The amounts Uber pays to drivers (after Uber collects the amounts from passengers on behalf of the drivers) are "wages" for payroll tax purposes.  This was decided by the NSW Court of Appeal in Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172.  

The 122-page decision of the Court of Appeal is distilled below into its key points, which are likely to be relevant to many "intermediary"-type businesses.

The facts

Uber provides a platform whereby a “passenger” can find a “driver” to drive the passenger.

Uber has a contract it enters into with drivers (a “Driver Contract”) and a separate contract it enters into with passengers. 

Under those contracts, very broadly:

• if a driver drives a passenger, the passenger becomes liable to pay a fare to the driver;
• the driver appoints Uber, as its agent, to collect the fare from the passenger; and
• the driver authorises Uber to deduct Uber’s “service fee” from the fare before remitting the remainder of the fare to the driver.

In what circumstances could Uber be liable to payroll tax on amounts it remits to drivers?

Uber could be liable to payroll tax on an amount remitted by Uber to a driver, only if the following 4 requirements are satisfied:

• Requirement 1:  Uber is supplied with driving services by the driver
• Requirement 2: The driving services are supplied under the Driver Contract
• Requirement 3: Uber makes a “payment” to the driver
• Requirement 4: The payment Uber makes to the driver is for or in relation to driving services

Were the 4 requirements satisfied?

Originally, a single judge of the Supreme Court of NSW held (on 6 September 2024) that requirements 1, 2 and 3 were satisfied but that requirement 4 was not satisfied.  Thus, at first instance, Uber was successful.

Revenue NSW appealed the original decision to the Court of Appeal.  The Court of Appeal held (on 1 August 2025) that all 4 requirements were satisfied.  Thus, on appeal, Revenue NSW (the NSW tax authority) was successful.

Court of Appeal’s reasoning for each requirement

In brief, here is the Court of Appeal’s reasoning as to why each of Requirements 1 to 4 was satisfied:

1. Is Uber supplied with driving services (by drivers)?: The fact that drivers provide driving services to passengers does not, of itself, preclude Uber from also providing driving services to Uber.  It is the drivers’ performance of the driving services that engages Uber’s right to be paid fees.  Thus, drivers supply the driving service to Uber by doing something that is necessary for Uber to derive fees and to continue its business. 

2. Are the driving services provided to Uber “under” the Driver Contracts?  It is true that the Driver Contract does not require a driver to perform any driving.  In other words, it is open for the driver to do as much or as little driving as the driver wishes.  However, if the driver does perform driving services then, under the Driver Contract, the driver becomes entitled to payment for the driving services.  Thus, the Driver Contract is a contract that confers upon the driver, a right to be paid for supplying driving services.  As such, the Driver Contract is a contract “under which” driving services are supplied to Uber.

3. Does Uber make “payments” to drivers?:  Although Uber  only ever collects funds from passengers on behalf of the driver and then remits those funds to the driver (after deducting in its own service fee), Uber nevertheless makes “payments” to drivers, as per the cases of Optical Superstore Appeal and Thomas & Naaz.  Uber argued that these two cases authorities were plainly wrong, and the Court of Appeal should not follow them.  The Court of Appeal held there was no compelling reason to depart from those decisions. 

4.  Are the payments which Uber makes to the drivers “for or in relation to" driving services?  The payments by Uber to drivers are payments related to the work performed by the drivers in transporting riders. The payments are calculated by reference to the driving service, e.g. duration and time of trip.  There is, thus, a direct relationship between the performance of work and what was payable by Uber to drivers.