Secretary Michael Kaine praised the decision as a victory for tax accountability: ”Uber’s entire business model has been insidiously created by trying to distance itself from obligations under our laws, while reaping all the profits. Time is up for gig behemoths using loopholes.”
”Uber’s entire business model has been insidiously created by trying to distance itself from obligations under our laws, while reaping all the profits. Time is up for gig behemoths using loopholes.”
NSW Government: NSW Finance Minister Courtney Houssos welcomed the outcome, noting that payroll tax forms a core part of public revenue. “Local businesses pay their fair share. Uber should pay their fair share too,” she said.
