Uber drivers and disability workers could be collateral damage after a landmark High Court ruling forced the rideshare giant to fork out millions in tax.
Australia’s highest court on Wednesday found Uber is liable to pay $81 million in NSW payroll tax.
Uber had long argued it did not employ drivers and claimed money paid to its drivers was not wages under state law.
But the ruling is likely to leave Uber with a significant bill for subsequent years, pushing the total to more than $100 million.
Legal expert Joellen Munton said any company whose business model involved linking clients with individual service providers through an app, including disability care providers on the NDIS, could be vulnerable.
“Any business that operates on that model, having assumed they’re not covered by payroll tax because they don’t see their payments as wages, will have to rethink,” Emeritus Professor Munton told AAP.
Prof Munton said the decision could lead to a major shift in how Uber structured its business and drivers could end up worse off.
“(Uber) may decide to give drivers less of a share if some … goes in payroll tax,” Prof Munton said.
“It’s not necessarily the case … if I’m going to have to pay 10 cents more in the dollar on what I receive, I’m going to charge my customer 10 cents more in the dollar.”
Uber said it respected the court’s decision but said the ruling could expose dozens of other businesses to mammoth new costs without law reform.
“This decision could have significant unintended consequences beyond rideshare, affecting … mortgage brokers, service-based marketplaces, medical practices and other healthcare services,” a spokeswoman for the company said.
“We are calling on state governments to modernise payroll tax laws to reflect how digital platforms operate.”
Uber was initially successful in appealing the NSW Chief Commissioner of State Revenue’s assessment, but Wednesday’s High Court 6-1 majority ruling ends the company’s legal avenues.
Six of seven justices agreed to dismiss Uber’s appeal, saying drivers who work for the company are employees and the money paid to them is classified as 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.”
Despite concerns drivers could bear some of the brunt, the union representing many rideshare drivers said the decision was a win for workers.
“Tech giants have spent years trying to convince governments right around the world that laws don’t apply to them,” Transport Workers Union national secretary Michael Kaine said.
“Uber’s entire business model has been insidiously created by trying to distance itself from obligations under our laws, while reaping all the profits.”
Payroll tax is a key part of NSW’s tax base, despite only about one in 20 companies meeting the threshold to pay it, the NSW government says.
“It helps fund essential services that families and households rely on,” Finance Minister Courtney Houssos said on Wednesday.
“Local businesses pay their fair share. Uber should pay their fair share too.”
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