Uber owes $81m after High Court calls driver fares wages

Uber must pay roughly $81 million in New South Wales payroll tax after the High Court of Australia ruled on 4 November that fares passed on to its drivers count as wages. The majority dismissed Uber's appeal in full and ordered the company to cover the Chief Commissioner of State Revenue's legal costs.

The decision upholds payroll tax assessments for the 2015 to 2020 financial years and touches any employer that relies on independent contractors. It turns on the contractor provisions of the Payroll Tax Act 2007 (NSW), which can treat payments to contractors as wages for tax purposes — a rule now confirmed to reach platform business models.

What does the ruling change?

Payroll tax is a state-based levy on wages paid above a set threshold. The central question in the case was whether money Uber passed to drivers, after deducting its service fee, fell within that definition.

Uber argued it was simply a payment collection agent — taking fares from riders and handing them on to drivers — and should sit outside NSW payroll tax rules. That argument won at first instance in the NSW Supreme Court in September 2024.

The NSW Court of Appeal unanimously overturned that ruling on 1 August 2025. The High Court granted Uber special leave to appeal on 4 December 2025, and has now found that drivers worked under contracts captured by the Act. Their fares are wages for payroll tax purposes.

Uber warns the fallout reaches beyond rideshare

Uber said it respected the decision but insisted payroll tax laws haven't kept pace with platform-based business models.

"We do not believe digital marketplaces like Uber should be captured by payroll tax legislation designed for traditional employment and contracting arrangements," an Uber spokesperson said.

"This decision could have significant unintended consequences beyond rideshare, affecting intermediary business models across the economy, including mortgage brokers, service-based marketplaces, medical practices and other healthcare services."

The company also flagged competitive neutrality concerns in point-to-point transport, saying the same trip could attract different payroll tax treatment depending on the operator. It called on state governments to modernise payroll tax laws for digital platforms.

Union calls it a reality check

The Transport Workers' Union welcomed the ruling, saying companies must pay their share of tax regardless of how they engage workers.

"This High Court decision is a critical reality check to companies seeking to skirt our laws: even companies who engage workers who may not be employees will have to pay their fair share," TWU national secretary Michael Kaine said.

"Tech giants have spent years trying to convince governments right around the world that laws don't apply to them because they operate through apps and algorithms," Kaine said.

The TWU linked the decision to a recent Fair Work Commission ruling setting minimum pay and conditions for food delivery workers under Albanese Government legislation. Its own application to lift pay and conditions for rideshare workers is before the commission, and the union is also demanding a halt to driverless robotaxi rollouts until stringent safeguards exist.

Is this a finding on employment status?

No. It's a tax ruling, not a determination that drivers are employees under federal workplace law. The Fair Work Ombudsman previously investigated Uber's engagement of drivers and concluded the relationship was not one of employment.

That distinction offers platforms little comfort. Legal advisers warn revenue authorities in other states and territories will likely step up payroll tax compliance activity across the gig economy following the NSW litigation.

The exposure isn't limited to rideshare. Mortgage aggregator Finsure has challenged Revenue NSW assessments that applied the same contractor provisions to its broker arrangements, and the NSW Parliament has been inquiring into how those provisions operate.

The ruling joins a growing queue of legal tests for platform work in Australia, from Uber's settlement of a potential landmark case brought by a former delivery driver to a workers compensation test case looming over gig economy employers.

For HR and payroll leaders, the practical step is clear: review contractor arrangements now, particularly where contractors deliver a service central to the business and payments tie directly to the work performed. More state revenue authorities are expected to follow NSW's lead.