On 1 August 2025, the NSW Court of Appeal delivered it’s decision in the NSW PRT case regarding whether any PRT was payable by UBER Australia Pty Ltd (‘UBER’) in relation to payments made by it to drivers.
We have previously considered the case, and more importantly the implications of the case as it relates the application of PRT to arrangements widely used in the health industry, In this regard see our article in the October 2024 edition of the TaxEd Update.
In short, NSW Revenue were successful on the appeal with it being determined arrangements between UBER and drivers were relevant contracts for PRT purposes and prima facie subject to PRT unless a ‘relevant contract’ exclusion applied.
The decision reinforces, and potentially signals the end of any further disputes to the PRT treatment of arrangements in the health industry. Health industry arrangements broadly involve medical and other health practitioners contracting to provide patient treatments from a 3rd party facility with services provided by the 3rd party including the provision of facilities, administrative support and collection of payment fees (including Medicare processing) for an agreed service fee (often an agreed % of the practitioner’s patient fees)
The Court of Appeal’s decision in UBER ruled against the key issue in the original decision (and upon which UBER has been successful) holding it did not matter that the money paid to the drivers by UBER was essentially the amount paid by a customer to the driver for the transport but collected by UBER for remittance to the driver (net of any agreed adjustments).
It was on this issue that any likely challenge to the PRT treatment of arrangements in the health sector rested. It appears now though that we may be at the end of the road and the PRT treatment of arrangements in the health sector is effectively settled, and as per the Revenue Office view. The Revenue Office view (around Australia) is that the arrangements are subject to PRT under ‘relevant contract’ rules save for application of relevant contract exclusions provided the 3rd party makes a payment to the practitioner.
For those interested, the Court of Appeal explained the issue and finding as per the extract from the decision below:
Issue 9 – Whether amounts collected by Uber from riders and remitted to drivers are “for or in relation to the performance of work” within s35(1) of the Payroll Tax Act
- The critical issue raised by the Chief Commissioner’s appeal in relation to the payroll tax liability of Uber for which the Chief Commissioner contends is that the primary judge concluded that the payments by Uber to the drivers were not “for or in relation to the performance of work” and hence not deemed to be wages under s 35 of the Payroll Tax Act.
- The primary judge considered that some “reciprocity or ascertainable calibration between the money paid and the work done” was required ([170]) and that this was absent in the present case because the payments made by Uber to the drivers were only made pursuant to an obligation to account ([180]-[181]). In so concluding, the primary judge applied the noscitur a sociis maxim ([167]) and, secondly, relied on the intention behind Div 7 of the Payroll Tax Act as being to capture the “means of disguising the employer.
Determination
- In our view the primary judge erred in his construction of s 35(1) of the Payroll Tax Act insofar as his Honour found that it required there to be some reciprocity or ascertainable calibration between the money paid and the work done, in the sense that his Honour invoked those notions. That construction puts an unsupportable gloss on the section. The word “for” in the phrase “for or in relation to the performance of work” indicates some distinction between payments “for” the performance of work and payments “in relation to” the payment of work. The two are not synonymous, even if they may overlap.
- The phrase “in relation to” is one used “in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ”: Travelex at [25]. The nub of the issue raised here is as to the nature and strength of the required relationship between the amounts paid or payable on the one hand and the performance of work under the contract on the other, such that those amounts are taken to be wages pursuant to s 35(1). The answer to the question lies in consideration of the role the phrase is intended to play in the statutory scheme in question: see the authority referred to above at [328]. However, a court should be cautious in answering such a question beyond the extent needed, as French CJ explained in Khazaal at [31], quoted above (at [105]).
- It is not necessary here to seek to articulate with specificity the strength of connection that is required by the phrase at issue. It suffices to reject the construction adopted by his Honour and his conclusion based upon that construction.
- The Chief Commissioner’s construction was that the relevant connection was simply that the services be “work-related”. He relied on the following passage in Odco, addressing a similarly structured and worded Victorian provision relating to liability to pay a workers compensation levy (at 612, emphasis added):
The notion that the supply of services and the performance of the work referred to in s 9 are necessarily distinct and separate concepts is not borne out by examination of the provisions. Likewise, the notion that the person supplying the services or the person supplying the services of persons is necessarily different from the person performing the work cannot be made out. It is a mistake to read the expression “for or in relation to the performance of work”, where it appears in s 9(1) and elsewhere, as doing anything more than qualifying the content or scope of the word “services”. All that the expression is saying is that “services” must be work-related; it is not stipulating that the services are wholly distinct from the work or that the supplier of the services is a person other than the performer of the work.
- By use of the notion “work-related” the High Court was paraphrasing the words “for or in relation to the performance of work” to explain the role that the notion played – namely, that the services must be work-related – in order to address an argument on a different topic. The Court was not addressing the issue at hand here.
- The Chief Commissioner’s argument that “in relation to” means “work-related” is not to answer the question at hand. It is to restate the question in another form, again involving the word “related”.
- What was said by Gleeson JA in Smith’s Snackfood is of greater assistance in resolving the issue:
The submission of Smith’s that the expression “for or in relation to the performance of work” are words of limitation is to be rejected. The meaning of those words as explained in Odco at 612 is to be applied. There is nothing in the context of s 32(1)(b), or in its legislative history, which suggests that the words “for or in relation to” should be read narrowly. The relevant connection or association is that the “services” supplied under the GDA must be work-related.
- Thus his Honour rejected the submission that a narrow construction of the phrase should be adopted. That being said, his Honour was not addressing the issue in the context of s 35(1). However, that fact itself points to a core problem with the approach adopted by the primary judge.
- His Honour’s construction is inconsistent with other parts of his Honour’s judgment. His Honour indicated he was construing the phrase “for or in relation to the performance of work” in s 35(1), and it was with respect to the words “in relation to” within that phrase that he read in the requirement for some form of reciprocity or ascertainable calibration (see e.g. at [169]-[170]). Yet that same phrase appears throughout the provisions in Div 7, including in the definition of “relevant contract” in s 32(1), along with some of the exemptions in s 32(2). And his Honour held that the driving, rating and referral services were supplied for or in relation to work for the purposes of those provisions (at [25(1)-(2)], [89]-[103], [122]-[129]). There is no sensible reason why Parliament would have intended the phrase to mean different things when employed in different provisions within Div 7. The High Court implicitly made much the same point in Odco in the passage just quoted.
- Although not articulated in these terms, the primary judge appears to have treated the fact that s 35(1) refers to “paid or payable … for or in relation to the performance of work” as a distinguishing feature from the other contexts in which the phrase is used. Yet his Honour noted the formal submission made below by Uber that no money was payable or paid, and his Honour rejected it (at [182]). He did so the basis of the decision of the Victorian Court of Appeal in Optical Superstore Appeal and this Court’s decision in Thomas & Naaz. Those decisions are addressed when addressing Issue 10 (immediately below). They establish that where the designated person pays or is liable to pay amounts under the relevant contract to the other party, the fact that the other party may have some contractual or beneficial entitlement to the money does not preclude the application of s 35(1). In both cases the other party had such an entitlement because of work done by the other party for third party customers/patients. As we explain below, we reject Uber’s argument that those decisions should not be followed. Despite the primary judge accepting the authority of those decisions, in substance his conclusion is inconsistent with them.
- His Honour’s conclusion on the lack of reciprocity or calibration was expressed as follows:
There is no element of reciprocity or calibration between the driver and Uber or the rider and Uber with respect to the money paid by the rider. Those elements exist only between the driver and the rider. The payment here is made pursuant to an obligation to account, and no more.
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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