The High Court confirms the reach of the contractor provisions in the gig and platform economies, but important questions remain for taxpayers.

What is payroll tax really about? The High Court divided sharply on that question in its decision concerning Uber's $81m payroll tax assessment. While the majority and dissent offered fundamentally different views of the contractor provisions, the result is clear: businesses that rely on labour supplied through modern intermediary structures including platforms and the gig economy face a stronger payroll tax risk than ever before.

In Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2026] HCA 40, a 6:1 majority of the High Court confirmed Uber's liability for payroll tax on payments made to drivers operating through its rideshare platform. The decision concludes a long-running dispute which progressed from a first instance victory for Uber to a successful appeal by the NSW Chief Commissioner, before ultimately reaching Australia's highest court. Long awaited by taxpayers, advisers and revenue authorities, the judgment provides important guidance on the operation of the contractor provisions that underpin payroll tax legislation throughout most states and territories. For many businesses, the significance of the decision extends well beyond the gig economy.

The divide was not over whether the contractor provisions have an anti-avoidance function. Rather, in the end, the case was a straight application of the provisions to the contractual arrangements that underpin how Uber runs its rideshare business. For the majority, Parliament deliberately cast the contractor provisions broadly so that new and evolving methods of engaging labour would be captured unless expressly excluded, giving a key function to the exclusion provisions. For Steward J, those considerations could not displace the need to construe the provisions consistently with payroll tax's fundamental character as a tax on wages and wage-like payments.

The broader conception of the contractor provisions ultimately won the day. While the competing approaches adopted by the majority and Steward J are likely to generate considerable discussion among tax practitioners and academics, most businesses will be focused on a more practical question: what does the decision mean for their existing arrangements and what steps should they take to manage payroll tax risk going forward?

Three practical takeaways emerge for taxpayers

First – One service with multiple recipients

A recurring theme throughout the judgment is that payroll tax liability turns on the contractual rights and obligations established between the parties. The majority placed significant weight, indeed determinative weight, on the fact that, under the contract between Uber and the drivers (the Driver Contract), drivers owed substantive obligations to provide driving services directly to Uber in relation to the provision of transportation services. While drivers remained free to choose when and whether to accept ride requests, once a trip commenced, they were contractually required to transport riders to their destination and comply with a range of standards imposed by Uber regarding the performance of those services. The majority considered those obligations sufficient to establish that drivers were supplying services to Uber as part of Uber's rideshare business, notwithstanding that the same services were also being supplied to riders. As is so often the case, the terms of the contract determined the outcome.

Importantly, the High Court rejected the notion that a service can only be supplied to a single recipient. The fact that riders directly received the transportation services did not prevent those same services from also being supplied to Uber. What mattered was that the Driver Contract created enforceable obligations owed to Uber and that the performance of those obligations formed an essential component of Uber's rideshare business.

Steward J took a fundamentally different view. While accepting that the same service may, in principle, be supplied to more than one recipient, his Honour did not accept that the drivers were supplying transportation services to Uber at all. Instead, he viewed Uber as supplying services to drivers through its platform, with drivers supplying transportation services to riders rather than to Uber. Had that analysis prevailed, the contractor provisions would not have applied in the first place.

Second – No clear boundary to the ‘use of goods’ exemption

Uber argued that the contractor provisions did not apply because the driving services were merely ‘ancillary’ to the use of the driver's vehicle. The majority rejected that argument. In its view, Uber and its customers sought transportation services, not the use of a car. The vehicle was merely the means of delivering those services. Drivers were therefore supplying labour, not simply making an asset available for use.

The decision may also prompt taxpayers to revisit the Explanatory Memorandum's famous crane example. Both the joint majority judgment and Gageler CJ referred to it. However, the judgment offers little guidance on when an arrangement moves from a ‘crane’ case, where labour is ancillary to equipment, to a ‘car’ case, where equipment is merely a means of delivering services. That remains a question of fact and degree.

Steward J did not separately consider the exemption. On his analysis, the drivers were not supplying services to Uber under a relevant contract in the first place, making it unnecessary to address the exclusion.

More broadly, this aspect of the decision reflects the tension identified at the outset of this article. The majority viewed the contractor provisions as deliberately broad, with the statutory exclusions performing much of the limiting work. However, if those exclusions are themselves construed narrowly, the practical reach of the regime becomes correspondingly broader. That is one reason why future disputes may increasingly focus on the scope of the exclusions rather than the concept of a relevant contract itself.

Third – Control over payment arrangements remains critical

Uber argued that the fares remitted to drivers were not amounts ‘paid or payable’ by Uber for the performance of work. The majority rejected that argument. A central consideration was that Uber was not simply acting as a passive payment conduit. Under the contractual arrangements, Uber collected fares, calculated amounts payable, deducted its service fee and retained rights to adjust or even cancel fares before remittance to drivers. The majority therefore regarded the remitted amounts as payments made by Uber in connection with the performance of the drivers' work.

In reaching that conclusion, the majority again stressed that contractual labels are not determinative. Although the Driver Contract described Uber as a ‘limited payment collection agent’, the majority focused on the substantive rights and obligations created by the arrangement rather than the terminology chosen by the parties. In particular, the majority considered that Uber exercised a degree of control over the fares that was inconsistent with the drivers having any immediate entitlement to those amounts upon receipt by Uber.

Perhaps the most interesting aspect of the majority's reasoning is what it did not decide. The majority distinguished, rather than endorsed, the Victorian Court of Appeal's decision in Commissioner of State Revenue v The Optical Superstore (2019) 110 ATR 651 (Optical Superstore). In that case, payments made from trust funds to optometrists were found to be amounts ‘paid or payable’ for the purposes of the contractor provisions. The majority observed that Uber was a different case because Uber expressly disclaimed any trust relationship and the drivers had no proprietary entitlement to fares received by Uber.

That distinction may prove significant. Steward J openly questioned whether Optical Superstore was correctly decided, while the majority stopped short of affirming its reasoning. Instead, the majority went to some lengths to explain why Uber differed from Optical Superstore and the NSW Supreme Court’s decision in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40.

Some taxpayers may therefore ask whether a genuine agency or trust arrangement, under which the intermediary lacks substantive control over funds, might produce a different outcome. The decision does not provide a definitive answer. The next battleground may therefore not be whether a contract is a relevant contract, but whether arrangements involving genuine agency or trust structures can be distinguished from Uber's contractual model.

The High Court's decision provides long-awaited guidance on the operation of Australia's contractor provisions. It resolves several questions that have occupied taxpayers and revenue authorities for years. While the majority's broad approach to the provisions ultimately prevailed, important questions remain concerning the scope of the statutory exclusions and the treatment of agency and trust-based payment structures. Businesses operating in the gig economy as well as businesses which are contractor-dependent or run platform-like models should take the opportunity to review their arrangements in light of the Court's reasoning.

While the decision relates to the New South Wales payroll tax provisions, noting payroll tax harmonisation which sees identical or similar payroll tax legislation across most states and territories, businesses nationwide should expect to see their state revenue offices start to move on these issues including new audits, as well as recommencing paused processes and stayed proceedings. We would expect all relevant jurisdictions to have a caseload of relevant matters ready to proceed.