The Supreme Court of New South Wales held that payments to drivers by a ridesharing company are not wages subject to payroll tax.
The Supreme Court of New South Wales (NSW) on September 6, 2024, held that payments to drivers by a ridesharing company are not wages subject to payroll tax.
The case is: Uber Australia Pty Ltd v Chief Commissioner of State Revenue (2024) NSWSC 1124
Specifically, the court held that while the taxpayer's arrangements with drivers did constitute a "relevant contract" under section 32 of the Payroll Tax Act 2007 (NSW), the amounts paid or payable to the drivers were not "for or in relation to the performance of work relating to a relevant contract" (within the meaning of section 35(1) of the Act). Rather, the taxpayer was a "mere payment collection agent" for amounts paid by riders to drivers. Therefore, such payments do not constitute wages paid or payable by the taxpayer and are not subject to payroll tax.
The decision may have widespread implications, not only for other gig economy participants, but across a broad range of industries which adopt tripartite arrangements, including arrangements between medical center operators and general practitioners and other allied health professionals, as well as those between mortgage aggregators and financial service providers.
The tax authority likely will appeal the decision to the NSW Court of Appeal.
For more information, contact a KPMG tax professional in Australia:
Keith Swan | keithswan@kpmg.com.au
Melissa Bader | melissabader@kpmg.com.au
Alston Kam | akam2@kpmg.com.au
Emilia Galluccio | egalluccio@kpmg.com.au