Contractors and Payroll Tax: What the High Court’s Uber Decision Means for NSW Businesses

The High Court has confirmed that payments connected with independent contractors can attract NSW payroll tax even where the contractors serve customers directly and are not common-law employees. Its decision in Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40 is an important prompt for businesses using contractors, platforms or intermediary payment arrangements to review their position.

What did the Court decide?

On 4 November 2026, the High Court dismissed Uber’s appeal from the NSW Court of Appeal, with costs. The dispute concerned fares remitted to drivers for the financial years ending 30 June 2015 to 30 June 2020.

A rider paid the fare electronically to Uber. Uber deducted its fees and remitted the balance to the driver. By majority, the High Court held that the contracts between Uber and its drivers were “relevant contracts” under section 32 of the Payroll Tax Act 2007 (NSW). The remitted fares were paid for or in relation to driving work connected with those contracts and were therefore deemed wages under section 35.

The Chief Commissioner’s assessments were approximately $81 million. The amount reflects the scale and historical period of Uber’s arrangements; it should not be treated as a guide to another business’s exposure.

It did not matter that the driver could decline a request before accepting it. Once a trip began, the contract obliged the driver to transport the rider to the nominated destination according to specified standards.

Uber also relied on an exclusion for services ancillary to the use of goods belonging to the contractor—in this case, the driver’s vehicle. That exclusion did not apply because driving work was not subordinate to the use of the vehicle. Both were essential to providing the transportation service.

The practical lesson is that labels such as “independent contractor” are not decisive. The actual contractual obligations, services performed and payment arrangements must be analysed against the legislation.

Does Every Contractor Payment Attract Payroll Tax?

No. Revenue NSW identifies seven contractor exemptions, including exemptions based on the duration of services, services provided to the public, work performed by two or more people, and some owner-driver arrangements. Deductions may also be available for genuine non-labour components such as materials, tools or equipment.

However, each contractor and arrangement should be reviewed separately. Exemptions can depend on detailed facts and supporting records. An ABN, company structure or contractor wording does not, by itself, remove payroll tax risk.

What should NSW businesses do now?

Businesses engaging contractors should consider:

• which contractual obligations require the contractor to perform work;

• whether the services are supplied to the business, even if a customer also receives them;

• who collects, controls or remits customer payments;

• whether any statutory exemption applies and what evidence supports it;

• whether labour and non-labour components are reasonably separated; and

• whether historical returns or provisions require review.

Businesses operating platforms, marketplaces or other intermediary models should take particular care. Payment flows that appear to pass customer money through the business may still fall within section 35.

The Uber decision does not make all contractors employees. It confirms that NSW payroll tax legislation can deem contractor-related payments to be wages even outside an ordinary employment relationship. Reviewing contracts and records before an audit or transaction can help identify risks, exemptions and corrective options.

Sources: Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40; High Court judgment summary; Payroll Tax Act 2007 (NSW), ss 32 and 35; Revenue NSW contractor guidance and Commissioner’s Practice Note CPN 007.

This article provides general information only and is not legal advice. Payroll tax outcomes depend on the legislation, contracts and facts of each arrangement.