High Court’s Uber decision and the scope of the payroll tax contractor provisions

The High Court handed down its decision in Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40 on 4 November 2026, ruling that Uber must pay payroll tax on amounts remitted to its rideshare drivers under the New South Wales contractor provisions. The decision confirms the broad reach of those provisions and is a timely prompt for businesses to review their contractor arrangements.

The case concerned whether the ‘contractor provisions’ contained in Division 7 of Part 3 of the Payroll Tax Act 2007 (NSW) (PTA) applied to Uber’s arrangements with its rideshare drivers.

By a 6:1 majority (Steward J dissenting), the High Court rejected each of Uber’s three grounds of appeal and dismissed the appeal with costs. The majority held that: 

1. The contracts between Uber and its drivers (the Driver Contracts) were ‘relevant contracts’ under section 32(1)(b) of the PTA;

2. The driving services were not ancillary to the use of the drivers’ vehicles and therefore, the exclusion in section 32(2)(a) of the PTA was not available; and

3. The amounts remitted to drivers by Uber were deemed to be wages under section 35(1) of the PTA. 

Accordingly, Uber remains liable to pay payroll tax in the sum of approximately $81 million for the financial years ended 30 June 2015 to 30 June 2020.

Contractor provisions

The PTA imposes payroll tax on all taxable wages paid or payable by an employer. The contractor provisions extend that liability beyond traditional employment relationships to certain amounts paid or payable for or in relation to the performance of work relating to a ‘relevant contract’. 

The aspects of the contractor provisions relevant to this case operate in three parts.

1. Section 32(1) of the PTA defines ‘relevant contract’ to include a contract under which a designated person (here, Uber), in the course of a business it carries on, has supplied to it the services of persons (here, the drivers) for or in relation to the performance of work.

2. Section 32(2)(a) excludes from that definition a contract under which the services supplied are ancillary to the supply of goods under the contract by the person supplying the services ‘or to the use of goods which are the property of that person’.

3. Section 35(1) then deems amounts paid or payable by an employer for or in relation to the performance of work relating to a relevant contract to be wages, and so subject to payroll tax. 

Uber’s rideshare business

Uber operates a rideshare system. A person who wishes to be transported to their desired destination (the rider) requests a trip through Uber’s Rider App, and the request is subsequently offered on the Uber Driver App. On the Driver App, drivers then have the option to accept, decline or ignore riders’ requests. At the end of the trip, riders pay the fare, as calculated by Uber, electronically to Uber. Uber deducts its service fee and other fees and remits the balance of the fare to the driver.

Background to the litigation

In 2021, the Chief Commissioner of State Revenue for New South Wales (NSW Chief Commissioner) assessed Uber for payroll tax and interest in the sum of approximately $81 million for the 2015 to 2020 financial years. Uber objected to the assessments, which the NSW Chief Commissioner ultimately disallowed.

Primary decision

Uber commenced proceedings in respect of the assessments in the Supreme Court of NSW and succeeded. Whilst the primary judge (Hammerschlag CJ in Eq) found that the Driver Contracts were relevant contracts under section 32(1)(b) of the PTA, his Honour also found that the amounts Uber remitted to the drivers were not ‘for or in relation to the performance of work relating to a relevant contract’, and so were not taken to be wages pursuant to section 35(1) of the PTA. 

Court of Appeal

The NSW Court of Appeal unanimously allowed the NSW Chief Commissioner’s appeal and dismissed Uber’s cross-appeal. Of the 11 issues before the Court of Appeal, Uber succeeded on only one.

Broadly, the Court of Appeal held that driving (and rating) the riders were services supplied to Uber ‘under’ the Driver Contracts. Neither service was ancillary to the use of the driver’s vehicle, so the exclusion at section 32(2)(a) of the PTA did not apply.

Critically, the Court of Appeal held that the primary judge erred in requiring ‘some reciprocity or ascertainable calibration’ between the money paid and the services supplied to enliven section 35(1) of the PTA. Rather, the fares Uber remitted to drivers, after deducting its service fees, were amounts paid or payable by Uber for or in relation to the performance of work, and so were deemed to be wages.

Uber sought special leave to appeal to the High Court, which was granted on 4 December 2025.

High Court Decision

The High Court considered the following three grounds of appeal:

1. Ground One: whether the driving services were supplied to Uber, and under the Driver Contracts, for or in relation to the performance of work, so that the Driver Contracts were relevant contracts within the meaning of section 32(1)(b) of the PTA.

2. Ground Two: whether the driving services were ancillary to the use of goods of the drivers, being their vehicles, so that the exclusion in section 32(2)(a) of the PTA applied.

3. Ground Three: whether the remitted fares were amounts paid or payable by Uber, as a deemed employer, for or in relation to the performance of work relating to a relevant contract so as to be deemed wages under section 35(1) of the PTA.

Ground One: Whether the Driver Contracts were ‘relevant contracts’ (s 32(1)(b) PTA)

Under Ground One, Uber argued that the Driver Contracts were not relevant contracts under section 32(1)(b) of the PTA on the basis that the driving services were neither supplied to Uber, nor supplied under the Driver Contracts. 

The plurality clarified that the mere generation of a financial benefit to Uber was not, of itself, sufficient to establish that the driving services were supplied to Uber. Rather, the focus was on whether the Driver Contract, which governs the relationship between Uber and its drivers, imposed obligations on the drivers, and whether those obligations were owed to Uber. 

The Driver Contracts included obligations such as:

• riders ‘should be transported directly to their specified destination, as directed by the [rider], without unauthorised interruptions or stops’ (clause 3);
   
• drivers must maintain high standards of professionalism, service and courtesy (clause 6); and
   
• drivers must maintain any minimum motor vehicle liability insurance requested by Uber (clause 21.1). 

Uber’s ability to block drivers from the Driver App for non-compliance with any of the Driver Contract obligations reinforced the notion that those obligations were owed to Uber. In this regard, the plurality referred to the ‘substantial control’ that Uber had over drivers under the Driver Contract as demonstrative of the centrality of the driving services to Uber’s business.

The services must also be supplied ‘for or in relation to the performance of work’. Applying Accident Compensation Commission v Odco Pty Ltd (1990) 64 ALJR 606 (Odco), the plurality observed that this expression qualifies the content or scope of the word ‘services’, by requiring those services to be work-related. That requirement was readily satisfied in Uber’s circumstances, as what was supplied to Uber was the performance of the drivers’ work, namely the driving services. Gageler CJ observed that Odco also demonstrates that a work-related service can be provided simultaneously ‘to’ someone to whom the service provider has a contractual obligation (here, Uber) and ‘to’ someone else who receives the physical benefit of the service (here, the rider). However, interestingly, the majority did not suggest that Uber and the riders were receiving a different service. Rather, they proceeded on the basis that the services being provided to riders and to Uber were the same.

In Steward J’s dissent, his Honour departed from the majority in respect of Ground One. At the outset, his Honour emphasised the origin and purpose of the contractor provisions. Division 7 of Part 3 of the PTA is an anti-avoidance regime targeting arrangements which seek to disguise what are in substance and reality ‘emoluments of employment paid in money or made over in kind to an employee by an employer’. 

Having regard to that purpose, his Honour rejected the Court of Appeal’s broader reading of ‘under which’, noting that the interpretation was ‘too loose and indirect’. In his Honour's view, a contract falls within section 32(1) only where it is the source of an obligation to supply the relevant services in question. In applying that construction, Steward J could not discern any clause in the Driver Contract imposing an obligation on drivers to supply services to Uber. Rather, ‘the only contract of carriage is that entered into between riders and drivers’.

Ground Two: Whether the driving services are ‘ancillary’ (s 32(2)(a) PTA)

Under Ground Two, Uber argued that the driving services were ‘ancillary… to the use of goods which are the property of’ the drivers, namely their cars, so that the exclusion in section 32(2)(a) of the PTA applied. The majority rejected that contention. 

The plurality stated that ‘ancillary’ is to be given its ordinary meaning of ‘subsidiary, incidental, accessory, auxiliary’. It was held that the driving services were not ‘incidental’ or ‘subsidiary’ to the use of the car. Rather, the primary object of the Driver Contract was the supply of driving services. Those services were central to both the Driver Contract and Uber’s rideshare business. Indeed, the Driver Contract was expressly concerned with ‘Transportation Services’, distinguishing it from, for example, a car-sharing service where a contract is concerned with the use of the car.

Gageler CJ reached the same conclusion noting that, for the driving services to be ancillary, the use of the car would need to be of ‘greater contractual significance’.

Ground Three: Whether the remitted fares are wages (s 35(1) PTA)

Under Ground Three, Uber argued that even if the Driver Contract was a relevant contract, the fares it remitted to drivers were not amounts paid or payable by Uber ‘for or in relation to the performance of work relating to a relevant contract’ under section 35(1) of the PTA. The majority rejected this argument.

The plurality first observed that section 35 is a deeming provision that creates its own concept of ‘wages’, so ordinary expectations of what constitutes wages are of limited relevance. Section 13 of the PTA was raised as an example where even in an employment relationship, ‘wages’ is defined broadly to include ‘commission, bonuses or allowances’.

The plurality confirmed that the necessary connection existed in Uber’s circumstances between the performance of work, being the driving services, and the amounts remitted to the drivers. Put simply, the greater the number of driving services performed (whether measured by distance or number of trips completed, or both), the more Uber remitted to the driver. This connection clearly reflected that the amounts paid to drivers were paid ‘for or in relation to the performance of work’.

The plurality rejected the Driver Contract’s description of Uber as a mere ‘limited payment collection agent’, cautioning against assigning too much weight to the ‘labels’ that parties use to describe their relationship. The labels may be relevant, but are ultimately not determinative. What mattered in the Court’s decision was the nature and content of the rights the relevant contract creates. 

Relevantly, the Driver Contract permits Uber to unilaterally adjust a fare or cancel it entirely. Those rights are inconsistent with the driver having any entitlement to the rider’s fare when Uber receives it. In fact, until the amounts are remitted, Uber has ‘substantive control’ over the fares, and it is only once the remittance occurs that the driver has control of the money. 

Steward J also departed from the majority in respect of Ground Three. His Honour stated that when the fares are remitted to drivers by Uber, the drivers obtain ‘complete disposition and control’ of that money. However, Steward J noted that the same could not be said in respect of the fares paid by riders to Uber. Rather, his Honour considered that Uber collected those fares ‘as the limited payment collection agent of the driver’, relying on clause 4 of the Rider Contract and clause 8.1 of the Driver Contract. As such, the payments made by Uber to drivers are not ‘for or in relation to the performance of work relating to a relevant contract’ under section 35(1) of the PTA. 

Implications of the Uber case for businesses

The decision highlights the far-reaching application of the contractor provisions, with Gageler CJ acknowledging the ‘indeterminate scope’ and ‘high level of generality’ of the contractor provisions. Accordingly, the broad interpretation of the contractor provisions will continue to impact a number of industries and business models, including platform-based arrangements and those operating more broadly within the gig economy.

Whilst the High Court found, by a 6:1 majority, in favour of the NSW Chief Commissioner, Steward J’s dissenting comments are significant in two respects. First, they highlight some of the practical difficulties in applying the contractor provisions. Second, Steward J draws attention to the original intent and purpose of the contractor provisions, which were enacted in 1985 as an anti-avoidance measure aimed at disguised employment arrangements. Given the breadth of the provisions following the series of recent court decisions including Uber, questions will continue to arise as to the intended scope of these provisions and whether state and territory governments ought to consider reform.

The High Court’s decision is a timely reminder for businesses to carefully review any existing contractor arrangements. The focus ought to be on substance over form, particularly with respect to any rights and obligations created under the contracts and the relevant payment flows.