Key points
- The High Court has dismissed Uber’s appeal, confirming that amounts Uber remitted to its drivers are deemed wages for NSW payroll tax purposes.
- By majority, the Court found that drivers supply services to Uber, even though riders physically receive those services, and that contractual labels such as “limited payment collection agent” will not determine the outcome.
- The reasoning extends well beyond rideshare. Any business that sets service standards for contractors and collects or controls customer payments should review its arrangements.
On 4 November 2026, the High Court handed down its decision in Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40. By majority (Steward J dissenting), the Court upheld the NSW Court of Appeal’s finding that Uber is liable for payroll tax on fares remitted to drivers under the contractor provisions in Division 7 of Part 3 of the Payroll Tax Act 2007 (NSW) (the Act).
Background
Uber connects riders and drivers through its digital platform under separate Driver and Rider Contracts. Under those contracts, drivers are described as independent transport providers, and Uber provides technology services. Riders pay fares to Uber, which deducts its service fee and remits the balance to drivers, acting as their “limited payment collection agent”.
The Chief Commissioner of State Revenue assessed Uber for approximately $81 million in payroll tax in NSW for the 2015 to 2020 financial years. At first instance, the Driver Contracts were found to be “relevant contracts” under section 32 of the Act. However, the payments were held not to be wages under section 35, because Uber was merely collecting fares as the drivers’ agent.
The NSW Court of Appeal overturned that conclusion in 2025. Uber appealed to the High Court on three grounds.
The High Court decision
Did drivers supply services to Uber under a “relevant contract”?
Yes. The High Court held that the Driver Contracts were relevant contracts under section 32(1)(b) of the Act.
A key part of the reasoning is that a service can be supplied to more than one person at the same time. Although the rider received the transportation, this did not prevent the driver from also supplying that service to Uber.
The Court focused on the driver’s contractual obligations to Uber. Once a trip commenced, the Driver Contract required the rider to be transported directly to their specified destination. Drivers were also bound to standards on safety, professionalism, vehicle condition and service quality, backed by Uber’s right to restrict access to the app.
The Court accepted that drivers were not required to accept any particular trip. However, once a trip began, obligations under the Driver Contract governed the performance of that work. The Court likened this to a casual employee who is not obliged to work any particular shift but is bound once work commences.
The Court also clarified that Uber obtaining a financial benefit from the driver’s work is not, by itself, enough. The critical feature was the driver’s contractual obligation to Uber to perform particular driving services to particular standards.
Were the driving services “ancillary” to the use of the driver’s vehicle?
No. Uber argued that the driving work was ancillary to the use of goods owned by the drivers, namely their vehicles.
The Court rejected this argument and determined that the exclusion under section 32(2)(a) applies where the performance of work is subsidiary or ancillary to the use of goods, such as where the principal object of a contract is the hire of equipment and the operator’s labour is secondary to that hire.
In Uber’s case, the principal object of the driver contract was the provision of driving services, not access to or use of the driver’s vehicle. Both the driver and the vehicle were essential to the transportation service, and the work of driving could not be characterised as subsidiary to the use of the vehicle.
This will be relevant to businesses that seek to rely on the exclusion where contractors use substantial equipment or other assets.
Were the remitted fares deemed wages?
Uber argued that it merely collected fares as the drivers’ limited payment collection agent and remitted money that already belonged to the drivers. On that basis, Uber maintained that it did not pay the drivers for their work.
The Court rejected that characterisation. It found that determining whether an amount is paid for or in relation to the performance of work requires consideration of the substantive contractual rights and obligations, rather than relying on the labels selected by the parties.
Uber calculated the recommended fare, deducted its service fee and held rights to adjust payments, cancel fares and seek reimbursement from drivers. The amounts ultimately remitted to drivers also had a direct relationship with the driving services performed, including the distance travelled and the number of trips completed.
The Court considered these rights inconsistent with Uber being a mere administrative conduit for the riders’ money and concluded that the remitted fares were amounts paid by Uber for or in relation to the performance of work under a relevant contract and were deemed to be wages.
The dissenting judgement highlights how finely balanced the issue was
While Uber ultimately lost, the decision was not unanimous. Steward J dissented and would have allowed Uber’s appeal. His Honour considered that drivers supplied transportation services to riders, rather than to Uber. In his view, Uber benefited from the transportation services but that was different from Uber itself receiving those services.
Steward J also considered that amounts remitted by Uber represented fares collected from riders as the drivers’ payment collection agent rather than payments by Uber in consideration for work performed for Uber. The competing approaches demonstrate the complexity of applying contractor provisions drafted decades before modern digital platforms and gig-economy arrangements emerged.
What does this mean in practice?
The decision confirms several principles with application beyond rideshare:
- A contractor can supply services to a customer and to the business at the same time. It is not enough to argue that the end customer, patient or client is the real recipient.
- A contractor need not be obliged to accept work. Obligations governing how work is performed once accepted may be sufficient.
- Customer payments passing through an intermediary can be deemed wages, even where the intermediary is described as a collection agent.
The decision also builds on Commissioner of State Revenue v The Optical Superstore and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue, where payments originated with customers or patients and were then remitted to service providers.
Who should be reviewing their arrangements?
Businesses operating contractor models should consider whether similar features exist, particularly:
- gig economy and digital platform businesses
- medical and allied health practices
- professional services businesses
- financial services and intermediary businesses
- other arrangements where a business facilitates services between contractors and customers and collects or distributes customer payments.
Key questions to consider include:
- Do contractors owe contractual obligations to the business about the services ultimately provided to customers?
- To what extent do contracts prescribe service standards, quality, pricing or how work must be performed?
- Can the business suspend or terminate contractors for failing to comply?
- How are customer payments collected and legally characterised?
- Does the business have discretion to adjust, withhold, refund or otherwise control amounts before paying contractors?
- Can any contractor exclusions under the applicable payroll tax legislation be substantiated?
- Will this alter the regulators’ views on what is considered to be “ancillary” when equipment is provided together with labour?
Clients should contact their Pitcher Partners representative to discuss how this decision may impact their circumstances.
This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor.
