The New South Wales Court of Appeal has unanimously overturned a 2024 Supreme Court judgment that had allowed Uber to avoid more than A$81 million in payroll taxes, ruling that payments associated with Uber drivers were made "for or in relation to" work and therefore subject to the Payroll Tax Act.
A five-judge bench delivered the reversal in a decision handed down last month, concluding that the trial judge, Justice David Hammerschlag, had applied an "unsupportable gloss" to the statute and introduced tests that the text of the law does not contain. The disputed liability covers the period from 2015 to 2020; the appeals court said taxes for that period will be payable with interest, and that payroll tax obligations will continue to apply for subsequent periods.
The Court of Appeal said the trial judge erred by adding a requirement that payments demonstrate a special "reciprocity or calibration" between money paid and work performed. On the statute's language, the appeals court said, the correct inquiry is whether the payments were "for or in relation to" work being performed. When drivers provide transport services and Uber retains a portion of each fare, the court found, those payments plainly relate to work.
The appeals court also rejected other aspects of the trial judge's reasoning. It found that treating referral fees as if they existed inside the same contract in a way that favoured Uber was legally unsound. The bench further dismissed the characterisation of payments as being "ancillary to the use of goods," noting that the use of a vehicle and the act of driving it are inseparable in the commercial reality of the service provided.
The judgment described the trial judge's constructions as inconsistent with both the statutory text and the commercial facts, saying the lower-court reasoning could have opened a significant gap in the payroll tax base had it been allowed to stand.
The NSW government supported the appeal, and the ruling was welcomed by officials who have argued that broad classifications of platform workers as independent contractors could undermine payroll tax collections. The decision will have consequences for employers and intermediaries that structure arrangements to characterise labour as non-employment for tax purposes.
Uber has sought special leave to appeal to the High Court. The company said it will pursue further review; legal observers noted that a unanimous five-judge decision at the appeals level presents a substantial hurdle for leave to be granted, though High Court outcomes are not certain.
Tax lawyers said the ruling has implications beyond ride-hailing, affecting other sectors where businesses rely on contractor models while directing or setting contractual terms for service delivery. Medical centres, mortgage brokers, law firms and digital platforms that rely on contracts under which the business sets terms and retains a share of revenue may need to reassess payroll tax exposure, advisers said.
The Court of Appeal’s judgment is notable for its categorical rejection of a series of legal constructions that had allowed the lower court to find in Uber’s favour. The appeals court framed its role as enforcing the ordinary meaning of the statute against interpretive additions that would have narrowed its reach.
If the High Court refuses special leave, the appeal court decision will stand and Uber will be liable for the amounts identified together with applicable interest. If leave is granted, the High Court will determine whether the appeals court correctly applied the law. The dispute highlights the continuing legal and policy tensions around classification of gig-economy workers and the tax obligations of digital platforms.