Chief Commissioner of State Revenue v Uber Australia Pty Ltd

[2025] NSWCA 172

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Chief Commissioner of State Revenue v Uber Australia Pty Ltd [2025] NSWCA 172

Hearing dates:

17-18 March 2025

Date of orders:

1 August 2025

Decision date:

01 August 2025

Before:

Ward ACJ; Mitchelmore JA; Kirk JA; Adamson JA; McHugh JA

Decision:

1.   Appeal allowed.

2.   Cross-Appeal dismissed.

3.   Order 2 made by the Court below on 6 September 2024 be set aside.

4.   Orders 1(c) and (f) made by the Court below on 20 September 2024 be set aside.

5.   Order 1(e) made by the Court below on 20 September 2024 be varied so that it reads “except as set out in Orders 1(a) to (d) above, is liable to payroll tax on amounts paid to drivers or partners (as each of those terms is defined in the primary judgment)”.

6.   Otherwise vary Order 1 made on 20 September 2024 to add a new order (c) and a new order (f) as follows:

(c)   is not liable to tax under that Act on payments made to drivers or partners for performing the service of referring (as that term is defined in the Court’s reasons for decision), other than such payments made to the drivers or partners:

i.   referred to in sub-paragraph 16(a) in the affidavit of Kiril Mitchev made 9 July 2024 (Mitchev Affidavit), for FY2015, FY2016 and FY2017; and

ii.   referred to in sub-paragraph 16(b) of the Mitchev Affidavit, for FY2018.

(f)   the plaintiff is liable to interest in respect of its tax default calculated by applying the premium component in addition to the market rate component, less any amounts which the defendant agreed to remit following issue of the assessments.

7.   The costs order made by the Court below on 22 October 2024 be set aside.

8.   The respondent pay the appellant’s costs of the proceedings at first instance and of the appeal and cross-appeal.

9.   Liberty to file submissions within 7 days if any revision to the above orders is sought to reflect these reasons (with any submissions in response to be filed within a further 7 days), those submissions to be dealt with on the papers.

Catchwords:

TAXES AND DUTIES – payroll tax – liability – application pursuant to s 97 of the Taxation Administration Act 1996 (NSW) to review decision of the appellant disallowing the respondent’s objection to a payroll tax assessment pursuant to the Payroll Tax Act 2007 (NSW) – the primary judge held that the amounts paid by the respondent to drivers were not paid for or in relation to the performance of work under the relevant contract – where the primary judge held that the amounts paid by the respondent were not taken to be wages paid or payable – where the primary judge held that payroll tax was not payable on those amounts and revoked the tax assessment – where the primary judge held that, if payroll tax was payable, premium interest should be remitted in full – following issues raised on the appeal/cross-appeal: whether driving was a service supplied by drivers to the respondent under the driver contracts – whether the primary judge erred in finding that rating was a service supplied to Uber “under” the driver contracts – whether the act of rating and referring was de minimis – whether the primary judge erred in implicitly concluding that the referrals were supplied or provided to the respondent under the driver contracts – whether the primary judge erred in accepting that the driving service was one and the same as the use of the vehicle – whether rating was ancillary to the use of the driver’s vehicle – whether amounts collected by the respondent from riders and remitted to drivers were “for or in relation to the performance of work” – whether amounts collected by the respondent from riders and remitted to drivers were “paid or payable” by the respondent – whether the primary judge erred in ordering remission of any premium interest payable – re-exercise of discretion as to remission of premium interest – appeal by the Chief Commissioner allowed and cross-appeal by Uber dismissed with costs

Legislation Cited:

Accident Compensation Act 1985 (Vic), s 9

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Constitution, s 76

Heritage Act 1995 (Vic), s 168(1)

Income Tax Assessment Act 1936 (Cth), s 160U

Increase of Rent and Mortgage Interest (Restrictions) Act 1920 (UK)

Interpretation Act 1987 (NSW), ss 5(2), 8

Judicial Review Act 1991 (Qld), s 4

Land and Environment Court Act 1979 (NSW), s 16(1A)

Pay-roll Tax (Amendment) Act 1983 (Vic)

Pay-roll Tax Act 1971 (NSW)

Pay-roll Tax Act 1971 (Vic), ss 3C, 35(1)

Payroll Tax Act 2007 (NSW), ss 3(1), 6, 7, 8, 9, 10, 11, 13(1), 31, 32(1), 32(1)(a), 32(1)(b), 32(2), 32(2)(a), 32(2)(b), 32(2)(b)(iv), 32(2)(b)(iii), 32(2)(c), 32(2)(c)(i), 32(2)(d), 32(2)(d)(i), 32(2A), 32(2B), 33, 33(1)(b), 34, 35(1), 35(3), 46, 82-83, Schs 1-2

Payroll Tax Act 2007 (Vic), s 32(2A)

Revenue Legislation Amendment Act 2024 (NSW)

Supreme Court Act 1970 (NSW), ss 19(2), 75A, 101

Taxation Administration Act 1996 (NSW), ss 4, 21, 22, 25, 25(1), 97, 100, 100(3), 101

Cases Cited:

Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641

Alenezi v R [2023] NSWCCA 283

Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107; (2021) 112 ATR 777

Arnold v Minister Administering the Water Management Act 2000 (2008) 73 NSWLR 196; [2008] NSWCA 338

Australian Broadcasting Corporation v Sawa Pty Ltd [2018] WASCA 29

Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424; [1954] HCA 20

Bardsley-Smith v Penrith City Council [2013] NSWCA 200; (2013) 195 LGERA 34

Batterham v Makeig [2010] NSWCA 86; (2010) 15 BPR 28,713

Baulkham Hills Shire Council v O’Donnell (1990) 69 LGRA 404

Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue [2005] NSWSC 788; (2005) 222 ALR 599

Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048

Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400

Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63

Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126

Chief Commissioner of State Revenue v E Group Security Pty Ltd (2022) 109 NSWLR 123; [2022] NSWCA 115

Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259; (2022) 115 ATR 448

Chief Commissioner of State Revenue v Elanor Operations Pty Ltd [2022] NSWCA 222

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19; (2004) 56 ATR 82

Chief Commissioner of State Revenue v McIntosh Bros Pty Ltd (in liq) [2021] NSWCA 221

Clarke v R [2015] NSWCCA 232; (2015) 254 A Crim R 150

Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; [2011] FCAFC 54

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456

Commissioner of State Revenue v Optical Superstore Pty Ltd [2018] VSC 524

Commissioner of State Revenue v Optical Superstore Pty Ltd [2019] VSCA 197; (2019) 110 ATR 651

Commissioner of Taxation (Cth) v Word Investments Ltd (2008) 236 CLR 204; [2008] HCA 55

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35

Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76; [2018] HCA 1

Council of City of Ryde v Azizi [2021] NSWCA 165; (2021) 248 LGERA 204

Downer EDI Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 743

DXH (A Pseudonym) v R [2023] NSWCCA 140

Edwards v Santos Ltd (2011) 242 CLR 421; [2011] HCA 8

Fairfax Media Publications Pty Ltd v Kermode (2011) 81 NSWLR 157; [2011] NSWCA 174

Federal Commissioner of Taxation v Cooke (1978) 23 ALR 229; (1978) 9 ATR 310

Federal Commissioner of Taxation v Faichney (1972) 129 CLR 38; [1972] HCA 67

Felton v Mulligan (1971) 124 CLR 367; [1971] HCA 39

Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157

Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127

Fuller v Lawrence [2024] HCA 45; (2024) 99 ALJR 103

GAR v Attorney-General (No 3) [2020] NSWCA 179

Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2024] HCA 20; (2024) 98 ALJR 808

Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249

Griffith University v Tang (2005) 221 CLR 99; [2005] HCA 7

Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230

Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21

House v The King (1936) 55 CLR 499; [1936] HCA 40

Inghams Enterprises Pty Ltd v Hannigan (2020) 379 ALR 196; [2020] NSWCA 82

IW v City of Perth (1997) 191 CLR 1; [1997] HCA 30

Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37

Klein v Domus Pty Ltd (1963) 109 CLR 467; [1963] HCA 54

Koala Motels Pty Ltd v Chief Licensing Inspector (1977) 18 ALR 12

Lendlease Corporation Ltd v Pallas [2025] HCA 19; (2025) 99 ALJR 834

Lenz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65

Letang v Cooper [1965] 1 QB 232

Lizzio v Ryde Municipal Council (1983) 155 CLR 211

LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575; [1983] HCA 31

Loan Market Group Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 390

Lorimer v Smail (1911) 12 CLR 504; [1911] HCA 44

Lou v IAG t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319

Macedonian Orthodox Community Church St Petka Inc v Petar (2008) 237 CLR 66; [2008] HCA 42

Macquarie International Health Clinic Pty Ltd v University of Sydney (1998) 98 LGERA 218

Mersey Docks and Harbour Board v Henderson Brothers (1888) 13 App Cas 595

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40

Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18

Minister for Immigration v SZVFW (2018) 264 CLR 541; [2018] HCA 30

Moreno v R [2023] NSWCCA 149

Moriarty v Nye (2024) 114 NSWLR 560; [2024] NSWCCA 116

Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37

Navy Health Ltd v Federal Commissioner of Taxation (2007) 163 FCR 1; [2007] FCA 931

Newton v Federal Commissioner of Taxation (1958) 98 CLR 1; [1958] AC 450

Ney v R [2023] NSWCCA 252

Nix v Pittwater Council (1994) 84 LGERA 199

Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17

Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

Prakash v Health Care Complaints Commission [2006] NSWCA 153

Qantas Airways Ltd v Chief Commissioner of State Revenue [2015] NSWSC 826; (2015) 99 ATR 364

R v A2 (2019) 269 CLR 507; [2019] HCA 35

R v Australian Broadcasting Tribunal; Ex parte 2 HD Pty Ltd (1979) 144 CLR 45; [1979] HCA 62

R v Orcher (1999) 48 NSWLR 273; [1999] NSWCCA 356

R v Khazaal (2012) 246 CLR 601; [2012] HCA 26

Rajendran v Tonkin (2004) 9 VR 414; [2004] VSCA 43

Rasier Operations BV v E Tū Inc [2024] NZCA 403; [2025] 2 NZLR 150

Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13

Rinehart v Welker (2012) 95 NSWLR 221; [2012] NSWCA 95

Ryde Municipal Council v Macquarie University (1978) 139 CLR 633; [1978] HCA 58

Smith’s Snackfood Co Ltd v Chief Commissioner of State Revenue [2012] NSWSC 998; (2012) 90 ATR 188

Smith’s Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470; (2013) 97 ATR 904

Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317; (2021) 113 ATR 601

Stratton v Simpson (1970) 125 CLR 138; [1970] HCA 45

SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34

Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (2011) 245 CLR 446; [2011] HCA 41

Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40

Thompson v His Honour Judge Byrne (1999) 196 CLR 141; [1999] HCA 16

TP Engineering Pty Ltd v JM [2015] WASCA 181

Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510; [2010] HCA 33

Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 1124

Uber BV v Aslam [2021] UKSC 5; 4 All ER 209

Varley v Attorney-General (1987) 8 NSWLR 30

Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773; (2018) 108 ATR 63

Wood v Carwardine [1923] 2 KB 185

WorkPac Pty Ltd v Rossato (2021) 271 CLR 456; [2021] HCA 23

XYZ v Commonwealth (2006) 227 CLR 532; [2006] HCA 25

ZG Operations Australia Pty Ltd v Jamsek (2022) 275 CLR 254; [2022] HCA 2

Texts Cited:

Explanatory Memorandum, Introduction Print, State Tax Laws Amendment (Budget and Other Measures) Bill 2013 (Vic)

Explanatory Memorandum, Pay-roll Tax (Amendment) Bill (No 2) 1983 (Vic)

Macquarie Dictionary

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 13 November 1985

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 29 May 2014

New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 18 June 2024

Victorian Legislative Assembly, Parliamentary Debates (Hansard), 22 November 1983

Victorian Legislative Council, Parliamentary Debates (Hansard), 24 November 1983

Category:

Principal judgment

Parties:

Chief Commissioner of State Revenue (Appellant/Cross-Respondent)
Uber Australia Pty Ltd (Respondent/Cross-Appellant)

Representation:

Counsel:
S Balafoutis SC with D Mitchell and C Chiam (Appellant/Cross-Respondent)
J Lockhart SC with C Burnett SC, B Mostafa and D Lewis (Respondent/Cross-Appellant)

Solicitors:
Crown Solicitor’s Office (Appellant/Cross-Respondent)
Ashurst Australia (Respondent/Cross-Appellant)

File Number(s):

2024/00365858

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity Division

Citation:

[2024] NSWSC 1124

Date of Decision:

06 September 2024

Before:

Hammerschlag CJ in Eq

File Number(s):

2021/00307779

HEADNOTE

JUDGMENT

Background

The Payroll Tax Act

The decision below

Issue 1 – Whether driving was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act

Was driving a service supplied to Uber?

Uber’s submissions

Chief Commissioner’s submissions

Determination

Was the driving service supplied “under” the driver contracts?

Uber’s submissions

Chief Commissioner’s submissions

Determination

“a contract under which …”

The Chief Commissioner’s primary contention

Conclusion as to Issue 1

Issue 2 – Whether rating was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act

Uber’s submissions

Chief Commissioner’s submissions

Determination

Issue 3 – Whether rating was de minimis

Uber’s submissions

Chief Commissioner’s submissions

Determination

Issue 4 – Whether referring was de minimis

Uber’s submissions

Chief Commissioner’s submissions

Determination

Issue 5 – Whether referring was supplied under a contract separate to the driver contract

Uber’s submissions

Chief Commissioner’s submissions

Determination

Issue 6 – Whether driving was ancillary to the use of the driver’s vehicle for the purposes of s 32(2)(a) of the Payroll Tax Act

Uber’s submissions

Chief Commissioner’s submissions

Construction of s 32(2)(a)

Determination

Issue 7 – Whether rating was ancillary to the use of the driver’s vehicle for the purposes of s 32(2)(a) of the Payroll Tax Act

Chief Commissioner’s submissions

Uber submissions

Determination

Issue 8 – Application of s 32(2B) of the Payroll Tax Act

Uber submissions

Chief Commissioner’s submissions

Determination

Issue 9 – Whether amounts collected by Uber from riders and remitted to drivers are “for or in relation to the performance of work” within s 35(1) of the Payroll Tax Act

Chief Commissioner’s submissions

Uber submissions

Determination

Issue 10 – Whether amounts collected by Uber from riders and remitted to drivers are “paid or payable” by Uber within s 35(1) of the Payroll Tax Act

Uber’s submissions

Chief Commissioner’s submissions

Determination

Issue 11 – Whether House v The King error in remission of premium interest

The power to remit interest

The nature of review in this Court

The primary judge’s decision and the need to re-exercise the discretion

Re-exercise of discretion

Orders

HEADNOTE

[This headnote is not to be read as part of the judgment]

The respondent, Uber Australia Pty Ltd (Uber), conducts a business built upon a rideshare system; riders who wish to be transported by motor vehicle are put in contact with drivers offering the service of picking them up and driving them to their destination. The connection is achieved by way of Uber’s two software applications (the Driver App and the Rider App).

The Payroll Tax Act 2007 (NSW) imposes payroll tax on all taxable wages paid or payable by an employer. For the financial years of 2015 to 2020, the appellant, the Chief Commissioner of State Revenue (the Chief Commissioner), assessed Uber as liable to pay approximately $81 million in payroll tax based on the amounts paid to its drivers. On 24 April 2021, Uber objected to that assessment. On 31 August 2021, the Chief Commissioner disallowed the objection. Uber then sought a review of the assessment by the Supreme Court under s 97 of the Taxation Administration Act 1996 (NSW).

The primary judge, Hammerschlag CJ in Eq, revoked the Chief Commissioner’s assessment and found that payroll tax was not payable on almost all payments Uber made to its drivers. The Chief Commissioner appealed from the orders made by the primary judge including the order for the remission of penalty interest in full. Uber cross-appealed from various of the findings made by the primary judge.

As Uber had advised that its case (in relation to Issue 10) involved a challenge to the correctness of two intermediate appellate court decisions (Commissioner of State Revenue v Optical Superstore Pty Ltd [2019] VSCA 197; (2019) 110 ATR 651 (Optical Superstore) and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas & Naaz)), a bench of five judges was constituted to hear the matter.

In this Court, the parties agreed that the following issues were raised for decision.

First, whether driving was a service supplied by drivers to Uber “under” the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act (Issue 1).

Second, whether rating of passengers by drivers after each ride was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act (Issue 2).

Third, whether rating was de minimis such that it should be disregarded (Issue 3).

Fourth, whether drivers referring other potential drivers to Uber was de minimis such that it should be disregarded (Issue 4).

Fifth, whether referring was supplied under a contract separate to the driver contract (Issue 5).

Sixth, whether driving was ancillary to the use of the driver’s vehicle for purposes of s 32(2)(a) of the Payroll Tax Act (Issue 6).

Seventh, whether rating was ancillary to the use of the driver’s vehicle for purposes of s 32(2)(a) of the Payroll Tax Act (Issue 7).

Eighth, whether s 32(2B) of the Payroll Tax Act had the effect of disapplying s 32(2) if driving was covered by s 32(2)(a) (Issue 8).

Ninth, whether amounts collected by Uber from riders and remitted to drivers were “for or in relation to the performance of work” within s 35(1) of the Payroll Tax Act (Issue 9).

Tenth, whether amounts collected by Uber from riders and remitted to drivers were “paid or payable” by Uber within s 35(1) of the Payroll Tax Act (Issue 10).

Eleventh, whether the primary judge erred in ordering remission of any premium interest payable (Issue 11).

The Court held (Ward ACJ, Mitchelmore, Kirk, Adamson and McHugh JJA), allowing the appeal and dismissing the cross-appeal with costs:

1. Issue 1 – The driving service is not merely a means of assistance to Uber in some indirect or collateral way. It generates a financial benefit for Uber in the form of a service fee and is the foundation of Uber’s business insofar as it concerns ridesharing. The driving service engages Uber’s contractual rights to be paid and to deduct its service fee. The service of driving is plainly a service supplied “to” Uber within the meaning of s 32(1)(b). The driving service was supplied to Uber “under” the driver contracts. The driver contracts conferred a legal right on drivers to be paid the driver’s share of the fare when the driver performed the driving service and they governed or controlled the driver’s performance of the driving service: [52]-[63]; [81]-[112].

   Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40; Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35;Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 considered.

1. Issue 2 – There was no error in the primary judge’s implicit finding that rating was a service supplied to Uber “under” the driver contracts. Using the Driver App required the driver to rate the previous rider as a condition of permitting the driver to receive and accept new rider requests. Supplying the service of rating should be seen as a condition of exercising the driver’s contractual rights to obtain the benefit of the contract. Rating riders was a service necessarily provided to Uber in the exercise of drivers’ rights under the driver contracts and was therefore supplied “under” those contracts: [128]-[137].

2. Issue 3 – The primary judge did not err in rejecting Uber’s contention that rating was such a trivial function as to give rise to the application of the de minimis principle. The fact that the rating service might have been a small part of the services supplied under the driver contracts (when seen overall in the context of the driving service that was being supplied) did not mean that it was so insubstantial as to be disregarded. For practical purposes, it was effectively an essential part of the driver continuing to make use of the Driver App: [147]-[151].

3. Issue 4 – The primary judge did not err in not finding that the service of referring was de minimis in the context of the driver contracts as a whole. The Court did not accept that the referral service, though no doubt far less substantial than the driving service, was so insubstantial in the context of the contractual arrangements between Uber and the drivers as to warrant the application of the de minimis principle: [158]-[160].

4. Issue 5 – The primary judge erred in implicitly concluding that the referrals were supplied or provided to Uber under the driver contracts. The service of referrals was supplied or provided by drivers to Uber under separate contracts made in accordance with the referrals policy and not under the driver contracts as such. The driver contracts did not govern or control the service of referrals; nor (even if that were the test) could it be said that the service of referrals was supplied in accordance with the driver contracts: [178]-[184].

5. Issue 6 – The primary judge correctly accepted that the driving service was one and the same as the use of the vehicle. The driving service supplied was not one that was ancillary to the use of the goods, as the driving service was not subsidiary, incidental, accessory or auxiliary to the use of the car: [160]-[166].

   ZG Operations Australia Pty Ltd v Jamsek (2022) 275 CLR 254; [2022] HCA 2; Macquarie International Health Clinic Pty Ltd v University of Sydney (1998) 98 LGERA 218 considered.

6. Issue 7 – The primary judge did not err in concluding that the rating service is bound up with the use of the vehicle in the sense of being subsidiary, incidental, accessory or auxiliary to driving the vehicle. However, that was not sufficient to establish that the exemption under s 32(2)(a) of the Payroll Tax Act applied. Use of the vehicle cannot be characterised as the principal or dominant characteristic of the contract (see Issue 6) and hence rating was not ancillary such as to fall within the s 32(2)(a) Payroll Tax Act exemption: [274]-[278].

7. Issue 8 – Given the conclusions that driving was a service which was not ancillary to the use of the vehicle; nor was rating a service which was ancillary to the use of the vehicle in the relevant sense; and referring was not a service supplied to Uber under the driver contracts, the issue as to whether s 32(2B) of the Payroll Tax Act had the effect of disapplying s 32(2) if driving was covered by s 32(2)(a) did not arise. In any event the Court concluded that it did not have that effect: [293]-[307].

   Smith’s Snackfood Co Ltd v Chief Commissioner of State Revenue [2012] NSWSC 998; (2012) 90 ATR 188 cited; Smith’s Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470; (2013) 97 ATR 904 considered.

8. Issue 9 – The primary judge erred in his Honour’s 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 concepts. The payments by Uber to drivers are payments related to the work performed by the drivers in transporting riders, notwithstanding that these represent part of the payments received by Uber from riders in discharge of the riders’ obligation to pay for the transportation service obtained through use of the Rider App: [346]-[364].

   R v Khazaal (2012) 246 CLR 601; [2012] HCA 26; Accident Compensation Commission v Odco Pty Ltd (1990) ALR 641; [1990] HCA 43; Commissioner of State Revenue v Optical Superstore Pty Ltd [2019] VSCA 197; (2019) 110 ATR 651; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 cited; Smith’s Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470; (2013) 97 ATR 904 considered.

9. Issue 10 – Uber’s challenge to the correctness of Optical Superstore and Thomas & Naaz was not upheld. The amounts collected by Uber from riders and remitted to drivers were “paid or payable” by Uber within s 35(1) of the Payroll Tax Act: [377]-[384].

   Commissioner of State Revenue v Optical Superstore Pty Ltd [2019] VSCA 197; (2019) 110 ATR 651; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 considered.

10. Issue 11 – The primary judge erred in ordering remission of any premium interest payable. Having regard to the various different conclusions reached by this Court, the factual landscape in which the primary judge’s theoretical exercise of the discretion to remit premium interest occurred has now changed. In any event, reliance by the primary judge on the ‘no wilful default’ factor revealed an error of principle in the House v The King sense. The appropriate result is that 50% of the premium interest should be remitted, that being the approach taken by the Chief Commissioner: [388]-[436].

    Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (2011) 245 CLR 446; [2011] HCA 41; Qantas Airways Ltd v Chief Commissioner of State Revenue (2015) 99 ATR 364; [2015] NSWSC 826; Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249; Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317; (2021) 113 ATR 601; Chief Commissioner of State Revenue v InciseTechnologies Pty Ltd [2004] NSWADTAP 19; (2004) 56 ATR 82 considered.

JUDGMENT

1. THE COURT: This appeal and cross-appeal arise out of a challenge by Uber Australia Pty Ltd (Uber), a wholly owned entity within the Uber group of companies, to the assessment by the Chief Commissioner of State Revenue (Chief Commissioner) of payroll tax liability in respect of payments made to “Uber” drivers/partners. The difference between drivers and partners is explained by the primary judge in the primary judgment (Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 1124) at [4] and nothing relevantly turns on this difference. Reference to the drivers in these reasons includes reference to the partners, unless otherwise indicated.

2. The Chief Commissioner assessed Uber as liable for payroll tax and interest in the sum of approximately $81 million for the financial years 2015 to 2020 pursuant to the Payroll Tax Act 2007 (NSW) (Payroll Tax Act). Uber unsuccessfully raised an objection to the assessments and then sought a review of the assessments pursuant to s 97 of the Taxation Administration Act 1996 (NSW) (Taxation Administration Act). The outcome of that review was that the primary judge, Hammerschlag CJ in Eq, revoked the assessments and remitted the premium interest that had been imposed by the Chief Commissioner.

3. The Chief Commissioner has appealed from the orders made by the primary judge revoking the assessments and remitting the premium interest levied in respect of the assessments. Uber has filed an Amended Notice of Cross-Appeal challenging certain findings made by the primary judge in the course of the determination of its review application and the Chief Commissioner has filed an Amended Notice of Contention in relation to the cross-appeal.

4. Prior to the hearing of the matter in this Court, Uber advised that its case (relevantly, Ground 6 of its cross-appeal) involved a challenge to the correctness of two intermediate appellate court decisions (that of the Victorian Court of Appeal in Commissioner of State Revenue v Optical Superstore Pty Ltd [2019] VSCA 197; (2019) 110 ATR 651 (Optical Superstore Appeal) and that of this Court in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas & Naaz)). Although Uber’s position was that this challenge was material but not critical to the disposition of its cross-appeal, a bench of five was constituted to hear the matter, having regard to the issue raised as to the proper construction of s 35(1) of the Payroll Tax Act and the importance of certainty in the interpretation of taxation legislation of this kind.

5. Numerous grounds were raised in the Chief Commissioner’s Amended Notice of Appeal, in Uber’s Amended Notice of Cross-Appeal, and in the Chief Commissioner’s Amended Notice of Contention. However, the parties agreed that 11 issues were raised for decision on the appeal. Those issues, and our determination of them, are as follows:

1. Whether driving was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act (Ground 1 of Uber’s Amended Cross-Appeal; Ground 2 of Chief Commissioner’s Amended Notice of Contention). In our view it was (see the reasons below at [52]-[63] and [81]-[112]).

2. Whether rating of passengers by drivers after each ride was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act (Ground 1 of Uber’s Amended Cross-Appeal; Ground 2 of Chief Commissioner’s Amended Notice of Contention). We conclude that it was (below at [128]-[137]).

3. Whether rating was de minimis such that it should be disregarded (Ground 2(a) of Uber’s Amended Cross-Appeal). We conclude that it was not (below at [147]-[151]).

4. Whether drivers referring other potential drivers to Uber was de minimis such that it should be disregarded (Ground 2(b) of Uber’s Amended Cross-Appeal). We conclude that it was not de minimis (below at [158]-[160]).

5. Whether referring was supplied under a contract separate to the driver contract (Ground 3 of Uber’s Amended Cross-Appeal; Ground 4 of Chief Commissioner’s Amended Notice of Contention). We conclude that it was supplied under a separate contract (below at [178]-[184]).

6. Whether driving was ancillary to the use of the driver’s vehicle for the purposes of s 32(2)(a) of the Payroll Tax Act (Ground 4 of Uber’s Amended Cross-Appeal; Ground 3 of Chief Commissioner’s Amended Notice of Contention). We conclude that it was not ancillary such as to fall within the exemption (below at [218]-[266]).

7. Whether rating was ancillary to the use of the driver’s vehicle for the purposes of s 32(2)(a) of the Payroll Tax Act (Ground 1 of Chief Commissioner’s Amended Notice of Contention). We conclude that it was not ancillary such as to fall within the exemption (below at [274]-[278]).

8. Whether s 32(2B) of the Payroll Tax Act had the effect of disapplying s 32(2) if driving was covered by s 32(2)(a) (Ground 5 of Uber’s Amended Cross-Appeal). Given our earlier conclusions this issue strictly does not arise, but in any event we conclude that it does have that effect (below at [293]-[307]).

9. Whether amounts collected by Uber from riders and remitted to drivers were “for or in relation to the performance of work” within s 35(1) of the Payroll Tax Act (Grounds 1-4 of Chief Commissioner’s Appeal). We conclude that they were (below at [346]-[364]).

10. Whether amounts collected by Uber from riders and remitted to drivers were “paid or payable” by Uber within s 35(1) of the Payroll Tax Act (Ground 6 of Uber’s Amended Cross-Appeal). We conclude that they were (below at [377]-[384]).

11. Whether the primary judge erred in ordering remission of any premium interest payable (Ground 5 of Chief Commissioner’s Appeal). We conclude that his Honour erred, and that the appropriate result is that 50% of the premium interest be remitted, being the approach taken by the Chief Commissioner (below at [388]-[436]).

6. The only issue on which Uber has succeeded is Issue 5. We do not understand that limited success to affect the result, which in substance is in favour of the Chief Commissioner. Given those conclusions the appeal should be allowed and the cross-appeal should be dismissed, with costs in favour of the Chief Commissioner to follow the event in respect of both the appeal and cross-appeal. We address the issues raised in turn below, after first setting out the context in which they arise.

Background

The Payroll Tax Act

7. The parties, by and large, focused on the Payroll Tax Act as it stood in the period 14 May 2020 to 10 August 2020. We adopt the same approach. It was not suggested that there was any material change to the legislation in the period relevant to the six assessments challenged.

8. Part 2 of the Payroll Tax Act deals with imposition of the tax. Section 6 provides that payroll tax is imposed on all “taxable wages”. Under s 7, the “employer” by whom such wages are paid or payable is liable to pay the tax. The term “employer” is defined in s 3(1) to mean “a person who pays or is liable to pay wages”, and is said to include (amongst other things) a person taken to be an employer by or under the Act. Section 8 provides that the amount of the tax is to be ascertained in accordance with Schedules 1 and 2. Those schedules set out the rate at which the tax is payable and the way in which it is to be calculated for each financial year.

9. The concept of “taxable wages” is elucidated in s 10 and following. Section 10 states that taxable wages are “wages that are taxable in this jurisdiction”, but not including “exempt wages” (an issue addressed in Pt 4 of the Act). Section 11 outlines the meaning of wages taxable in the jurisdiction, notably including wages paid or payable by an employer for or in relation to services performed by an employee wholly in the jurisdiction.

10. Part 3 of the Act is headed “Wages” and spells out what that concept is taken to encompass. The core of the notion is articulated by s 13(1), which states that it means “wages, remuneration, salary, commission, bonuses or allowances paid or payable to an employee”, and includes amongst other things “an amount that is included as or taken to be wages by any other provision of this Act”.

11. Payroll tax is payable with respect to the financial year (see Sch 1). It may be payable monthly during the course of the year with respect to wages paid or payable in the previous month (s 9) but the overall amount may then be adjusted at the end of the financial year to ensure the correct amount has been paid for the year (ss 82-83). In substance, thus, the tax is payable in arrears.

12. This case concerns the provisions of Div 7 within Pt 3, which is entitled “Contractor provisions”. Within that division, s 33(1)(b) relevantly provides that a person “to whom during a financial year, under a relevant contract, the services of persons are supplied for or in relation to the performance of work” is taken to be an employer in respect of that financial year. Section 34 has the correlative effect in relation to the other contractual party, deeming them to be an employee. Building upon those sections, s 35(1) states that amounts paid or payable by an employer “for or in relation to the performance of work relating to a relevant contract … by an employee under a relevant contract are taken to be wages paid or payable during that financial year” (potentially being a subset of all amounts paid or payable under the contract). These provisions thus extend the taxing provisions in Pt 2 of the Act to certain persons who would not otherwise be employers as defined in s 3(1).

13. The key hinge in these provisions is the notion of “relevant contract”, the content of which is articulated in s 32. That section here involves three levels of analysis. First, there is the definition of the notion in s 32(1), which relevantly is as follows:

In this Division, a relevant contract in relation to a financial year is a contract under which a person (the designated person) during that financial year, in the course of a business carried on by the designated person—

…

(b)   has supplied to the designated person the services of persons for or in relation to the performance of work …

14. Section 31 defines “contract” to include “an agreement, arrangement or undertaking, whether formal or informal and whether express or implied”; defines “services” to include “results (whether goods or services) of work performed”; and defines “supply” to include “supply by way of sale, exchange, lease, hire or hire-purchase, and in relation to services includes the providing, granting or conferring of services”.

15. Second, s 32(2) sets out a series of categories of exemption, which the notion of “relevant contract” is taken not to include. It is the first category which is relevant here, being:

a contract of service or a contract under which a person (the designated person) during a financial year, in the course of a business carried on by the designated person—

(a)   is supplied with services for or in relation to the performance of work that are ancillary to the supply of goods under the contract by the person by whom the services are supplied or to the use of goods which are the property of that person …

16. Third, however, s 32(2B) disapplies the exemptions in subs (2) in certain circumstances. It states:

Subsection (2)(a), (b), (c) or (d) does not apply to a contract under which any additional services or work (of a kind not covered by the relevant paragraph) are supplied or performed under the contract.

17. Thus a relevant contract is one which falls within the definition in s 32(1) and which is not exempt under s 32(2), or for which some such exemption would have been satisfied but the exemption is disapplied by s 32(2B). Disputes arise at all three of those levels here (being Issues 1-8). Two disputes relate to the application of s 35(1) (Issues 9-10). Issue 11 is distinct, relating to remitter of premium interest.

18. Payne JA, sitting at first instance, traced aspects of the history of these “relevant contract” provisions in Downer EDI Engineering Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 743 (Downer First Instance) at [101]-[110]. Equivalent provisions were introduced into the Pay-roll Tax Act 1971 (Vic) in 1983, which amendments were also introduced to the then Pay-roll Tax Act 1971 (NSW) in 1985.

19. Uber sought to derive some high level assistance for all of its statutory construction arguments from the legislative history of the provisions (AT 9-11). For example, in the Minister’s second reading speech introducing the Victorian provisions in 1983 it was said (Victorian Legislative Council, Parliamentary Debates (Hansard), 24 November 1983 at 1255):

It has been brought to the attention of the Government that the pay-roll tax base has been eroded considerably during recent years because an increasing number of employees have become or purported to become independent contractors and their employers or former employers no longer pay pay-roll tax on remuneration paid to these contractors, notwithstanding that for all intents and purposes the relationship between the parties is almost identical. This trend has accelerated in recent years and is continuing to accelerate. The major motive appears to be to avoid income tax.

20. The Minister then gave three examples of such arrangements, the second of which was:

An organization has always operated on the sub-contractor system but the sub-contractors are integral to the operations of the organization. In some cases, employees and sub-contractors work side by side doing the same work for the same “employer” under almost identical working conditions.

21. The parties agreed, incidentally, that it was legitimate to take account of the 1983 Victorian extrinsic materials in construing the New South Wales provisions which were based on those amendments (note also Thompson v His Honour Judge Byrne (1999) 196 CLR 141; [1999] HCA 16 at [35]; Fairfax Media Publications Pty Ltd v Kermode (2011) 81 NSWLR 157; [2011] NSWCA 174 at [31]-[40]). In any event, similar comments were made by Minister Debus when introducing the provisions to the Legislative Assembly in this State in 1985 (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 13 November 1985 at 9558). And when the Hon Dominic Perrottet, then Minister for Finance and Services, was explaining the context when introducing some amendments in the Legislative Assembly in 2014 he said that the “relevant contracts” provisions related to remuneration paid to contractors “who provide services on a similar basis to ordinary employees but who are regarded at law as independent contractors” (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 29 May 2014 at 29468 (2014 Second Reading Speech (NSW))).

22. Uber argued that “the goal here was to prevent tax avoidance that might otherwise come about by replacing traditional employment relationships with independent contractors”, but “it was not intended that there be a disconnection from the primary subject of the Act, that being a tax on moneys paid by acquirers of work services to providers of work services for the work they perform” (AT 10.10; AT 11.10). It said that the tax “wasn’t designed for a sort of gig economy business like Uber supplying a technology app to drivers” (AT 121.25).

23. Whilst Ministers may have referred to a concern about payroll tax being avoided, the provisions at issue here do not depend upon establishing such a purpose, save that, pursuant to s 32(2A), the exemptions in s 32(2) do not apply if the Chief Commissioner determines that “the contract or arrangement under which the services are supplied was entered into with an intention either directly or indirectly of avoiding or evading the payment of tax by any person”. That provision has not been put in issue in this matter.

24. Moreover, no assumption should be made that the provisions should be construed as intended only to apply to the particular types of business structures which were being used and were causing concern at the time they were introduced. And in any event, it is by no means clear that Uber’s business model is very distinct from the sorts of structures which were of concern, even if the 21^st century label of “gig economy” is applied. It has some similarities, for instance, with the Victorian Minister’s second example quoted above relating to sub-contractors who are integral to the operations of an organisation. After all, whether or not Uber should be treated as an employer – or drivers should be treated as something akin to an employee – is a matter which has been the subject of litigation in various forums, applying various particular tests, with various results (e.g. Uber BV v Aslam [2021] UKSC 5; 4 All ER 209; Rasier Operations BV v E Tū Inc [2024] NZCA 403; [2025] 2 NZLR 150 (now on appeal to the Supreme Court)).

25. Uber noted that in Chief Commissioner of State Revenue v E Group Security Pty Ltd (2022) 109 NSWLR 123; [2022] NSWCA 115 (E Group) this Court said that “the primary subject matter of the Act is a tax upon payroll – which is to say a tax upon the wage and salary earnings of employers” (at [45]), and that there is “nothing to suggest however that Division 8 should entirely outflank its role as an add-on to common law notions of employment” (at [46]). Division 8 addresses employment agents, and does not raise the same line-drawing exercises as arise for Div 7. The intent of Div 7 is to apply the payroll tax regime to some independent contractors. Various issues arise as to how far it goes in doing so. These sort of high level arguments raised by Uber do little to advance debate on the issues in dispute in this case (see similarly Optical Superstore Appeal at [62]).

The decision below

26. There was no quarrel with the primary judge’s description of Uber’s business as a “rideshare system” nor as to how the Uber system works (see from [27]-[46] of the primary judgment) and we do not propose here to repeat that account, save as may be necessary for the determination of the issues in the appeal/cross-appeal. Nor is it necessary to set out in detail the relevant contractual arrangements between Uber and the drivers (the driver contracts) (summarised by his Honour at [47]-[56]) and between Uber and riders (the rider contracts) (summarised at [57]-[59]).

27. We do, however, note that Uber emphasises that the driver contracts recite that Uber’s business is to provide “lead generation services” in return for a service fee (as recorded by his Honour at [53(1)]) and the rider contracts are to a similar effect; and that Uber is appointed under the driver contracts as a “limited payment collection agent for the driver” (as noted by the primary judge at [53(6)]) (see AT 5).

28. The relevant services that the Chief Commissioner ultimately contended were supplied to Uber by the drivers (the Chief Commissioner’s position as to this having changed during the course of the objection and review process) for the purposes of s 32(1)(a) of the Payroll Tax Act were: first, transporting riders to their destination (driving); second, giving feedback about riders (rating); and third, referring people to Uber to become drivers (referring). Uber, on the other hand, contended that the driver contracts were not “relevant contracts” because: the driving services were not provided “to” Uber (but, rather, to the riders); the rating service was not provided “under” the driver contracts and in any event was de minimis; and the referring service was provided under separate contractual arrangements from the driver contracts, and in any event was again de minimis.

29. Uber further contended that its arrangements with the drivers were excluded from the definition of “relevant contract” under one or more of the exemptions in s 32(2). Principally, Uber invoked the exclusion in s 32(2)(a) which applies where, under the contract, the designated person (Uber) is supplied with services for or in relation to the performance of work that are ancillary to the use of goods which are the property of the person supplying the services (although Uber also argues that the service of referring in the case of most drivers fell within the exception in s 32(2)(b)(iii)).

30. The question then arose as to whether, if otherwise applicable, the exclusion in s 32(2)(a) was disapplied by s 32(2B) (as the Chief Commissioner contended) on the basis that the contract between Uber and the drivers was one under which additional services or work of a kind not covered by any of the relevant exclusions were supplied or performed.

31. Uber next contended that the amounts paid or payable to the drivers were not amounts paid or payable “for or in relation to the performance of work relating to a relevant contract” (s 35(1)).

32. The primary judge accepted that each of the driving, rating and referring services was a service for or in relation to the performance of work and concluded (albeit implicitly in relation to the rating and referring services) that the services were supplied to Uber “under” the driver contracts.

33. In summary, his Honour concluded (see [25] of the primary judgment) that: by Uber’s arrangements with drivers, Uber was supplied with the services of persons for or in relation to the performance of work within s 32(1)(b) (accepting the Chief Commissioner’s submissions in that regard); the exclusion in s 32(2)(a) applied (i.e., as Uber contended, Uber was supplied with services for or in relation to the performance of work that were ancillary to the use of goods the property of the drivers); but s 32(2B) operated against Uber to take it out of the s 32(2)(a) exclusion because Uber was supplied services that did not fall within one of the exclusions; and, with respect to some but not all of the arrangements, services provided to Uber were provided in circumstances that fell within the exclusion in s 32(2)(b)(iii) but this exclusion did not operate again because of s 32(2B). The cumulative effect of those conclusions was that the driver contracts fell within the definition of “relevant contract” (such that Uber was the deemed employer – see s 34 of the Payroll Tax Act).

34. Critically, however, for the disposition of the review at first instance, the primary judge also found (at [25(4)]), as Uber had contended, that the amounts paid or payable by Uber to the drivers were not “for or in relation to the performance of work relating to a relevant contract” within s 35(1) and hence were not taken to be wages paid or payable. His Honour rejected Uber’s alternative submission that the amounts paid to drivers were not subject to s 35(1) by reason of the proper construction of the phrase “paid or payable” (this being the point raising the correctness of the intermediate appellate court decisions referred to earlier).

35. Accordingly, the primary judge found that payroll tax was not payable on “almost all” of the payments Uber made to its drivers, noting that there were some concessions by the Chief Commissioner in relation to the exclusions in ss 32(2)(b)(iv) and 32(2)(c)(i), which meant that some adjustment would be required to the assessments come what may (see at [23]-[24]).

36. The primary judge proceeded to make what were in effect contingent findings as to the discretion to remit premium interest (i.e., had payroll tax liability been established). As adverted to above, his Honour ultimately made orders remitting the premium interest that had been imposed by the Chief Commissioner (including on amounts in respect of which, based on the primary judge’s findings, Uber was liable for payroll tax). The Chief Commissioner here appeals from the order remitting premium interest but, irrespective of the outcome of that appeal, the Chief Commissioner argues that the primary judge erred in ordering that all premium interest be remitted (since a portion of the premium interest related to amounts for which, on the primary judge’s findings, payroll tax remained payable).

Issue 1 – Whether driving was a service supplied by drivers to Uber under the driver contracts for the purposes of s 32(1)(b) of the Payroll Tax Act

37. The first of the three services relied upon by the Chief Commissioner ([73]) and found by the primary judge to have been supplied to Uber by drivers ([88]) was the service of driving riders (picking them up from their pick-up point and transporting them to their destination). His Honour said (and no one here disputes this) that driving passengers around was undoubtedly work ([101]) and that it was a service in relation to the performance of the work ([103]). The primary judge further found that this was a service performed “under” the driver contracts ([118]).

38. There was no dispute by Uber that driving constituted a service and that it was a service provided for or to riders ([76]-[77]). Rather, as noted earlier, Uber disputed that driving was a service supplied “to” Uber and disputed that it was a service supplied “under” the driver contracts. Each of those challenges to his Honour’s ruling (that driving was a service supplied to Uber under the driver contracts) is considered in turn.

39. At the outset, however, we note that Uber submits that, if the broad meaning propounded by the Chief Commissioner for the concepts of the supply of services and of supply being “under” a contract for the purpose of s 32(1)(b) were accepted, then the compound concept in s 32(1)(b) of a supply of services under a contract would be of extraordinary breadth. Uber criticises the Chief Commissioner’s construction as one that construes the compound phrase by reference to the separate meaning of its several parts (cf Mersey Docks and Harbour Board v Henderson Brothers (1888) 13 App Cas 595 at 599–600, approved in Lorimer v Smail (1911) 12 CLR 504 at 510; [1911] HCA 44; XYZ v Commonwealth (2006) 227 CLR 532; [2006] HCA 25 at [19], [102]) and as failing to have regard to the provision’s context and purpose (gleaned from the 2014 Second Reading Speech (NSW) to which we have already referred), and the principle that a construction that promotes the purpose of a statute is to be preferred (citing R v A2 (2019) 269 CLR 507; [2019] HCA 35 at [37]; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]). The Chief Commissioner, unsurprisingly, rejects that criticism and, for his part, criticises Uber for its focus on the concept of “supply”.

40. We turn then to the two sub-issues within Issue 1.

Was driving a service supplied to Uber?

Uber’s submissions

41. Although there is no challenge as such to the adequacy of the primary judge’s reasons, Uber complains that the primary judge did not explain why he reached the implicit finding (at [119]) that the drivers supplied the driving service “to” Uber; in particular, whether this conclusion was reached by reference to the ordinary meaning of “supply” or its expanded definition in s 31 of the Payroll Tax Act, which as already noted includes the concept of the provision of services. Pausing here, it is reasonably clear that the finding at [119] amounted to an acceptance of the Chief Commissioner’s submissions on that issue; i.e., that the provision of the driving service conferred a benefit on Uber (by generating fees and by reference to the “Rider value proposition”, which we explain below) and hence was a service supplied or provided to it. Whether the expanded definition of “supply” was relied upon for the implicit finding goes nowhere.

42. Uber contrasts the present case with that considered by the High Court in Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641 (Odco) on the basis that, here, the provision of the driving services to riders did not cause Uber to perform any contract for the provision of a driving service with that rider (whereas in Odco the services of tradespersons were held to have been supplied to the entity through which their services were provided to builders notwithstanding that, at the same time, they supplied the same services to the builders for the purposes of the builders’ businesses – see at 652).

43. Insofar as the Chief Commissioner relied upon Thomas & Naaz (where doctors performing services to patients at a medical practice were held also to have provided services to the medical practice in relation to the performance of work) for the contention that drivers supplied the driving service to Uber because Uber benefited from the work performed by drivers, Uber distinguishes the present case on two bases. First, that the doctors who were there held to have provided services for or in relation to the performance of work to the medical practice owed an obligation to the medical practice to provide their medical services to persons who attended the practice to receive those services. Second, that the performance of the doctors’ promises required positive actions by the medical practitioners on a continual basis while the contract was in force (referring to Leeming JA’s reasons at [45]).

44. Uber says that in contrast in the present case: drivers were not obliged to use Uber’s software application for drivers (referred to as the Driver App) and, if they did so, were not obliged to accept trip requests; nor were they obliged to perform requests once accepted (since they could cancel accepted requests prior to arriving at the pick-up location); there was no question of drivers “taking leave” nor any obligation to give Uber notice of such leave; and drivers were able to provide transportation services to persons located through other means, including other “ridesharing” applications (Uber refers in this regard to cll 2.4 and 4 of various driver contracts). In this regard, Uber submits that the primary judge erred in finding (at [53(13)]) that the driver contracts required the driver to perform ride requests once accepted (pointing out that, other than the driver contract dated May 2014, none of the driver contracts contained any such obligation and noting that at [37] the primary judge referred to the fact that drivers could cancel accepted requests prior to arriving at the pickup location).

45. Uber argues that the only real parallels between the present case and Thomas & Naaz are that Uber benefited financially from drivers providing the driving service to riders and that Uber’s business would not function if a sufficient number of drivers did not do so. Uber says that those matters do not suffice to allow the conclusion that drivers supplied the service of driving to Uber, arguing that simply performing an act that assists another does not mean that the former has necessarily supplied a service to the other. In that regard, Uber postulates the examples of a marketplace owner renting out stalls and the making of referrals by a nanny introduction agency as instances where a business benefits from, and may depend upon, the provision of services by one third party to another (the stallholders to customers, the nannies to the families to whom the nannies were introduced through the agency) without those services being supplied to the marketplace owner or nanny introduction agency itself.

46. Uber maintains that it is not a natural usage of the word “supply” (or “provide”) to say that the driver supplied (or provided) to Uber the service of driving and it contends that neither Odco nor Thomas & Naaz warrants such a conclusion. Uber says that the Chief Commissioner’s submissions (summarised below) do not sufficiently grapple with the concept of supply (or, in its expanded definition, provision) of services.

Chief Commissioner’s submissions

47. The Chief Commissioner, in response, criticises Uber’s approach as taking an unduly narrow view as to what constitutes a “service” by Uber’s focus on the concept of “supply”. (Unsurprisingly, Uber does not accept this criticism.) The Chief Commissioner emphasises the wide import of the term “services” (as noted by the primary judge at [71]), the term relevantly including “an act of helpful activity”. Reference is made in this context to the ordinary meaning of that term as adopted by the High Court in IW v City of Perth (1997) 191 CLR 1 at 11; [1997] HCA 30, and to the decisions of Richmond J in Loan Market Group Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 390 (Loan Market) at [200] and of this Court in Thomas & Naaz.

48. The Chief Commissioner contends that the driving service is supplied “to” Uber (as well as to riders) because the service of transporting riders assisted Uber both by generating a service fee for Uber and by increasing the attractiveness of Uber’s software application (referred to as the Rider App) to riders by improving the reliability of Uber’s platform (referred to as the “Rider value proposition”).

49. The Chief Commissioner submits that nothing in Odco requires that a contractual relationship must exist between Uber and riders (such that, in transporting the rider, the driver must have caused Uber to perform some contract with the rider), noting that in Thomas & Naaz Leeming JA rejected such a requirement (see at [57], where his Honour gave by way of example the performance of a barbershop quartet singing carols at a shopping centre as the provision of a service both to customers and to the shopping centre operator itself but without any contract between customer and shopping centre). The Chief Commissioner also refers, in support of the proposition that there need not be a contractual requirement to perform the service, to the decision of Gzell J in Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue [2005] NSWSC 788; (2005) 222 ALR 599 (Bridges). The Chief Commissioner argues that it is of no relevance (to the question whether drivers supplied a service to Uber when transporting riders) that drivers were not obliged to go online or to accept rider requests.

47. As to Uber’s submissions in relation to Thomas & Naaz, the Chief Commissioner argues that the difference in the contractual obligations owed by doctors to the medical centre in that case from those owed by drivers to Uber in the present case is immaterial. In particular, the Chief Commissioner submits that various of the factors referred to by Leeming JA in Thomas & Naaz (at [42]-[45]) as relevant to determining whether a service is supplied to the designated person are applicable in the present case: first, the centrality and importance to Uber’s business of the transportation by drivers of riders (see Thomas & Naaz at [42]-[43]); second, the performance by drivers of contractual obligations (as to the operating conditions imposed by Uber) that are conducive and valuable to Uber’s business (see Thomas & Naaz at [45]), though the Chief Commissioner accepts that these obligations differ from those in Thomas & Naaz; third, that a purchaser of Uber’s business would acquire the valuable contractual rights pursuant to which drivers agreed to pay a service fee to Uber every time they used the Driver App to transport a rider (see Thomas & Naaz at [44]).

48. As to the examples postulated by Uber, the Chief Commissioner places more weight on the barbershop quartet example in Thomas & Naaz as demonstrating the orthodoxy of the concept of a service being an act of assistance or benefit. The Chief Commissioner also argues that it is unlikely that the marketplace owner pays money to the stallholder to run its stall and points out that, in the absence of that payment, there would not be any payroll tax levied. In reply submissions, Uber expands on the hypothetical examples it has put forward to argue that the Chief Commissioner’s argument as to “services” would mean that performance of an obligation by stallholders to act courteously to customers or nannies to provide reasonable care when providing nannying services would, on this construction, be a “service” to the marketplace owner or nanny agency, which Uber argues would not involve the provision of services “on a similar basis to ordinary employees” (as contemplated by the 2014 Second Reading Speech (NSW)).

Determination

52. It is accepted by Uber that the fact that drivers provided a transportation service to riders does not, as a matter of principle, preclude a finding that the drivers also supplied that service to Uber. Therefore, the fact that drivers clearly provided a service to riders is not determinative against the Chief Commissioner’s position.

53. Rather, the crux of Uber’s challenge in this first limb of Issue 1 is that the driving service was not supplied “to” it. While Uber cavils with the suggestion that it has adopted an unduly narrow approach to the issue by focusing on “supply” and its extended definition, the thrust of its argument both orally and in written submissions was indeed on the concept of “supply” or provision of a service to it. Uber maintains that it is not sufficient that the driving service be one that is of assistance to it or from which it benefits.

54. In our opinion, the challenge by Uber to this aspect of the primary judge’s reasoning fails. The transportation of riders to their destination (the driving service) is not merely of assistance to Uber in some indirect or collateral way. It clearly generates a financial benefit for Uber in the form of a service fee, and is the foundation of Uber’s business insofar as it concerns ridesharing.

55. Central to that business is the collection of money directly from riders on a per-trip basis, of which Uber keeps a significant part by way of service fee. The driver’s performance of the driving service is the very thing which engages Uber’s legal rights to do so, conferred by Uber’s contracts with the rider (to collect the money) and with the driver (to keep part).

56. Using the 10 June 2020 version of the rider contracts as representative (as did Uber during the hearing), the rider contracts provide that Uber provides a technology platform which enables the rider, “as a user of Uber’s mobile applications”, to “arrange and schedule transportation services” provided by drivers. The rider acknowledges that use of Uber’s Services (relevantly, the Rider App) may result in charges to the rider for the services provided by the driver (defined as “Charges”). The rider contracts provide that after the rider receives those services, “Uber will facilitate [the rider’s] payment of the applicable Charges”, which are due immediately, by “using the preferred payment method designated in [the rider’s] Account”. This must be “either a credit card or accepted payment partner”. It is the driver’s performance of the driving service that thus engages Uber’s contractual right to debit the rider’s account for the fare.

57. Using the 1 December 2017 version of the driver contracts with individual drivers as representative (as did Uber at the hearing), the driver contracts provide that the driver authorises Uber “to accept the Fare … from the [rider] on [the driver’s] behalf via the Uber Services’ payment processing functionality, and agree[s] that the [rider’s] payment to [Uber] shall be considered the same as payment made directly by the [rider] to [the driver]”. The driver contracts define “Transportation Services” as “peer-to-peer passenger transportation services”, and provide that Uber is entitled to be paid “a service fee on a per Transportation Services transaction basis … calculated as a percentage of the Fare Calculation” (defined as a “Service Fee”). The driver contracts authorise Uber to deduct the Service Fee from the charges that Uber has collected from the rider’s account pursuant to the rider contracts, before Uber remits payment of the balance to the driver. It is the driver’s performance of the driving service that thus engages Uber’s contractual rights to be paid, and to deduct, the Service Fee.

58. From Uber’s perspective, the exercise of the legal rights described above is not a mere collateral benefit of the contractual relationships it establishes with drivers and riders; it is a (if not the primary) purpose of those contractual relationships. Uber’s entitlement to exercise those rights depends on the driver’s performance of the driving service. Without the provision of such a service, Uber’s business could not function. In that sense, drivers clearly “supply” a service to Uber by doing something that is necessary for Uber to derive service fees and to continue its business. That is more than “simply performing an act that assists another” in some sort of Good Samaritan sense. Bearing in mind the purpose of Pt 3, Div 7 of the Payroll Tax Act (see further below at [89]), the service of driving is plainly a service supplied “to” Uber within the meaning of s 32(1)(b).

59. Whether the drivers also provide a benefit in the sense of the “Rider value proposition” (which is less tangible) is in our opinion unnecessary to determine. It is sufficient that the driving service is a service that is supplied (or provided) to Uber by engaging its contractual rights against riders and drivers, thereby generating a financial benefit to it.

60. The emphasis placed by Uber on the extended definition of “supply” or the natural usage of the terms “supply” and “provide” does not assist Uber’s argument. There is a sufficiently direct connection between the service of driving and the benefits generated by it to satisfy the requirement that the service be supplied to Uber.

61. Nor do the hypothetical examples relied upon by Uber as demonstrating that there is no supply (in the extended sense) of a service to it (or the extension by Uber of its hypothetical examples to encompass the performance of obligations of courtesy or reasonable care) persuade us that the driving service is not one supplied to Uber. The most obvious way in which the drivers provide a service to Uber (by transporting riders who use the Rider App) is that doing so engages Uber’s contractual rights to charge and collect service fees. As indicated, this goes well beyond simply performing an act that assists another (as Uber in its submissions appears to suggest).

62. The fact that such a concept of supply of service may have other applications (say, in relation to nanny introduction agencies or the like) does not warrant a conclusion that there was no driving service supplied to Uber. Unless the amounts paid by the family on account of the nanny’s services were being paid to the introduction agency, and then on-paid to the nanny (presumably after deduction of the agency’s fee), Div 7 would not apply. But if that was the structure of the arrangement, it is not obvious why the nanny’s services should not be seen as being provided to the introduction agency, for the same reasons as given above. As the Chief Commissioner submits, the barbershop quartet example is more akin to the situation here before the Court; and, as already noted, the suggestion that, in order for there to be a service supplied or provided to Uber, the driving service must cause Uber to comply with a contractual obligation to riders was rejected in Thomas & Naaz.

63. Thus, there was no error in the primary judge’s conclusion that the service of driving (when a driver chooses to accept a ride request and perform the driving service albeit without being obliged to go online or to accept a ride request in the first place) was a service supplied or provided to Uber.

Was the driving service supplied “under” the driver contracts?

64. The second limb of this first issue concerns the conclusion by the primary judge that the driving service was supplied “under” the driver contracts. In addressing this sub-issue, there was debate as to the width or narrowness of the test which should be adopted to determine whether the service was supplied under the driver contracts (the so-called Sara Lee test – see Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520; [2000] HCA 35 (Sara Lee) at [49] – or the so-called Smith’s Snackfood test – see Smith’s Snackfood Company Ltd v Chief Commissioner of State Revenue (NSW) [2013] NSWCA 470; (2013) 97 ATR 904 (Smith’s Snackfood) at [79]-[80]). And there was debate as to whether there would be a different outcome under one test or the other.

65. The so-called Sara Lee test involves identification of the “source” of the obligation or right in question whereas the so-called Smith’s Snackfood test takes the words “under which” as meaning “in accordance with”, “pursuant to” or “required by” the terms of the relevant agreement. The primary judge considered (at [109]) that the Sara Lee approach had been followed by this Court in Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd (2020) 103 NSWLR 772; [2020] NSWCA 126 (Downer Appeal) at [122]-[123] (a proposition with which the Chief Commissioner here takes issue) but also noted that the test had been expressed differently in Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82; (2020) 379 ALR 196 (Inghams) at [137] where Meagher JA added reference to whether the agreement “governs or controls” the existence of the obligation (or, one might add, the right); and in Smith’s Snackfood itself.

66. The primary judge (at [115]) proceeded on the basis that, to the extent that the alternatively articulated tests differ from the High Court’s articulation, then the test set out by the High Court (in Sara Lee), must prevail. His Honour concluded (at [118]) that the Sara Lee test (and a fortiori each of the alternatively articulated tests) was satisfied on the basis that the right to use the Driver App and all the entitlements and benefits stemming from its use (including the opportunity to drive for gain) had their source in the driver contracts.

Uber’s submissions

67. Uber’s position is that there is no inconsistency between Smith’s Snackfood and Sara Lee. Uber says that, although Sara Lee was decided in a different statutory context, the common approach in the cases referred to in Downer Appeal supports its position (namely, that the concept of supply “under” a contract is where the contract can properly be seen as the source of the obligation to effect the supply). Uber argues that Smith’s Snackfood does not propound a different approach.

68. In that regard, Uber says that Gleeson JA’s statement in Smith’s Snackfood at [79] as to how the meaning of the words “under which” may be taken (drawn, Uber suggests, from Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 249; [1989] HCA 63 (Chan v Cresdon)) was not made in the context of a dispute as to the meaning of “under which”; rather, it was made to emphasise the need for the application of the statutory test in that case (under s 32(2)(d) of the Payroll Tax Act) (Uber here referring to [80] and [82] of Smith’s Snackfood). Uber points to the statement by Gleeson JA that “regard is to be had to the contractual arrangement under which the services are actually provided” as directing attention to the contract that is the source of the obligation or right.

69. Uber argues that the exposition in Chan v Cresdon of the concept of “under” (in the phrase “under this lease”) as including “in accordance with” is not satisfied if the source of the obligation arises elsewhere (even if the relevant instrument gives the entirety of the content of an obligation). Pausing here, we consider that little can be drawn from Chanv Cresdon as to the meaning of the words “under which” in s 32(1)(b) of the Payroll Tax Act, for reasons we develop in [95] below.

70. As to the application of the test in the present case, Uber emphasises that the driver contracts imposed no obligation on the drivers to provide the driving service and conferred no “right” to perform the driving service; rather, Uber says that the driver contracts gave the drivers the right to use the Driver App.

71. Uber accepts that, in a practical sense, the right to use the Driver App brought with it the opportunity for the driver to “drive for gain” and Uber further accepts that this opportunity “in some sense” had its source in the driver contracts (since, without entering into a driver contract, a driver would not be able to access the Driver App and without the Driver App the driver would not be able to receive requests from riders through the Uber system, which, if accepted, resulted in an opportunity to provide transport to riders). However, Uber argues that it was only in this practical, not legal, sense that the driver contracts, by granting access to the Driver App, provided an “opportunity to drive” and Uber submits that the connection between “the opportunity to drive” and the driver contracts does not satisfy the Sara Lee test so as to make any driving supplied to Uber a supply “under” the driver contracts.

72. In support of its argument, Uber points to instances of businesses that provide technology that in a practical sense gives users the opportunity to perform services (such as phone or internet service providers) but argues that the subsequent provision of other services arranged through such a phone or internet service does not amount to the provision of those other services “under” the contract with the phone or internet service provider.

73. Insofar as the primary judge relied on the fact that the driver contracts placed some obligations on drivers when they availed themselves of the opportunity to use the Driver App and to transport riders (see at [118]), Uber says that the existence of such obligations in the driver contracts (such as refraining from making unauthorised stops while driving and refraining from allowing unauthorised passengers in the vehicle) does not support the conclusion that drivers to whom those obligations applied supplied driving to Uber “under” the driver contracts. Uber emphasises that the relevant service that the Chief Commissioner contended was supplied by drivers to Uber was “driving to the pickup point, taking the rider on board and driving them to their destination” ([73(1)]). Uber thus submits that the driver contracts were not “the source of the obligation” to perform the driving service.

Chief Commissioner’s submissions

74. The Chief Commissioner points to the extended definition of “contract” in s 31 (which includes an agreement, arrangement or undertaking, whether formal or informal) as indicating that the Payroll Tax Act contemplates that there can be a relevant contract under s 32 even if there is not a legally binding agreement. The Chief Commissioner submits that the fact that the driver contracts give drivers the right to use the Driver App satisfies the Sara Lee test articulated by the primary judge at [108] and hence that his Honour was correct so to conclude.

75. By way of an acknowledged fallback position, the Chief Commissioner contends that the primary judge erred in adopting a test which was unduly narrow. The Chief Commissioner argues that his Honour should have found that the phrase “under which” only requires that the services be performed “in accordance with”, “pursuant to” or “required by” the terms of the driver contracts (citing Smith’s Snackfood at [79] and noting that this construction was adopted by Richmond J in Loan Market at [197]). The Chief Commissioner says that this was also the effect of Gzell J’s judgment in Bridges at [222] and [226], namely that services could be provided under a contract even if there was no obligation to undertake that work; it being sufficient for the work to be done “in terms of” (i.e., in accordance with) the relevant contract. (In reply, Uber argues that the reliance placed by the Chief Commissioner on Bridges is misplaced; that although the relevant contracts in Bridges did not contain obligations to perform the services in question, it was by those contracts that the taxpayer’s representatives had the right to act as such.)

76. Insofar as the primary judge (at [109]) concluded that the narrower construction of the phrase “under which” was supported by this Court in Downer Appeal at [122]-[123], the Chief Commissioner submits that this is based on a misreading of the decision. The Chief Commissioner emphasises that at [123] Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) commenced by acknowledging that the word “under” can have a broader meaning “including” that the supply occurred in the exercise of a right or discharge of an obligation conferred or imposed by the terms of the relevant contract (the Chief Justice there citing Smith’s Snackfood at [79]) and the Chief Commissioner argues that Bathurst CJ did not exhaustively state the meaning of the word “under” and did not, by adopting a similar approach to that taken in Sara Lee, reject the formulation in Smith’s Snackfood. (In response, Uber argues that the reference to the broader meaning of “under”, should be read in context with what was said in the preceding paragraph, [122], as to what the narrowest meaning of the word “under” would require in that case.)

77. The Chief Commissioner notes that in Loan Market (at [198]) Richmond J considered that the statement by Bathurst CJ that “a similar approach [to that of the plurality in Sara Lee] should be taken in dealing with the present legislation” was not a limitation on the meaning of “under which”, rather, it was one way of approaching the question posed on the facts of Downer Appeal (where the case concerned a putative employee who had a contractual obligation to perform the relevant work). The Chief Commissioner submits that it is unlikely that Downer Appeal intended to limit what was said in Smith’s Snackfood on the meaning of “under” when that issue was not the subject of the appeal. (In contrast, Uber argues that it is unlikely, given that Bathurst CJ referred to Sara Lee at [49] and Sara Lee drew on Chan v Cresdon (at [42] fn 55), that Downer Appeal was propounding a broader meaning of “under” than in either Chan v Cresdon or Sara Lee.)

78. Further, the Chief Commissioner argues that the particular issue arising in Sara Lee (which was concerned with the disposal of an asset “under a contract” within the meaning of s 160U of the Income Tax Assessment Act 1936 (Cth), where the question was under which of two contracts the asset was disposed of) and its different statutory context (which required a binding or enforceable contract to be identified) means that there was no need for the High Court to engage in an extensive analysis of the boundaries of the meaning of the phrase “under a contract” and hence the decision should not be read as exhaustively stating the meaning of that phrase.

1. all principal tax that has been assessed and is not in dispute has been paid in full;

2. there has been timely cooperation by the taxpayer in providing relevant information so as to enable the Chief Commissioner to issue assessments;

3. there has been no wilful default by the taxpayer in not paying tax on time;

4. the taxpayer took reasonable care in relation to complying with its tax obligations; and

5. the taxpayer acted reasonably in all the circumstances, including in light of any explanation offered for why the default occurred.

398. Such factors commonly will be useful in assessing whether or not, in the particular circumstances of any case, the broad discretionary power in s 25 to remit premium interest should be exercised in favour of the taxpayer in whole or in part. They are consistent with an understanding that imposition of the premium component of interest serves a penal function. These factors are not exhaustive. Nor are they tick-a-box requirements, where the taxpayer must necessarily establish all of them in order to benefit from a favourable exercise of the power. Section 25 grants a broad discretion to be exercised in light of all the circumstances.

399. The Chief Commissioner did not seek to establish in this matter that some or all of these factors are mandatory considerations in a Peko-Wallsend sense, such that they must always be considered in every case, and such that failure by an administrative decision-maker to consider them would constitute jurisdictional error. Any such argument would involve issues of statutory construction with which the Chief Commissioner did not attempt to grapple.

The nature of review in this Court

400. There was some debate in the appeal as to whether, in contending that the primary judge erred in the House v The King sense by failing to take into account a relevant consideration (or taking into account an irrelevant consideration), it was necessary for the Chief Commissioner to establish that the consideration was a mandatory (or prohibited) consideration in the Peko-Wallsend sense. The passage in House v The King relevantly uses the language of the court failing to “take into account some material consideration” and, conversely, taking into account “extraneous or irrelevant matters” (at 505). There was some related debate as to whether the exercise of the discretion by the primary judge was properly characterised as the exercise of judicial, as opposed to administrative, power.

401. The Chief Commissioner argues that the discretion to remit premium interest in s 25 of the Taxation Administration Act, on review under s 97(1) of the Act, is a “judicial” one having regard to the nature of the jurisdiction, noting that in Tasty Chicks the High Court concluded that a “review” under s 97 of the Taxation Administration Act is taken to be an “appeal” for the purposes of the Supreme Court Act 1970 (NSW) (SCA) by reason of s 97(4) of the Taxation Administration Act and s 19(2) of the SCA and that therefore s 75A of the SCA applies to that “appeal”, subject to ss 100 and 101 of the Taxation Administration Act (s 75A(4); see Tasty Chicks at [16]-[17]). Although an “appeal”, it was in the exercise by the Supreme Court of its original jurisdiction (Tasty Chicks at [5]).

402. The Chief Commissioner argues that, while administrative powers may be conferred on the Supreme Court (referring by way of example to Varley v Attorney-General (1987) 8 NSWLR 30 at 49), that conclusion should be rejected in the case of s 97(1) of the Taxation Administration Act since such a conclusion would mean there is no right of appeal from such a decision, as s 101 of the SCA is limited to appeals from the exercise of judicial power (referring to GAR v Attorney-General (No 3) [2020] NSWCA 179 at [96]). The Chief Commissioner says that the fact that the discretion is judicial is consistent with s 97 referring to “a review” by the Court, whereas s 96 refers to “administrative review” by the New South Wales Civil and Administrative Tribunal. The Chief Commissioner notes that the Housev The King standard of review applies to an appeal from “a judicial discretion” (citing Minister for Immigration v SZVFW (2018) 264 CLR 541; [2018] HCA 30 (SZVFW) at [38]).

403. Uber, in response, argues that labelling the discretion as a “judicial” one, rather than an administrative one, “sidesteps” the fact that the primary judge was standing in the shoes of the Chief Commissioner when exercising the s 25 power. Uber says that the limits of the decisional freedom granted by the statutory conferral of a discretion depend on the terms of the enactment regardless of whether the discretion is conferred on a judicial body or an administrative one (referring to Klein at 473). Further, Uber says that discretion signifies a number of different legal concepts (noting Norbis v Norbis (1986) 161 CLR 513 at 518; [1986] HCA 17). It argued that the relevant discretion in the present case is not an ordinary judicial discretion (AT 95.24-25) as it involves the Supreme Court re-exercising the same statutory power that is ordinarily exercised by an administrative decision-maker (the Chief Commissioner).

404. What is nevertheless not disputed is that this Court has proceeded on the basis that, in an appeal from a discretionary decision in proceedings for review pursuant to s 97 of the Taxation Administration Act, it is necessary to establish Housev The King error (see for example Chief Commissioner of State Revenue v Elanor Operations Pty Ltd [2022] NSWCA 222 at [3], [27] (Elanor)).

405. The contentious issue, as adverted to above, is as to whether Ground 5 of the Chief Commissioner’s appeal requires him to establish that an asserted failure to “take into account some material consideration” requires that matter to be mandatory in the Peko-Wallsend sense. Uber says that it does. The Chief Commissioner says that it does not but accepts that, with respect to the contention that the primary judge took into account irrelevant considerations, he is required to show that those considerations were “definitely extraneous to any objects the legislature could have had in view” (citing Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22], [49] (Oshlack)). The Chief Commissioner argues that this reflects the different language used in Housev The King with respect to “material” considerations and “extraneous or irrelevant” matters from that used in Peko-Wallsend.

406. The Chief Commissioner points to conflicting intermediate appellate authorities as to whether a failure to take into account a “material consideration” must involve a failure to consider a mandatory relevant consideration in the Peko-Wallsend sense. He acknowledges that the following authority suggests that such is necessary (TP Engineering Pty Ltd v JM [2015] WASCA 181 at [47]; Australian Broadcasting Corporation v Sawa Pty Ltd [2018] WASCA 29 at [53]; Ney v R [2023] NSWCCA 252 at [3] (although cf [4], [73]-[75], [113]); Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230 at [37]-[38]; DXH (A Pseudonym) v R [2023] NSWCCA 140 at [28]; Moreno v R [2023] NSWCCA 149 at [37]).

407. However, he submits that the correct approach is that taken by Basten JA in Clarke v R [2015] NSWCCA 232; (2015) 254 A Crim R 150 (Clarke) at [33], saying that “[t]here is no indication that the reference to a material consideration was intended to refer to a mandatory consideration, in the sense that failure to take it into account would demonstrate error of law” (and see also Alenezi v R [2023] NSWCCA 283 at [24]). Further, the Chief Commissioner notes that there are authorities of this Court dealing with a failure to take into account a material consideration which do not involve any analysis of whether the consideration was a mandatory consideration (referring by way of example to Lou v IAG t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319 at [44]).

408. The Chief Commissioner argues that, for three reasons, Housev The King error will be established if the appeal court considers that a matter that was put below was relevant to the exercise of the discretion but was not taken into account. First, in Housev The King at 505, reference to the error is as to the failure to take into account “some material consideration” (rather than referring to a mandatory consideration). The Chief Commissioner notes that this passage is often cited by the High Court without qualification (such as in Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37, and in Macedonian Orthodox Community Church St Petka Inc v Petar (2008) 237 CLR 66; [2008] HCA 42 (Petar)). Second, the proposition that a material consideration need not be a mandatory one is consistent with the High Court’s approach in Petar (referring to the consideration by the Court there of the argument that the primary judge failed to consider a “material consideration”, where the Chief Commissioner says the majority at [157]-[158] proceeded on the basis that materiality was the relevant requirement). Third, the Chief Commissioner submits that the principles for appellate review of judicial discretion and judicial review of administrative action have developed as separate streams. The Chief Commissioner says that although there is similarity between those streams it does not follow that identical principles apply in each case (referring to SZVFW at [87] and Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; [2011] FCAFC 54 at [51] (Coal & Allied Mining Services)).

409. Uber, in its supplementary submissions, raises a doubt as to whether there is any difference at the level of principle between a mandatory relevant (or irrelevant) consideration in the Peko-Wallsend sense (at 39-40) and a “material consideration” (or “extraneous or irrelevant” matter) in a House v The King sense, especially where the discretion is conferred by statute. It says that if there is such a difference then the Peko-Wallsend approach is applicable in the present case. Uber says that Elanor does not stand as contrary authority, as the point was not argued in that case.

410. Uber argues that once it is accepted that different judicial discretions involve different degrees of freedom to determine which factors are to be considered in the exercise of the discretion, there is no difficulty in concluding that the degree of decisional freedom on the re-exercise by the Court of the s 25 power is the same as when exercised by the Chief Commissioner.

411. Uber says that none of the sentencing cases referred to by the Chief Commissioner in his supplementary submissions contains a holding, as opposed to obiter, that a material consideration in the House v The King sense is something less than a Peko-Wallsend mandatory consideration. It says that, as the Chief Commissioner acknowledges, there are cases that treat the concept of material considerations as akin to that of mandatory considerations. Uber further refers in this context to the decision of the Victorian Court of Appeal in Rajendran v Tonkin (2004) 9 VR 414; [2004] VSCA 43 (Rajendran v Tonkin), involving an appeal from orders made under s 168(1) of the Heritage Act1995 (Vic) to remedy certain contraventions. Uber notes that Morris AJA, speaking for the Court, held that the discretion to make an order “to remedy or restrain the contravention” was a wide one and, having had regard to this and the purposes of the relevant legislation, said that “any contention that the trial judge was bound to consider a particular matter immediately faces a very significant hurdle” (at [17]). Uber notes that Morris AJA, referring to the discussion in Peko-Wallsend regarding relevant considerations, said that although there may be some differences between a judicial and an administrative discretion “all these principles are equally applicable to the discretion contained in s 168” (at [20]-[23]).

412. In reply submissions on this issue, the Chief Commissioner accepts that he and the primary judge had the same “decisional freedom” when exercising the s 25 discretion. However, as to what constitutes appellable error in the exercise of that discretion, the Chief Commissioner submits that there is no conceptual difficulty in characterising a failure to consider a material (but not mandatory) factor as an error, in the sense that the primary judge should have considered it because it was logically relevant and probative even if not mandated by the statute. The Chief Commissioner submits that the decision in Rajendranv Tonkin is not determinative, arguing that it is inconsistent with what was said in SZVFW at [86]-[87] and Coal & Allied Mining Services at [48]-[51] and conflicts with Prakash v Health Care Complaints Commission [2006] NSWCA 153 at [88], where Basten JA said in relation to House v The King error, that “a material consideration may involve any matter having potential relevance to the exercise being undertaken and may not be limited to legally mandatory considerations” (see also Santow JA at [64]-[71]).

413. In our view, describing the power as exercised by the Court below as judicial or administrative does little to advance debate. There was no dispute that the nature of the power was such that in this Court House v The King principles apply in exercise of this Court’s jurisdiction to undertake an appeal by way of rehearing with respect to an exercise of the power. The dispute centres on what is meant by the reference in that classical case to the court below failing to “take into account some material consideration” – in particular, as regards exercise of a statutory power, whether that notion is limited to failing to take into account a mandatory consideration that the court was legally obliged to consider, in the sense explained in cases such as Peko-Wallsend.

414. It is somewhat surprising that the issue has not been resolved in clear terms in the 90 odd years since House v The King was decided. Authorities have been cited by the parties pointing in different directions, but it is not apparent that any of those authorities have had to resolve it following argument directed to the issue. That a matter is sufficiently material that a court was obliged to consider it raises the question of what it is, beyond the nature of the power being exercised, that gives the consideration such a necessitous character. Similarly, the reference in House v The King to the court below being guided by “extraneous or irrelevant matters” requires some elucidation in any particular case of why it is that the matter considered was impermissible.

415. However, in a case replete with legal issues, we do not consider it necessary to resolve the issue here. As shall be seen, we conclude that the Chief Commissioner is not required to establish House v The King error in the circumstances of the decision on the point, and in any event the remitter decision of the primary judge was affected by House v The King error. That being so, it falls to this Court to re-exercise the discretionary power in s 25 of the Taxation Administration Act.

The primary judge’s decision and the need to re-exercise the discretion

416. In exercising the discretion under s 25 of the Taxation Administration Act at [186], the primary judge stated that he had had regard to all of the parties’ submissions but would not restate them. The primary judge (having referred to what was said in Incise at [62]), simply proceeded to list the factors that led him to exercise the discretion to remit premium interest, as follows:

(1)    these proceedings involve complex and difficult issues and none of the positions taken by Uber (except perhaps its position on the calculation of the 90-day exclusion) is unreasonable or unarguable;

(2)    viewed realistically, these proceedings are a large commercial dispute;

(3)    Uber and the Chief Commissioner have entered into a payment plan which Uber has complied with;

(4)    Uber has paid all principal tax which is not in dispute;

(5)    the Chief Commissioner (correctly, but late, in my view) made concessions which require the Assessments to be varied downwards, even if Uber had otherwise lost;

(6)    there is no suggestion that Uber has not provided all relevant information to the Chief Commissioner or that Uber has not cooperated;

(7)    the Chief Commissioner has significantly changed positions which reflect that the basis upon which he made the Assessments (even if they might otherwise ultimately stand) was wrong; and

(8)    I do not consider that the circumstances reveal any wilful default on the part of Uber.

417. His Honour said at [186] that “[b]ecause Uber has succeeded with respect to the entirety of the challenged Assessments, no interest is payable”, but he nevertheless concluded that “if otherwise payable” he would remit the entirety of the premium component of interest” (as noted above at [386], in fact some amounts paid to drivers remained taxable under the orders made below). His Honour made an order that Uber “is not liable to premium interest”.

418. One of the matters that influenced his Honour’s decision was the reasonableness and arguability of the positions taken by Uber. However, the landscape has now changed significantly in light of various different conclusions we have reached. As noted, his Honour considered the issue on the basis that no interest was payable. Because we would uphold the appeal and dismiss the cross-appeal, there is now a substantial amount of premium interest at stake. The factual landscape has changed in a very material way, such that his Honour’s theoretical exercise of discretion as to whether premium interest should be remitted in full – in circumstances where he considered the need for the discretion to be exercised did not actually arise – is no longer apposite. On that view it is not necessary for the Chief Commissioner to establish House v The King error, because it is necessary to exercise the discretion in light of the materially different circumstances in which the issue falls to be considered in light of our determination of the issues above. That is so even recognising that his Honour made an order addressing the issue. The matter might also be expressed in House v The King terms as his Honour having mistaken the facts.

419. In any event, at least one of the House v The King errors asserted by the Chief Commissioner is made out. The Chief Commissioner argued that the primary judge acted on an incorrect principle by reversing the onus of proof in relation to the issue of wilful default. The primary judge stated that “I do not consider that the circumstances reveal any wilful default on the part of Uber” ([186(8)]). The Chief Commissioner emphasises that, on an application for review, the applicant (here, Uber) bears the onus of proving its case. The Chief Commissioner says that it was therefore not for him to adduce evidence to show that there was a wilful default on the part of Uber; rather, Uber bore the onus of proving that it was not in wilful default of its tax obligations. The Chief Commissioner contends that the statement by the primary judge at [186(8)] should not be understood as being a positive finding that there was no wilful default, as the primary judge did not otherwise refer to the underlying facts which may bear on that finding (such as obtaining legal advice).

420. Uber sought to contextualise the statement, noting the reference by the primary judge at [186] to Incise at [62], and the fact that the first three of the four “criteria” referred to in Incise at [62] were ultimately conceded by the Chief Commissioner. Uber argued that a fair reading of [186(8)] is that the primary judge found that there was no wilful default on the part of Uber in light of the previous facts, including the complexity and difficulty of the issues involved. Uber says that this finding does not reveal any error of principle.

421. Uber says that wilful default requires “consciousness of the breach or reckless indifference to whether it will be a breach or not” (Golden Age at [108]), and Uber contends that, where a taxpayer has promptly paid the tax once assessed to it (or entered into an agreed payment plan and so deferred the time for payment), there can be no wilful default in paying that assessed tax on time.

417. In reply, the Chief Commissioner argues that the matters listed at [186(1)-(7)] have no apparent bearing on whether Uber was conscious, or recklessly indifferent, as to any noncompliance with its tax obligations. In particular, the Chief Commissioner says that the complexity of the proceedings says nothing about whether Uber committed a wilful default unless Uber led evidence of what Uber did in response to that complexity. The Chief Commissioner argues that this points against reading [186(8)] as a positive finding that there was no wilful default. The Chief Commissioner says that Uber’s submissions overlook that the relevant question is whether Uber committed a wilful default in not paying its tax when it fell due (that is each month during the financial years 2015 to 2020 inclusive), not when an assessment was issued in 2021.

418. In our opinion, the better view is that the reliance by the primary judge on the factor at [186(8)] as to wilful default reveals an error of principle (and thus House v The King error) as contended by the Chief Commissioner. Uber bore the onus of establishing the facts supporting its claim that there was no wilful default by it in not paying its tax when it fell due. We accept the Chief Commissioner’s submission that the matters set out at [186(1)-(7)] do not bear upon whether Uber was conscious of or recklessly indifferent to any noncompliance with its tax obligations. For example, the fact that Uber entered into and complied with the payment plan once the assessments were issued says nothing about whether there was wilful default by it at an earlier stage. Nor does the complexity or difficulty of the issues raised, or the positions later taken by the Chief Commissioner, lead to the inference that it was not in wilful default.

419. Thus we conclude that in this respect the primary judge erred in the House v The King sense in exercising the power to remit the premium interest. It is not necessary to address the other errors asserted by the Chief Commissioner. Ground 5 of the Chief Commissioner’s appeal should thus be upheld. It falls to this Court to re-exercise the discretion.

Re-exercise of discretion

425. The Chief Commissioner submits that the balance of the premium interest (taking into account that he has already agreed to remit half of the premium interest component up until the date of the assessments) should not be remitted. The Chief Commissioner argues this on the basis that Uber has failed to discharge its onus; that Uber has not demonstrated that it did not commit a wilful default by not paying tax on time; nor has it shown that it exercised reasonable care to comply with the taxation law. The Chief Commissioner emphasises that Uber led no evidence as to the steps it took to meet or understand its taxation obligations.

426. The Chief Commissioner submits that in the absence of evidence that Uber obtained legal advice on its taxation obligations or as to the substance of that advice or what reasonable steps were taken to comply with its tax obligations, the Court cannot be satisfied that Uber’s tax default was not caused by wilful default, or that it took reasonable care. Thus, the Chief Commissioner submits that the Court cannot be satisfied that Uber took reasonable care to avoid a tax default, or that it was not reckless as to compliance with its tax obligations. The Commissioner says that a purpose of premium interest is to punish culpable conduct on the part of the taxpayer and submits that, without knowing the details of the advice given to Uber, it is impossible for the Court to conclude whether the tax default was caused by culpable conduct on the part of Uber, or a proper reliance on legal advice which turned out to be mistaken.

427. Further, the Chief Commissioner notes that the Court has a discretion, if it considers premium interest should be remitted, as to what portion of interest to remit. As already noted, the Chief Commissioner has already agreed to remit 50% of the premium and market components of interest up to the time of the assessments. The Chief Commissioner emphasises that the purpose of the market component of interest is to compensate the Chief Commissioner for not having the tax on time, and that only exceptional circumstances would justify its remission. Again, it is noted that Uber has already received the benefit of half of the market rate of interest being remitted. The Chief Commissioner says that this should be taken into account in the exercise of the Court’s discretion as to whether the balance of the premium component should be remitted. In all those circumstances, it is submitted that no further remission of premium interest is warranted.

428. Uber made little argument directed to how the discretion should be re-exercised if it came to that. However, we will proceed on the basis that Uber implicitly asserted that the factors identified by the primary judge at [186] sufficed to establish that we should reach the same view as that adopted by his Honour. Uber did argue that waiver of privilege in legal advice is not the only way to establish reasonable care. Uber refers to an email sent on 18 August 2020 from the Principal Compliance Officer at Revenue NSW to Uber’s solicitor, referring to a submission that had been made in relation to the interest and penalty tax to be imposed on the “upcoming” assessments for Uber. In that email, it was said that, after careful consideration, “they” had agreed that Uber took reasonable care to comply with its payroll tax obligations. We note that it is not clear to what submissions the email referred. Uber submits that the primary judge’s findings at [186] (including that the issues are complex and that the Chief Commissioner had significantly changed positions such that the basis on which he made the assessments was wrong) are themselves a reflection of reasonable care having been taken by Uber. We note that the logic of that proposition is not immediately apparent, particularly when there was no evidence as to the steps taken in relation to reasonable care to ensure compliance with the tax obligations.

429. We take into account in Uber’s favour that it has paid all principal tax not in dispute, and that there is no suggestion it has not been cooperative in providing information in a timely fashion. We note that it has agreed a payment plan with respect to other amounts assessed as owing to the Chief Commissioner, although this factor has limited weight as it still involves late payment of assessed amounts.

430. We note that the Chief Commissioner made concessions which required the assessments to be revised downwards (as his Honour noted at [186(5)]), but these were relatively limited, and interest will only apply to those amounts for which Uber is assessed to be liable. We respectfully consider that the primary judge overstated the position in concluding that the Chief Commissioner “has significantly changed positions which reflect that the basis upon which he made the Assessments (even if they might otherwise ultimately stand) was wrong” ([186(7)]). Such changes as occurred were not major, and it is unsurprising that the Chief Commissioner’s position might evolve somewhat in a large case raising complex issues.

431. We accept that the proceedings involve complex and difficult issues and that the positions taken by Uber were all arguable ([186(1)]). Beyond that, we do not consider that the fact that “these proceedings are a large commercial dispute” ([186(2)]) has any particular significance as regards exercising the discretion in Uber’s favour. If anything, the facts that large amounts were involved and that the taxpayer is a significant commercial enterprise reinforce the need for a deterrent to the making of a business decision not to pay the tax assessed (see above at [392]-[393]).

432. That point is connected to a further important factor. We are not persuaded that there was no wilful default by the taxpayer in not paying tax on time, nor are we persuaded that Uber took reasonable care to comply with its tax obligations, or that it acted reasonably in all the circumstances.

433. Uber provided no evidence as to whether it had received legal advice on its payroll tax obligations or what any such advice was. It would be surprising in the circumstances if Uber had not given careful consideration to its obligations to payroll tax. It certainly should have done so.

434. We do not accept the Chief Commissioner’s apparent contention that a taxpayer is required to waive legal professional privilege in advice that may have been received as to its tax obligations. There may be ways in which reasonable care might be established without the need to put into evidence the content of that legal advice (as Uber itself contends). However, Uber pointed to no other significant evidence indicating that it had done so. We do not accept that the initial response from Revenue NSW’s Principal Compliance Officer amounts to some kind of binding admission that reasonable care was taken. Nor does the fact that the Chief Commissioner may have taken different positions on different issues establish that prior thereto Uber took reasonable care.

435. We take into account that Uber has already received the benefit of half of the market rate of interest being remitted up to the time of the assessments.

436. In light of these factors and all the circumstances, we do not consider that there should be a remission of premium interest beyond that which has already been agreed by the Chief Commissioner.

Orders

437. The form of orders sought by the Chief Commissioner in his Notice of Appeal reflects the fact that the parties’ agreement on the application of the exemption in s 32(2)(c) means that the assessments will need to be varied in any event ([155]). The Chief Commissioner therefore seeks that Orders 1(c) and (f) be set aside, as those orders reflect the findings made by the primary judge which are challenged by the Chief Commissioner’s appeal. The Chief Commissioner seeks an order that Uber pay the Chief Commissioner’s costs of this appeal and of the proceedings below.

438. We see no reason not to make the costs orders sought on the basis of the general rule that costs follow the event.

439. However, in the event that some revision to the orders proposed by the Chief Commissioner in the Notice of Appeal is necessary in light of the above reasons, there should be liberty to apply and the Court will deal with the issue on the papers.

440. For the above reasons, the orders of the Court will be as follows:

1. Appeal allowed.

2. Cross-Appeal dismissed.

3. Order 2 made by the Court below on 6 September 2024 be set aside.

4. Orders 1(c) and (f) made by the Court below on 20 September 2024 be set aside.

5. Order 1(e) made by the Court below on 20 September 2024 be varied so that it reads “except as set out in Orders 1(a) to (d) above, is liable to payroll tax on amounts paid to drivers or partners (as each of those terms is defined in the primary judgment)”.

6. Otherwise vary Order 1 made on 20 September 2024 to add a new order (c) and a new order (f) as follows:

(c)   is not liable to tax under that Act on payments made to drivers or partners for performing the service of referring (as that term is defined in the Court’s reasons for decision), other than such payments made to the drivers or partners:

i.   referred to in sub-paragraph 16(a) in the affidavit of Kiril Mitchev made 9 July 2024 (Mitchev Affidavit), for FY2015, FY2016 and FY2017; and

ii.   referred to in sub-paragraph 16(b) of the Mitchev Affidavit, for FY2018.

(f)   the plaintiff is liable to interest in respect of its tax default calculated by applying the premium component in addition to the market rate component, less any amounts which the defendant agreed to remit following issue of the assessments.

7. The costs order made by the Court below on 22 October 2024 be set aside.

8. The respondent pay the appellant’s costs of the proceedings at first instance and of the appeal and cross-appeal.

9. Liberty to file submissions within 7 days if any revision to the above orders is sought to reflect these reasons (with any submissions in response to be filed within a further 7 days), those submissions to be dealt with on the papers.

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Amendments

13 August 2025 - Order 5 amended by deleting '(b) and' and replacing with the word "to"

Order 6 amended by adding the words '(c) and a new order' and to also include new order (c)

[5(8)] amended by deleting the words 'did not' and replacing with the word 'does'

[52] amended by deleting the word 'Uber' and replacing with the word "drivers'

19 August 2025 - Headnote - 'April' amended to 'August'

Decision last updated: 19 August 2025