The New South Wales Court of Appeal has delivered a landmark decision that reshapes payroll tax compliance in Australia. On 1 August 2025, in Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172, the Court ruled that payments made by Uber to its drivers are subject to payroll tax. This decision overturned the 2024 Supreme Court ruling in Uber’s favour and has far-reaching consequences for businesses that rely on contractor or platform models.
For small and medium businesses across Australia, this case highlights how complex payroll tax obligations can be and why careful structuring of contractor arrangements is essential.
Why the court ruled against Uber
The Court of Appeal concluded that Uber’s agreements with drivers met the definition of “relevant contracts” under the Payroll Tax Act 2007 (NSW). Several important findings led to this outcome:
- Relevant contracts: Drivers were considered to be supplying services directly to Uber, not only to passengers.
- Payments treated as wages: The amounts remitted to drivers (fares less Uber’s service fee) were held to be wages “for or in relation to the performance of work.”
- Exemptions rejected: The “ancillary services” exemption was dismissed, as driving was the core service provided.
- Substance over form: The Court looked beyond contractual labels, focusing instead on the practical reality of the arrangements.
As a result, Uber faces an estimated payroll tax liability of $81 million, plus interest, for the 2014–15 to 2019–20 financial years. While Uber is expected to seek leave to appeal to the High Court, the ruling already sets a strong precedent that businesses cannot ignore.
The wider impact on Australian businesses
This decision is not confined to rideshare platforms. Contractor provisions are largely harmonised across most Australian states (except Western Australia), meaning other industries may face similar scrutiny. Businesses at particular risk include:
- Medical and health practices, including GPs, dentists and allied health professionals
- Financial and professional services such as mortgage brokers, financial planners and consultants
- Delivery, logistics and other gig-economy platforms
With payroll tax representing a major revenue stream for state governments, authorities are expected to intensify compliance activity and audits. The ruling serves as a warning that contractor arrangements—no matter how they are described in agreements—may still attract payroll tax if the substance of the relationship suggests otherwise.
What businesses should do now
For business owners, the Uber ruling highlights the importance of proactive compliance. Key considerations include:
- Review contractor arrangements: Examine whether current agreements could be considered “relevant contracts” under payroll tax law.
- Assess payment flows: Where businesses collect payments and then remit amounts to contractors, payroll tax exposure may arise.
- Prepare for retrospective audits: State revenue authorities can audit arrangements going back several years. Maintaining accurate records and risk assessments is critical.
- Consider voluntary disclosures: Early disclosure in some cases may reduce penalties and interest, but should only be undertaken with professional advice.
- Seek expert guidance: Tailored legal and accounting advice is vital to manage risks effectively and avoid costly disputes.
Looking ahead
The key takeaway here is that payroll tax obligations are firmly under the spotlight. Whether you are a large platform operator or a small professional practice, the risks of incorrectly treating contractor payments are significant. The Court’s focus on substance over form makes it clear that businesses cannot rely solely on contractual wording to avoid liability.
Australian tax law and payroll tax compliance are increasingly complex, and this case shows that missteps can be extremely costly. As audits become more common, businesses should act now to review their structures, strengthen compliance processes, and seek professional advice before issues escalate.
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NEED HELP? This article provides general information and should not be considered legal or tax advice. For personalised guidance, please contact our expert team of tax accountants at The Quinn Group by calling 1300 QUINNS (1300 784 667) or +61 2 9223 9166, or submit an online enquiry form to arrange an appointment.
