Uber faces an $81 million payroll tax bill in New South Wales after Australia’s High Court ruled that payments to its drivers are wages, raising concerns about the impact on rideshare workers and disability care providers.
The six-to-one decision ends the company’s legal challenge against the NSW Chief Commissioner of State Revenue. It is also expected to leave Uber facing a total liability of more than $100 million once subsequent years are taken into account.
The ruling could have wider consequences for businesses that connect customers with individual service providers through digital platforms, including some disability care providers operating under the National Disability Insurance Scheme.
Emeritus Professor Joellen Munton said companies using that model would need to reassess whether their payments were subject to payroll tax.
“Any business that operates on that model, having assumed they’re not covered by payroll tax because they don’t see their payments as wages, will have to rethink,” Professor Munton told AAP.
She said the judgment could prompt a significant change to Uber’s business structure, with drivers potentially receiving a smaller share of fares if the company passes on part of the tax cost.
“(Uber) may decide to give drivers less of a share if some … goes in payroll tax,” she said.
Uber said it respected the court’s decision but warned that the judgment could impose substantial new costs on businesses beyond the rideshare industry.
“This decision could have significant unintended consequences beyond rideshare, affecting … mortgage brokers, service-based marketplaces, medical practices and other healthcare services,” an Uber spokeswoman said.
The company called on state governments to modernise payroll tax laws to reflect the way digital platforms operate.
High Court says Uber controls payments
The majority of the seven justices found that Uber had structured its rideshare operation so that fares paid by passengers were channelled through the company before being passed to drivers.
That arrangement gave Uber control over the money, including the ability to deduct its service fee or alter or cancel a fare, the majority said. The judges concluded that drivers working for Uber were employees and that the payments they received were wages under NSW law.
The Transport Workers’ Union, which represents many rideshare drivers, welcomed the ruling.
“Tech giants have spent years trying to convince governments right around the world that laws don’t apply to them,” national secretary Michael Kaine said.
“Uber’s entire business model has been insidiously created by trying to distance itself from obligations under our laws, while reaping all the profits.”
NSW Finance Minister Courtney Houssos said payroll tax helped fund essential services, despite only about one in 20 companies meeting the threshold for payment.
“Local businesses pay their fair share. Uber should pay their fair share too,” she said.
