Rideshare fares counted as wages: High Court confirms payroll tax on driver payouts

In Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40, the High Court of Australia dismissed Uber's appeal, by a 6:1 majority, and held that Uber Australia Pty Ltd is liable for New South Wales payroll tax on the fares it passed on to rideshare drivers. Under the "contractor provisions" of the Payroll Tax Act 2007 (NSW), the standard Driver Contract was a "relevant contract", the driving was not merely "ancillary" to the use of the driver's car, and the fares Uber remitted to drivers were deemed to be wages. Gageler CJ wrote separately; Gordon, Edelman, Gleeson, Jagot and Beech-Jones JJ wrote joint reasons; Steward J dissented. The appeal was dismissed with costs. All paragraph references below are to the judgment.

Why it matters: Payroll tax is not limited to employees. The contractor provisions can treat a business as an "employer" and amounts it pays to contractors as "wages". This is the High Court's first look at how those provisions apply to a gig-economy platform, and the answer turned on what the platform's own contract required of drivers.

At a glance

• Court and level: High Court of Australia (final appeal court), seven justices
• Area of law: State taxation; payroll tax; contractor provisions (Payroll Tax Act 2007 (NSW) ss 32–35)
• Decision type: Appeal from the New South Wales Court of Appeal, heard 8 April 2026, decided 4 November 2026
• Outcome: Appeal dismissed with costs (6:1); the Court of Appeal's decision that Uber is liable stands ([18], [25], [92])
• Majority: Gageler CJ (separate reasons) and Gordon, Edelman, Gleeson, Jagot and Beech-Jones JJ (joint reasons)
• Dissent: Steward J, who would have allowed the appeal with costs ([93], [148])
• Amount at stake: Assessments of about $81 million for the 2015 to 2020 financial years ([22])

🧩 Facts and Issues

Background

• Uber runs a "rideshare system" that connects riders and drivers through its Driver App and Rider App. Each driver signs a standard Driver Contract with Uber, and each rider signs a standard Rider Contract ([19]).
• When a driver accepts a request, they collect the rider and drive them to the destination. The rider pays the fare to Uber, which deducts its service fee and pays the balance to the driver ([20]).
• Uber calculates a recommended fare from a base fare plus distance. It can adjust or cancel a fare, and can block drivers for breaching the contract or its Community Guidelines ([20], [46]–[47], [73]).
• The Driver Contract describes drivers as independent providers, says Uber does not direct or control them, and calls Uber a "limited payment collection agent" ([48], [88]).

How the case got here

• The Chief Commissioner assessed Uber for payroll tax on the fares remitted to drivers in the 2015 to 2020 financial years, treating most of those amounts as wages under the contractor provisions ([22]).
• Uber's objections were disallowed. The primary judge (Hammerschlag CJ in Eq) found the Driver Contracts were relevant contracts, but held the remitted fares were not wages because Uber was only a payment collection agent, and revoked the assessments ([23], [53]–[55]).
• The Court of Appeal allowed the Chief Commissioner's appeal and dismissed Uber's cross-appeal, so Uber was liable ([23], [56]–[58]).

What each side argued

• Uber said the driving was supplied to riders, not to Uber, and not "under" the Driver Contract, because drivers had no obligation to accept any trip ([24], [63]).
• It said the driving was "ancillary" to the use of the drivers' own cars, which would take the contract outside the definition ([24], [78]).
• It said the remitted fares were the drivers' money, passed on by a collection agent, rather than amounts Uber paid "for or in relation to the performance of work" ([24], [87]).
• The Chief Commissioner said Uber's control over drivers and fares meant the contract and the payments fell within the provisions ([73], [120]).

The issues

• Was the Driver Contract a "relevant contract" because Uber "has supplied to [it] the services of persons for or in relation to the performance of work" under it (s 32(1)(b))?
• Was the driving "ancillary ... to the use of goods" owned by the driver (s 32(2)(a))?
• Were the remitted fares amounts paid by Uber "for or in relation to the performance of work relating to a relevant contract", and so deemed wages (s 35(1))?

⚖️ Applicable Law – Legislation, Rules and Principles

• Payroll Tax Act 2007 (NSW): payroll tax is imposed on taxable wages paid or payable by an employer, and Div 7 of Pt 3 (the contractor provisions) extends "employer", "employee" and "wages" ([21], [26]).
• Section 32(1)(b): a "relevant contract" includes one under which a business has supplied to it the services of persons for or in relation to the performance of work ([59], [61]).
• Section 32(2)(a): the definition excludes services that are ancillary to the use of goods owned by the person supplying the services ([21], [78]).
• Sections 33 and 34: the person receiving the services is taken to be an employer, and the worker an employee, for the purposes of the Act ([28]).
• Section 35(1): amounts paid or payable by the employer for or in relation to the performance of work relating to a relevant contract are taken to be wages ([29], [84]).
• Purpose: the provisions were adopted from Victoria to stop the payroll tax base being eroded by engaging contractors instead of employees ([30]–[32]).

📌 Authorities Relied On

• Accident Compensation Commission v Odco Pty Ltd (1990) 169 CLR 1: the same service can be supplied to the person you are contractually bound to and to the person who physically receives it ([6], [71], [74]–[75]).
• Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520: "under" a contract points to the source of the obligation ([60], [107]).
• Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue and Commissioner of State Revenue v The Optical Superstore: payments to contractors can be wages even where the contractor has an entitlement against someone else ([16], [88], [142]).
• Mutual Acceptance Co Ltd v Federal Commissioner of Taxation (1944) 69 CLR 389: relied on by Uber about money paid to an employee "as such"; the majority held it inapplicable ([89]–[90], [138]).
• Federal Commissioner of Taxation v PepsiCo Inc: used by Steward J for the meaning of "for" as a causal connection ([112], [141]).

🧠 Analysis

Issue

Did the contractor provisions make Uber an "employer" liable for payroll tax on fares remitted to drivers?

Rule

A relevant contract exists where the contract is the source of an obligation to supply work-related services to the business. The ancillary exclusion applies only where the use of goods is the main thing and the work is subsidiary. Amounts paid for or in relation to that work are deemed wages ([8], [13], [60], [79], [84]).

Application

The driving was supplied to Uber under the Driver Contract

• Drivers did not have to accept any trip. But once a driver picked up a rider, the Driver Contract obliged the driver to Uber to take the rider "directly to their specified destination", so the contract was the source of the obligation ([9], [63]–[64], [72]).
• The majority likened a driver to a casual employee: free to decline work, but bound by obligations once work starts ([72]).
• Other clauses required driving of a particular standard, enforced through ratings, cancellation rates and Uber's power to block drivers ([65]–[67]).
• Driving could be supplied to the rider and to Uber at the same time, as Odco shows ([6], [10], [68]).
• A financial benefit to Uber alone would not have been enough. What mattered was the drivers' contractual obligation to Uber and Uber's substantial control ([69]–[70]).
• The Court did not need to decide the outer limits of s 32(1)(b) ([8], [76]).

The driving was not ancillary to the car

• The primary object of the Driver Contract was driving services, not the use of a car. The driver's work and the car were equally essential, so neither was subsidiary ([11]–[13], [80]).
• The majority said that makes the contract different from, for example, a car-sharing service, and from hiring a crane with its operator ([13], [80]–[81]).

The remitted fares were deemed wages

• Section 35 creates its own concept of wages, so ordinary ideas of what wages are carry little weight ([85]).
• The more a driver drove, the more Uber paid them. That was a sufficient connection with the performance of work, and no exact "quid pro quo" was needed ([15], [17], [86]).
• Labels in the contract are not decisive. Uber's power to adjust or cancel fares before paying drivers was inconsistent with it being a mere collection agent, and Uber did not claim it held fares on trust ([87]–[88], [90]).
• It did not matter that Uber could have structured its business so that riders paid drivers directly, because it did not ([90]).

The dissent

• Steward J read Div 7 as an anti-avoidance regime aimed at disguised employment, controlled by the nature of payroll tax as a tax on wages ([96], [100]–[101]).
• His Honour saw drivers as independent businesspeople buying lead generation services from Uber, with nothing supplied to Uber, and no suggestion of disguised employment ([115], [134]–[136]).
• He would have held that the remitted fares were Uber fulfilling its promise to riders, not a payment in exchange for work, and would have allowed the appeal ([140]–[141], [148]).

Conclusion

The Driver Contract was a relevant contract, the ancillary exclusion did not apply, and the remitted fares were deemed wages. Uber was liable for the payroll tax assessed ([18], [25], [91]).

🏛️ Outcome, Orders and Costs

• The order of the Court is: "Appeal dismissed with costs."
• The Court of Appeal's orders stand, so Uber is liable for payroll tax on the remitted fares for the 2015 to 2020 financial years ([3]–[4], [25]).
• The Court did not need to decide the Chief Commissioner's notice of contention ([25]).
• Steward J would have upheld grounds 1 and 2 and allowed the appeal with costs; he did not decide the ancillary ground ([103], [147]–[148]).

🧭 What It Means More Broadly

• For gig-economy platforms: Calling workers independent contractors does not settle payroll tax. The question is what the platform's contract obliges workers to do for the platform, and how much control the platform has over the work and the money ([67], [70], [88]).
• For businesses using contractors: Payment flows matter. Fares that ran through Uber, under its control, were treated as Uber's payments, even though they came from riders ([90]).
• Limits: The decision is about the NSW Act and Uber's Driver Contract terms. It does not decide that drivers are employees for any other purpose, such as workplace law ([28], [76], [135]).
• Other platforms and states: The contractor provisions were harmonised with Victoria, so the reasoning is likely to be relevant elsewhere. Each platform's own contract terms will still decide the result ([26], [31], [76]).
• Gageler CJ's point: The contractor provisions are "always speaking in the present" and can apply to gig-economy arrangements Parliament did not foresee ([2], [77]).

🧠 Take-Home Lesson

• For payroll tax, the contract's obligations and the platform's control over the money count for more than the labels in the contract.
• A worker who can turn down any job can still be supplying services to the platform once a job starts.

"Calling drivers contractors didn't settle it: the contract's obligations and Uber's control over fares made the payouts taxable wages."

This digest is general information about a published judgment, not legal advice. For advice about your own situation, speak to a lawyer or a tax adviser.