Uber’s $81 million payroll tax wake up call

On 1 August 2025, the New South Wales Court of Appeal delivered a unanimous decision: Uber Australia is liable for approximately $81 million in payroll tax, plus interest, for payments made to its drivers over the 2015–2020 financial years.

How did the court reach its decision?

Three key findings shaped the outcome:

• Payments Uber made to drivers, collected from riders and then remitted, were determined to be “for or in relation to the performance of work”. They were therefore considered taxable wages under the Payroll Tax Act.
• Both driving and passenger ratings were found to be services supplied to Uber under relevant contracts. Rating riders was compulsory and integral to Uber’s platform, not a separate ancillary task.
• Uber’s argument that driving was merely ancillary to the use of the driver’s own vehicle, seeking an exemption, was rejected. The court ruled these services were central to Uber’s business and not eligible for exclusion.

Why this matters for payroll professionals

This ruling elevates payroll from an often unseen cost centre to a strategic compliance risk area. It sends a clear message, businesses using contractors, particularly in the gig economy, medical, or mortgage broking sectors, must reassess contractor arrangements for potential payroll tax exposure under “relevant contract” provisions.

Payroll tax liabilities can be applied retrospectively, potentially spanning up to five years. Organisations should proactively review their contractor relationships, assess payroll tax risk, and seek expert advice if required.

The Australian medical sector has already expressed concern that the same logic could impose significant payroll tax liabilities on general practices, particularly where doctors are engaged as contractors.

What’s next?

Uber is preparing an appeal to the High Court, seeking to overturn the decision. If a stay is granted or the High Court rules in Uber’s favour, it could limit the precedent set by this landmark case.

In the meantime, payroll professionals and finance teams should use this ruling as a prompt to:

• Map and document all contractor arrangements and payment flows
• Evaluate whether services are genuinely contractor based or fall into payroll tax liabilities
• Strengthen documentation around contracts, responsibilities, and exemptions
• Stay informed on potential payroll tax reforms or amendments

This case is a reminder that payroll compliance extends far beyond employees, it includes any payment arrangements that could be caught under payroll tax law. As Australian Payroll Association often advises, the cost of non compliance is rarely limited to the tax bill or backpayments. It brings brand damage, legal costs, and potential penalties that can multiply quickly.