Australia's High Court Orders Uber to Pay $81 Million in State Payroll Tax

The High Court of Australia issued a ruling on Wednesday that makes Uber liable for $81 million in unpaid payroll tax for the period between 2015 and 2020. The decision resolves a dispute in New South Wales where the company argued that its drivers were independent contractors rather than employees.

The court rejected Uber's primary defense, which held that it did not employ its drivers and that the money they received did not qualify as wages under state law. Six of the seven justices on the bench agreed that the payments made to drivers constituted wages, thereby triggering the company's tax obligations.

The judgment notes that Uber structures its business so that payments from riders flow through the company before reaching the drivers. The majority opinion stated that this structure gives Uber substantive control over fares, allowing it to deduct service fees or alter and cancel fares entirely. This control was a key factor in determining the nature of the working relationship.

Uber had previously won an appeal against an assessment issued by the NSW chief commissioner of state revenue. The current ruling marks the end of the company's legal options in this specific matter. While the current liability stands at $81 million, the total amount is expected to exceed $100 million once tax years from 2020 onward are included in the calculation.

Chief Justice Stephen Gageler observed that payroll tax laws in various states were revised in the late 20th century to capture revenue from contractual arrangements that might obscure the true nature of employment. He noted that these contractor provisions continue to apply to participants in the gig economy that emerged in the current century.

The New South Wales government maintained that payroll tax is a key part of the state's revenue base, even though only about one in 20 companies meets the threshold required to pay it. Courtney Houssos, the NSW finance minister, stated on Wednesday that the tax helps fund essential services that families and households rely on.

Houssos added that local businesses pay their fair share and that Uber should do the same. Legal expert Celeste Black wrote last year that the case would likely shape the payroll tax obligations of other companies with gig workers across Australia.