$81.5m payroll tax win for Uber

Multinational ride-sharing system Uber has successfully contested six Revenue NSW payroll tax assessments totalling over $81.5 million. The assessments were issued on the basis that Uber drivers were employees and therefore payroll tax was payable.

The Payroll Tax Act 2007 (NSW) imposes the tax on all taxable wages paid or payable by an employer. The Act also extends to contractors by capturing payments made “by a person who, during a financial year, supplies services to another person under a contract (relevant contract) under which the first person (designated person) has supplied to the designated person the services of persons for or in relation to the performance of work.”

So, are Uber drivers employees? The New South Wales Supreme Court says no. Among the reasons is that, “amounts paid or payable by Uber to the drivers or partners were not for or in relation to the performance of work …and are not taken to be wages paid or payable.”

The payroll tax assessments were revoked.

Uber is a special case because of its method of operation. Businesses working with contractors need to be vigilant that they have assessed the relationship with their contractors correctly.

What does this mean for businesses?

While Uber’s unique operating model led to this payroll tax decision, it serves as a reminder for businesses to carefully review their contractor relationships. Misclassifying workers can result in significant financial penalties and tax obligations. At Modoras, our team of experts can help you navigate the complexities of contractor arrangements and ensure your business remains compliant with tax laws. Contact us today to review your payroll processes and avoid potential pitfalls.