More Preferential Tax Treatment for Uber

The NSW Supreme Court's Uber payroll tax decision contrasts, with the doctor's case, Thomas and Naaz, and the UK Supreme Court's Uber employment law decision. It raises questions, for appellate review, and about Uber's preferential fiscal outcomes.

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Uber's Rideshare System

Uber operated a "rideshare" system. This connected "drivers", of cars, with "riders", using software applications, or "apps".

Drivers contracted with riders, for a service. Uber also had contracts with riders, and separate contracts with drivers. Drivers drove riders, then rated them, and referred other drivers, to Uber. Uber collected fares, as the drivers' agent, retaining 20-25%.

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Decision

Hammerschlag CJ held that Uber was not liable for payroll tax. Driving was "work", with drivers supplying services, of persons, to Uber, for, or in relation to, the performance of work.

The statutory issue was if Uber "paid ... for or in relation to the performance of work". Needing "reciprocity or ascertainable calibration between the money paid and the work", he held that Uber did not. He said:

"What the rider pays the driver is for or in relation to the work done by the driver. What Uber pays the driver is in relation to the payment Uber has received, not in relation to the work itself."

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Doctors' Case

This contrasts with Thomas and Naaz. The taxpayer operated medical centres. On behalf of doctors, it collected Medicare benefits, that the doctors claimed, paying them 70%. The argument that a "quid pro quo" was needed, for payroll tax, was rejected.

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UK Supreme Court

It also contrasts with the UK Supreme Court's Uber employment law decision. It held that a Uber driver was a "worker", as defined beyond a common law "employee". The NSW Uber decision does not mention this case. This is despite the case turning on common factors, especially Uber fixing prices.

Also not mentioned was the Federal Court's Uber GST decision, in 2017, holding that drivers supplied "taxi travel", for GST purposes. In this application, for declaratory relief, no driver was a party. Issues later decided, by the UK Supreme Court, were not raised, with no contradictor. Uber's relationship, with drivers, was assumed to make the drivers liable, for GST.

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Comment

The NSW Uber decision is another favouring Uber. While Uber formally lost the Federal Court's Uber GST decision, it won, in substance. It had no GST liability. This procedural favouring of Uber, including in the NSW Uber decision, by not raising relevant factors, troubles. It shows tax regulators preferring large entities, which often were clients, of the regulators' employees.