Uber pays its drivers ‘wages’ and is liable for $81m payroll tax bill, Australia’s high court rules

The rideshare behemoth Uber has suffered a bruising loss in Australia’s high court that will cost it more than $80m in unpaid taxes.

The court on Wednesday dismissed Uber’s claim it was not liable to pay payroll tax in New South Wales after it argued that it does not employ drivers and claimed that money paid to its drivers were not wages under state law.

In a six-to-one decision, the high court found that Uber is liable to pay $81m for the tax years from 2015 to 2020.

But the ruling is likely to leave the multinational with a significant bill for subsequent years, pushing the total well over $100m.

Uber was initially successful in appealing against the NSW chief commissioner of state revenue’s assessment but Wednesday’s ruling spells the end of the company’s legal avenues.

Six of seven justices agreed to dismiss the high court appeal, saying Uber’s drivers were employees and the money paid to them was wages.

“Uber has structured its rideshare system business so payments from riders are funnelled through it,” the majority said in the judgment.

“That gives Uber substantive control over the fares before they are remitted to drivers, allowing Uber to deduct its service fee, or change or cancel the fare entirely.”

Chief Justice Stephen Gageler noted that payroll tax laws had been adjusted late in the last century in multiple states to capture more revenue from contractual arrangements meant to disguise the true nature of the working relationship.

“The contractor provisions … have continued ‘always speaking in the present’ to participants in the gig economy which emerged in this century,” the chief justice wrote.

Last year the legal expert Celeste Black wrote that the case would probably influence the payroll tax obligations of companies with gig workers across Australia.

The NSW government said payroll tax was a key part of state’s tax base, despite only about one in 20 companies meeting the threshold to pay it.

“It helps fund essential services that families and households rely on,” the NSW finance minister, Courtney Houssos, said on Wednesday.

“Local businesses pay their fair share. Uber should pay their fair share too.”