Uber leans on 'payment collection agent' role as tax appeal begins
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The news: Uber has characterised itself as a "payment collection agent" at the start of the NSW Chief Commissioner for State Revenue's appeal of the rideshare company's initial court victory in a high-stakes payroll tax dispute.
Uber collects fares on behalf of drivers, barrister James Lockhart SC told the court.
"Despite it’s efficiency, it is nothing more than a service that connects drivers and riders," said Lockhart, who characterised Uber as generating "leads" for drivers.
But a panel of judges in the Court of Appeal have questioned Uber's arguments that a contract or obligation exists between drivers and riders rather than Uber being central to that system.
Court of Appeal Judge Jeremy Kirk said Uber's lead generator argument is like a dating app provider saying, "here’s who you’re going on a date with, you’re going to have this course for this much and it will end at 10:35pm. It’s highly structured. It’s not just generating the lead, it governs the entire relationship".
The numbers: Revenue NSW issued six payroll tax assessments to Uber in February 2021 for financial years 2015 to 2020 inclusive, totalling $81.5 million.
The context: In his September 2024 ruling, New South Wales Supreme Court Judge David Hammerschlag said Uber acts as a “payment collection agent”, and is therefore not subject to payroll tax.
The chief commissioner's appeal, along with a cross-appeal lodged by Uber, is set to run for a day and a half, wrapping up on Tuesday.
As a key operator in the gig economy, Uber’s case could set an important precedent. A ruling in favour of the state may embolden governments nationwide to enforce payroll tax on similar companies. Conversely, an affirmation of Hammerschlag’s decision could shield gig economy businesses from such tax liabilities.
According to court documents seen by Capital Brief, Revenue NSW is expected to dispute Hammerschlag's "payment collection agent" characterisation. It is expected to argue that Uber’s control over payment amounts and surcharges makes it more than "a mere payment collection agent".
In its filing, Revenue NSW contended that payments to Uber drivers are “work related", even if not strictly wages. Drivers earn based on actual work performed — specifically, driving riders — and the amount increases with more trips, which underscores the link between payments and services provided.
The appeal continues.
The source: Court of Appeal
