Chief Commissioner of State Revenue v Uber Australia Pty Ltd

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.

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.

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.

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.

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:

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.

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.

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.

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.

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”.

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.

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).

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:

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”.

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:

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

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.

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.

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):

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

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))).

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).

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.

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 21st 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)).

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]).

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]).

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).

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.

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)).

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.

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)).

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.

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).

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).

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]).

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).

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]).

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.

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”.

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

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.

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).

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]).

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).

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.

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.

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.

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”).

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.

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]).

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)).

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.

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.

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.

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).

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.

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.

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).

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.

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.

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).

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.

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.

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.

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.

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 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.

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.

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 Chan v 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.

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.

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.

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.

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.

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.

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.)

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.)

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.)

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.

Thus, the Chief Commissioner submits that the decision in Sara Lee is not binding on the construction of the Payroll Tax Act and that any divergence between the approach taken by the High Court in Sara Lee, or this Court in Smith’s Snackfood or Downer Appeal, is not required to be resolved by simply following the High Court. Rather, the Chief Commissioner argues that this Court should follow its previous decisions concerning the meaning of the phrase “under which” in the context of the Payroll Tax Act.

If the Smith’s Snackfood construction is accepted, then the Chief Commissioner submits that driving was a service provided to Uber “under” the driver contracts for an additional reason, namely that the driver contracts impose obligations on drivers when they drive riders who are using the Rider App ([118]), including the requirement to exercise due care and skill when transporting riders, to transport riders directly to their destination, and only to permit the rider and persons authorised by the rider in the vehicle ([53(4)], [53(13)], [53(14)]). The Chief Commissioner submits that, by these terms, the drivers provided a service “under” the driver contracts within the meaning of Smith’s Snackfood; namely, the service provided by the drivers was provided “in accordance with” or “pursuant to” the driver contracts, because when performing that service the driver had to comply with the terms of the driver contracts.

It is convenient to begin with the question of construction, and in particular whether it requires the application of the Sara Lee approach.

Section 32(1)(b) refers to “a contract under which a person … has supplied to [the person] … services”. The word “under” here describes a relationship between two subject-matters: a contract and a supply of services. In our opinion, in the context of Div 7, the relationship between the driver contracts and the supply of the driving service meets that description. No prior decision requires the contrary conclusion.

As Bathurst CJ said (Macfarlan and Meagher JJA agreeing) in Downer Appeal at [122], the word “under” takes its meaning from the context in which it occurs. The varying degrees of precision and closeness in the description of the required relationship when the word is used in different contexts may be illustrated by a few examples.

Section 76(ii) of the Constitution provides that the Parliament may make laws conferring original jurisdiction on the High Court “in any matter … arising under any laws made by the Parliament”. The width of those words is well-known. They do not require that the federal law be the source of the right or obligation on which the plaintiff founds its claim. A matter arises “under” federal law where the source of a defence to the claim is a law of the Commonwealth (Felton v Mulligan (1971) 124 CLR 367 at 408; [1971] HCA 39), or where the claim is for breach of contract, if the contract is in respect of a right which is a creature of federal law (LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581; [1983] HCA 31 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ); Edwards v Santos Ltd (2011) 242 CLR 421; [2011] HCA 8, at [1] and [45] (Heydon J, French CJ, Gummow, Crennan, Kiefel and Bell JJ agreeing)).

By s 4(a) of the Judicial Review Act 1991 (Qld), that Act applies to “a decision of an administrative character made … under an enactment” (a formula borrowed from the Administrative Decisions (Judicial Review) Act 1977 (Cth)). It was held by Gummow, Callinan and Heydon JJ in Griffith University v Tang (2005) 221 CLR 99; [2005] HCA 7 at [89] that the determination of whether a decision is made “under” an enactment within the meaning of s 4 involves two criteria: that the decision be expressly or impliedly required or authorised by the enactment, and that the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense derive from the enactment; see also Fuller v Lawrence [2024] HCA 45; (2024) 99 ALJR 103 at [11]-[16].

The words “any dispute under this deed” in an arbitration clause contained in a settlement deed fell to be construed in Rinehart v Welker (2012) 95 NSWLR 221; [2012] NSWCA 95. Bathurst CJ held at [125] (Young JA agreeing at [218]) that “if the outcome of the dispute was governed or controlled by the Settlement Deed, then there would be a dispute under the Settlement Deed irrespective of whether the claimant was invoking or enforcing some right created by the Settlement Deed”. His Honour said that if the settlement deed had the effect of barring the claims, it would follow that the dispute in question was governed or controlled by the settlement deed: at [135]. In Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13, the High Court adopted a purposive construction of the same clause to conclude that claims as to the validity of the settlement deed itself were also disputes “under” the deed: at [43]-[48] (Kiefel CJ, Gageler, Nettle and Gordon JJ), [83] (Edelman J).

In the context of a royalty agreement, in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 the words “persons or corporations deriving title through or under” the company were construed broadly, so as not to be limited to cases of succession, assignment or conveyance. Instead, French CJ, Nettle and Gordon JJ considered those words sufficiently broad to cover a close practical or causal connection: at [74]-[81]. Kiefel and Keane JJ held that those words referred to a person’s title to win iron ore from land where the company had deployed its own title in order to facilitate the person’s acquisition of such a title: at [114] (Bell and Gageler JJ agreeing at [123]).

Examples may readily be multiplied. What is plain is that the nature and closeness of the required relationship will generally depend on the particular context in which the word “under” is used, including the purpose for which the relationship in issue is being identified. Attempts to import a construction reached in one context into a different context are unlikely to be of more than illustrative assistance.

Here, the context is Pt 3, Div 7 of the Payroll Tax Act, at least one purpose of which is to bring within the payroll tax regime amounts paid for or in relation to the performance of work by persons who, as Minister Perrottet said, “provide services on a similar basis to ordinary employees but who are regarded at law as independent contractors” (which is not to say that purpose exhausts the objects of Div 7 – see above at [19]-[25]).

That is very different from the context in Sara Lee, on which Uber bases its argument. The issue in that case was the identification of the year of income in which a capital gain made by Sara Lee was taxable by reason of the provisions of the Income Tax Assessment Act. The gain arose on the disposal of assets comprising a business. The disposal was part of a wider transaction involving two foreign corporations and their subsidiaries in various countries. As to the time of disposal of an asset, s 160U(3) and (4) respectively distinguished between assets “disposed of under a contract” and those “disposed of otherwise than under a contract”. In the former case, “the time of … disposal shall be taken to have been the time of the making of the contract”. In the latter case, “the time of … disposal shall be taken to have been the time when the change in the ownership of the asset … occurred”.

As Gleeson CJ, Gaudron, McHugh and Hayne JJ said at [43]: “The transfer of ownership of the assets in question was, as is usual in such commonplace disposals as conveyances of real estate, effected pursuant to a contractual obligation which the respondent had previously undertaken”. Unsurprisingly, it was held that subs (3), not subs (4), applied. But the purchase and sale agreement had been amended. Given that s 160U(3) “assumes that, in a case to which it applies, there is a single time of disposal” (at [45]), it was necessary to identify the contract under which the assets had been disposed of. The main issue was thus not whether or not the assets had been disposed of under a contract; it was which contract.

That was the context in which their Honours said:

In the context of a capital gain arising on the disposal of an asset, the purpose of s 160U was to identify the time at which the disposal was taken to have occurred. Given that that was the purpose for which the question whether the asset was “disposed of under a contract” was being asked, it is not surprising that the answer lay in the source of the obligation to effect the disposal. The effect of the construction was to deem the time of disposal to be the time at which the taxpayer came under that obligation (i.e., the time of making the contract).

Those considerations are far removed from the concerns to which s 32(1) of the Payroll Tax Act is directed. The interpretation given in Sara Lee to the words “asset … disposed of under a contract” in the Income Tax Assessment Act does not control the interpretation of the words “a contract under which a person … has supplied to [it] … services” in s 32(1)(b). The text, the context and the purpose are all relevantly different.

It should also be noted that the sentence quoted above from [42] of Sara Lee was followed by a footnote: “cf Chan v Cresdon Pty Ltd (1989) 168 CLR 242 at 249, per Mason CJ, Brennan, Deane and McHugh JJ”. The context in Chan v Cresdon was cl 23.01 of a lease which provided that the appellants guaranteed the “due and punctual performance by [the lessee] of the obligations on its part to be performed under this lease”. The particular sentence in Chan v Cresdon to which the joint judgment in Sara Lee appears to have been referring is as follows: “The word ‘under’, in the context in which it appears, refers to an obligation created by, in accordance with, pursuant to or under the authority of, the lease”. There was thus a straightforward textual reason why the joint judgment in Chan v Cresdon referred to an “obligation”: that word appeared in the guarantee itself. What is more significant for present purposes is that the language used to describe the nature and closeness of the required relationship extended beyond obligations “created by” the lease to include those performed “in accordance with, pursuant to or under the authority of, the lease”.

The decision of this Court in Downer Appeal also does not avail Uber. It was a decision concerned with the words “services … that are ancillary to the supply of goods under the contract” in s 32(2)(a) of the Payroll Tax Act, not the words of s 32(1)(b). As Bathurst CJ pointed out at [120], the question whether the supply in issue was “under” the relevant subcontract was not the subject of any ground of appeal; was the subject of only “some debate … at the hearing”; and was dealt with “briefly” in the judgment. The Chief Justice referred at [123] to Smith’s Snackfood at [79] without criticism. His Honour then referred to Sara Lee, saying:

Adopting that approach, Bathurst CJ noted at [124] that the subcontractor had a contractual obligation to deliver the equipment, and that the supply occurred in fulfilment of that contractual obligation to Downer. His Honour held that the supply “thus occurred ‘under the contract’”. In circumstances where the Sara Lee test was satisfied, it was not necessary for Bathurst CJ to consider whether that test represented the outer limit of the relationships caught by the word “under” in s 32(2)(a), still less in s 32(1)(a); and his Honour did not suggest otherwise. That is consistent with Bathurst CJ’s reference to Inghams. That was a contract case, where Meagher JA said at [137] that the description of certain amounts “as ‘payable and/or owed’ ‘under’ the agreement directs attention to the source of the underlying payment obligation and whether the agreement governs or controls its existence” (emphasis supplied). The latter part of that formulation goes beyond the Sara Lee test.

In the result, there is no prior decision binding this Court, or requiring reconsideration by this Court, which stands as authority for the proposition on which Uber’s argument turns: that for the purposes of s 32(1)(b), the necessary relationship between the contract and the supply of services is established only where the contract is the source of an obligation, or a right, to perform the services.

Uber’s proposition should be rejected on its merits. In particular, the fact that (at least before a given trip commences) the driver has no contractual obligation to Uber to perform the driving service is not to the point. The statutory question is not whether the driver has a legal obligation (or a legal right) to perform the driving service. It is whether, when the driver performs the driving service, it is a service which Uber has supplied to it under the contract with the driver.

The extended definition of “contract” in s 31 as including arrangements or undertakings, whether formal or informal and whether express or implied, cannot be reconciled with a construction of s 32(1)(b) requiring the existence of a contractual right or obligation to perform the services. The extended definition of “contract” also supports a construction of “under” that embraces the language in Smith’s Snackfood: “in accordance with”, “pursuant to” or “required by”. It is difficult to understand what could be meant by an informal arrangement under which services are supplied if not that the services are supplied in accordance with the arrangement.

The purpose of Div 7 does not provide any reason to construe the word “under” as capturing only services which the contract confers the legal right, or imposes a legal obligation, to perform. To the contrary, the purpose of Div 7 favours a significantly wider construction. One purpose for which the question whether the service is supplied under the contract is asked is to determine whether the person supplying the service does so on a similar basis to ordinary employees. Casual employees are ordinary employees, but at common law they need not have a contractual right, nor a contractual obligation, to work at any particular time, or at all: WorkPac Pty Ltd v Rossato (2021) 271 CLR 456; [2021] HCA 23 at [32]-[33], [57], [88] (Kiefel CJ, Keane, Gordon, Edelman, Steward and Gleeson JJ).

A significant aspect of the basis on which ordinary employees (including casual employees) supply their services is that doing so earns them the right, conferred by their contract of employment, to be paid. That is a strong reason for construing the words “a contract under which …” in s 32(1) to include contracts which confer a right to be paid for supplying services when they are supplied, even if the contract does not confer a right or impose an obligation to supply them. (That is not to say that for the purposes of s 32(1) a service is supplied “under” a contract only where it is shown that some part of the remuneration is referable to supplying that service.)

The point may be illustrated as follows: assume a kitchen hand working in a restaurant is a casual employee. The employment contract imposes no obligation, and confers no right, to work any particular shift. But when the kitchen hand does work a shift, there is no doubt that the work is performed (that is, that the services are supplied) “under” the employee’s contract of employment. That is so for at least two reasons. First, doing that work engages the employee’s contractual right to be paid. Secondly, the contract may govern or control aspects of the kitchen hand’s performance of the work. Why should the same not be true where the contract is not one of employment? (As will shortly be seen, both reasons apply in a similar way to drivers performing the driving service.)

It follows, in our opinion, from the text, context and purpose of Div 7 that the words “a contract under which …” in s 32(1) of the Payroll Tax Act extend to a “contract” (as defined in s 31):

Given the extended definition of “contract” as extending to informal arrangements, there is also much to be said for a construction of the words “a contract under which …” in s 32(1) as extending to a contract in accordance with which, or pursuant to which, the services are supplied (using the language of Smith’s Snackfood), or which is the source of the practical opportunity, or the practical requirement, to supply the services. However, as French CJ explained in R v Khazaal (2012) 246 CLR 601; [2012] HCA 26 (Khazaal):

It is unnecessary for present purposes to go further than the construction identified at [104] above (that is not to suggest that we should be taken to disagree with that aspect of Smith’s Snackfood; it is simply not necessary to consider it). Applying that construction (and in particular pars (2) and (3)) to the facts here, the driver contracts are clearly contracts under which Uber has the driving service supplied to it. Drivers have no reason to perform the driving service except to be paid, and they perform that service in the context of the driver contracts.

Specifically as to the driver’s right to be paid for supplying the driving service, as between Uber and the driver, the driver contracts provide that the driver “can charge a fare to [riders] for each instance of completed Transportation Services that [the driver] provide[s] to a [rider] that are obtained via the Uber Services”. That is defined as the “Fare”. As noted above, the driver authorises Uber to collect the Fare from the rider. Uber “agrees to remit, or cause to be remitted, to [the driver] on at least a weekly basis, … the Fare less the applicable Service Fee …”. The driver contracts thus confer on drivers the legal right to be paid the driver’s share of the Fare each time the driver performs the driving service.

The driver contracts also govern or control the driver’s performance of the driving service. For example, they include the following provisions with which the driver is required to comply when performing the driving service:

For the reasons above, the driver contracts are “contract[s] under which a person … has supplied to [the person] … services” within the meaning of s 32(1)(b).

In light of the conclusion reached above, it is not strictly necessary to consider the Chief Commissioner’s primary contention, namely, that the Sara Lee test was satisfied in circumstances where the source of the opportunity to perform the driving service was the right under the driver contracts to use the Driver App.

In conclusion as to Issue 1, lest it be suggested that in dealing with the sub-issues sequentially, we have made the same claimed error for which the primary judge is criticised (of construing the several parts of the compound phrase separately or failing to have regard to context and purpose), we have arrived at the conclusion that the driving service was supplied to Uber (in the sense that it was a service provided to riders from which Uber derived its service fees and on which its business financial model depends – as Uber readily accepts, see AT 22) and that it was supplied “under” the driver contracts (for the reasons given above), having considered the question of supply of services to Uber under the driver contracts in a composite way.

Uber has not made good Ground 1 of its Amended Notice of Cross-Appeal in relation to the service of driving.

The second of the three activities performed by drivers that were relied on by the Chief Commissioner to support a finding that the driver contracts were relevant contracts for the purpose of s 32(1)(b) of the Payroll Tax Act was that of providing ratings of riders, that is, “giving feedback about riders (by rating them – with or without additional comments) at the end of the trip” ([73]).

The primary judge found that the rating service was sufficiently connected to the driving to make that service one that was “in relation to” work ([103]). The primary judge was satisfied that the drivers were, in practical terms, forced to rate the rider at the end of a journey because the Driver App required the driver to rate the rider before another trip could be started, accepting the Chief Commissioner’s submission in that regard ([116(2)]).

Uber notes that the primary judge did not expressly find that drivers supplied the service of rating to Uber “under” the driver contracts and that, while the primary judge found that the driver contracts recorded “that the driver will be asked or prompted to provide a rating for the rider” ([53(15)]), there was no finding that the driver contracts obliged drivers to rate riders or provided drivers with a “right” to do so. However, Uber accepts that such a finding is implicit in the primary judge’s holding that s 32(2)(a) applied because of the service of rating ([128], [141]).

Uber contends that rating was not a service supplied to it “under” the driver contracts (and says that, if it was, it was de minimis – see Issue 3).

Uber notes that the form of driver contracts that were in force for the largest portion of the relevant period (the December 2017 driver contracts) expressly stated that there was “no obligation” on drivers to provide ratings and “nor is there any consequence for not providing a rating” (see cl 6 of the December 2017 driver contracts). Uber contends that the relevant clauses in those driver contracts did not create a right for drivers to provide ratings, in the sense that Uber would be in breach of the contracts if it removed the ratings function from the Driver App. Rather, Uber argues that the clauses in question merely regulated to an extent how drivers were to conduct themselves if they chose to provide a rating (in particular, that any ratings were to be provided “in good faith”) (see cll 5 and 6, respectively).

Uber points out that the earlier forms of driver contracts (which did not expressly state that rating was not mandatory), in force in the period from November 2015 up until the December 2017 version came into force, stated that it was acknowledged and agreed that after a trip, drivers would “be prompted by the Driver App to provide a rating of the [rider] and, optionally, to provide comments or feedback about the [rider]” (language, Uber says, that is not the language of obligation), and that drivers were (or partners were to instruct their drivers) to provide their “ratings and feedback in good faith” (see cll 2.5.1 and 2.6.1, respectively). As to the May 2014 driver contract, it is noted that this said nothing about drivers providing ratings and the July 2013 driver contract stated only that Uber would “request the [p]artner and/or the [d]river to comment on and to provide a score for the [rider] on the Driver App. Partner will and will [sic] procure that its [d]rivers will provide accurate and objective feedback that does not violate any applicable laws and regulations”.

Thus, Uber argues that, applying the Sara Lee test, rating was not a service supplied to it under the driver contracts.

Uber says that an additional reason why rating cannot be characterised as a service supplied to it under the driver contracts is that no part of any money paid to drivers can be seen as being remuneration for rating. Uber refers to Federal Commissioner of Taxation v Cooke (1978) 23 ALR 229 at 240; (1978) 9 ATR 310 (Cooke), where the phrase “services rendered” was held to require that the work in question was done “as consideration for reward offered in exchange for the work” and Uber argues that the concept of services being supplied in s 32(1)(b) of the Payroll Tax Act should also require that, under the putative relevant contract in question, the putative service supplied must constitute at least some portion of what is done to earn the consideration under the contract. Uber says that, as that was not the case, rating was not a service supplied under the driver contracts.

In reply submissions, Uber maintains its contention that, properly construed, the driver contracts prior to the December 2017 driver contracts did not oblige drivers to provide ratings but says that, even if the Chief Commissioner’s construction is preferred, that cannot assist him in relation to the period from December 2017 onwards when the driver contracts expressly made rating optional.

The Chief Commissioner maintains that rating was a service provided under the driver contracts for three reasons.

First, that a feature of the Driver App was that drivers were “practically” obliged to rate the riders after each trip (before they could use the Driver App to start another trip) ([116(2)]). In those circumstances, the Chief Commissioner submits that the obligation to rate the riders is a condition of using the software granted by the driver contracts and, accordingly, rating is a service provided “under” the driver contracts. The Chief Commissioner argues that it does not matter if that obligation arises from the operation of the Driver App, rather than from an express term of the driver contract (again noting the extended definition of “contract” in s 31 and citing Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 at 7-8; [1958] AC 450 (Newton)). (Uber in reply submissions says that Newton (at 7-8) does not assist the Chief Commissioner, pointing out that the case dealt with the avoidance of tax evasion measures. Uber says that Newton does not support the proposition that “contract” in the broader sense in the present case would include every function of the Driver App.)

Second, the Chief Commissioner submits that it is sufficient that the driver contracts regulated the manner in which drivers were to provide ratings (namely, that the ratings had to be provided in good faith), noting that Uber accepts that the driver contracts regulated the provision of ratings to this extent. (This submission turns on an acceptance that “under which” is satisfied if the service is provided in accordance with the relevant contract, as discussed in relation to Issue 1.)

Third, the Chief Commissioner submits that, when properly construed, the driver contracts in force from November 2015 to December 2017 required a driver to provide ratings, noting that only the December 2017 driver contracts expressly say that rating riders is optional. As to the statement in the November 2015 and subsequent driver contracts prior to 2017 that drivers “will be prompted by the Driver App to provide a rating of the User and, optionally, to provide comments or feedback about the User”, the Chief Commissioner says that the word “optionally” relates to the giving of comments or feedback not the rating service itself. The Chief Commissioner thus submits that the omission of the word “optionally” in relation to provision of a rating in contracts before the December 2017 driver contracts meant that there was a contractual obligation to rate. (Uber cavils with this proposition.)

As to Uber’s contention that rating cannot be characterised as a service supplied to it because no part of any money paid to drivers can be seen as remuneration for rating, the Chief Commissioner says that there is nothing in the Payroll Tax Act which imposes a requirement that a service be supplied if it constitutes some portion of what is done to earn the consideration under the contract and that such a requirement is contrary to the barbershop quartet example given in Thomas & Naaz. The Chief Commissioner argues that the fact that remuneration is dealt with separately by s 35 of the Payroll Tax Act suggests that there is no need to import a similar concept into s 32.

Insofar as Uber has relied on Cooke, the Chief Commissioner points out that Cooke was in a different statutory context (namely, the definition of the “assessable income of a taxpayer” as including compensation given to the taxpayer “in respect of … any employment of or services rendered by him”). The Chief Commissioner says that the concept of compensation or remuneration was therefore inherent in the statutory provision under consideration in Cooke, and that it is in that context that the meaning of “services rendered” arose for consideration (contrasting the position here in respect of s 32). (In reply submissions, Uber argues that the provision considered in Cooke had a similar context to Div 7, as it brought to tax amounts that have a particular nexus with “any employment of or services rendered by” the taxpayer. Uber submits that the Court there made it abundantly clear that it was construing the specific expression “services rendered” as involving something done for compensation and then, having so construed that expression, went on to consider the nexus (citing Cooke at 240).)

In oral submissions, Uber complained as to the finding by the primary judge that it was more likely than not that the drivers were obliged in a practical sense to rate riders ([116(2)]) (see AT 31.2-29). However, that finding was not challenged in the Amended Notice of Cross-Appeal. The evidence supports the conclusion that drivers were indeed practically obliged to rate riders (even if the December 2017 contracts state that rating is optional) in that the evidence was that at the end of a journey the Driver App required the driver to rate the rider before another trip could be started.

The 1 December 2017 version of the driver contract provided:

The November 2015 version of the driver contract made similar provision. The May 2014 driver contract conferred on the driver “the right to accept requests to perform on-demand transportation services … received by [the driver] via the Software”, which was defined as a “mobile application”, (i.e., the Driver App). The July 2013 driver contract provided that “Uber offers information and a tool to connect Customers seeking Driving Services to Drivers”, and that “Uber will provide information to the Driver via the Driver App”.

The driver contracts thus mandated that the means by which drivers were to obtain the benefit of the contract (by receiving and accepting rider requests) was through the Driver App. Each time a driver used the Driver App to receive requests from riders, the driver undoubtedly did so in the exercise of the rights conferred by the driver contracts, and therefore “under” those contracts.

The agreement mandating use of the Driver App to obtain the benefit of the contract was an agreement permitting the driver to use the Driver App such as it was from time to time, including any conditions on its use or functionality. For example, the Driver App might require, as a condition of access to the rider request functionality (and thus a condition of obtaining the benefit of the contract), that the driver enter a password, or sign in with two-factor authentication, or confirm particular information (such as a mobile telephone number for riders to call pending the driver’s arrival at the pickup point). The 1 December 2017 driver contract referred to Uber’s right to “deactivate or otherwise restrict [the driver] from accessing the identification and password key assigned to [the driver] by Uber (‘Driver ID’)”.

On the primary judge’s finding, 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. It is unnecessary to decide whether the driver had a contractual obligation to rate the previous rider, such that failure to do so would be a breach. It is not to the point that the driver may have been free to forego the benefit of the contract and stop using the Driver App to receive rider requests. It was not possible to obtain the main benefit of the contract except by using the contractually mandated means (the Driver App), which required the driver to rate the previous rider.

In those circumstances, supplying the service of rating the previous rider should be seen as a condition of exercising the driver’s contractual rights to obtain the benefit of the contract by receiving requests from riders through the contractually mandated means. Rating riders was a service necessarily provided to Uber in the exercise of the driver’s rights conferred by the driver contracts, and was therefore supplied under those contracts. It follows that the service of rating riders was supplied to Uber under the driver contracts.

The fact that the manner of rating is regulated by the driver contracts reinforces but is not necessary for that conclusion. The November 2015 and December 2017 contracts required the driver to provide ratings and feedback “in good faith”. That was a significant matter, designed to promote the integrity of the rating system. The contracts thus governed or controlled the supply of the rating service. That is a further, independent, reason for concluding that the service of rating riders was supplied to Uber under the driver contracts.

Whether or not a driver could be sued for failing to rate a rider is thus irrelevant. Nor is there a requirement, when determining whether services are supplied under the putative relevant contract, that the particular services be compensated for by a monetary payment under or in accordance with that contract. The barbershop quartet example suffices to meet that contention.

Thus, there was no error in the implicit finding that rating was a service supplied to Uber “under” the driver contracts and this aspect of Ground 1 of Uber’s Amended Notice of Cross-Appeal is not made good.

Ground 2(a) of Uber’s Amended Notice of Cross-Appeal challenges the rejection by the primary judge of Uber’s contention that any service of rating supplied by drivers to Uber was de minimis ([87]). The primary judge found that rating was not de minimis because it was of value to Uber as it contributed to the enhancement of safety (see at [75], [87]).

Uber relies in this regard on the de minimis principle (that the law does not concern itself with trifling matters), citing Commissioner of the Australian Federal Police v Hart (2018) 262 CLR 76; [2018] HCA 1 at [14], [92], [97], [103]; Federal Commissioner of Taxation v Faichney (1972) 129 CLR 38 at 46-47; [1972] HCA 67. Uber contends that there is no contextual indicator that s 32 of the Payroll Tax Act is not subject to this principle.

Uber says that any service of rating supplied to Uber was de minimis (and should be disregarded in determining whether the driver contracts were relevant contracts) because rating was of such an insignificant nature in the context of the driver contracts as a whole as to be trifling. Uber argues this on the basis that it says the process of rating took only a second or two and involved pressing one or two buttons on the driver’s phone.

Uber refers, by way of analogy, to the decision in Wood v Carwardine [1923] 2 KB 185 at 191-192 (Wood v Carwardine) where it was held that attendance by the landlord’s caretaker to deliver the post to tenants was so insubstantial and such a “slender” part of the caretaker’s duties as to be within the de minimis principle and disregarded it for the purpose of determining whether the delivery of post was an attendance on the tenant by the landlord. Wood v Carwardine arose in the context of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 (UK) (1920 Act) where it was held by McCardie J that trivial duties did not amount to attendance within the meaning of s 12(2)(i) of the 1920 Act. McCardie J held that the de minimis principle involved a question of substantiality, as the substance of the caretaker’s business was outside the delivery of letters, parcels and messages (which was said to form a trivial part of her duties).

Insofar as the primary judge determined that rating was not de minimis because it was of value to Uber (in contributing to the enhancement of safety), Uber submits that his Honour erred in asking, in effect, whether the function of rating as performed in the aggregate by all of the thousands of drivers was important to it. Uber says that the correct enquiry is whether, in characterising the particular driver contract between a driver and Uber (and, particularly, in the context of any service of driving supplied under the driver contract), the service of rating a rider at the end of a trip by pressing one or two buttons is so insubstantial that it does not properly affect the character of that contract for the purposes of s 32.

In reply submissions on the cross-appeal, Uber criticises the Chief Commissioner’s submissions on the de minimis issue (both in relation to rating and referring) insofar as they focus on the “value” to Uber of those activities. Uber emphasises that the statutory enquiry under s 32(1)(b) and s 32(2) is one of characterisation (cf Smith’s Snackfood at [76]) as to whether a driver contract is one under which services are supplied to Uber by the driver and, if so, what those services are. Uber says that the process of characterisation does not depend on assigning value or importance to various things that happen under the driver contract but, rather, on looking at what happens under the driver contract as a whole.

The Chief Commissioner cavils with Uber’s characterisation of rating involving only “pressing one or two buttons”, arguing that the process requires the driver to assess and evaluate the rider during the journey and to decide on the appropriate rating and that it is therefore more than simply pressing a few buttons on the driver’s phone.

Further, the Chief Commissioner notes that under s 32(1) of the Payroll Tax Act a contract is a “relevant contract” in relation to a particular financial year. Accordingly, the Chief Commissioner says that, when determining whether a service is de minimis such that s 32 is not engaged, it is necessary to consider the totality of the services provided in that year (referring to the approach by Richmond J in Loan Market at [271]). The Chief Commissioner says that, over a single financial year, a driver may undertake many trips and therefore provide ratings on many occasions and that it is necessary to consider the act of rating riders over an entire year.

Insofar as Uber draws a distinction between the value of ratings in the aggregate, rather than in the context of a single driver, the Chief Commissioner argues that this is a distinction without a difference. It is noted that the primary judge accepted (at [87]) the Chief Commissioner’s submission (summarised at [75]) that rating riders has “significant value to Uber because it contributes, amongst others, to the enhancement of safety” by reducing road safety incidents, interpersonal conflict and unreliable drivers. The Chief Commissioner submits that, although the primary judge did not expressly indicate whether that finding was made on an individual basis or in the aggregate, the reasoning applies in either case. The Chief Commissioner argues that a driver, by rating an individual rider after a particular trip, contributes to the corpus of feedback that Uber has about a particular rider, which permits Uber to maintain and improve the safety of its platform.

As can be seen from the above, the parties have thus approached the issue as to whether the rating service was so trifling in the context of the driver contracts as to invoke the de minimis principle from different perspectives: Uber, from the perspective of the time taken to rate the riders (said to be a matter of seconds, involving pressing one or two buttons on the phone); the Chief Commissioner, from the perspective of the value to Uber of the service (enhancing rider safety and hence, presumably, the “Rider value proposition”).

As to the process by which the service of rating occurs, there is an element of speculation (as Uber argues in its reply submissions) as to how a driver makes the relevant assessment and evaluation necessary to rate the driver during or at the end of the journey, though we accept that the driver might do more than push one or two buttons, given there is a comment function on the Driver App. We also accept that from the driver’s perspective, the process may well be seen as insubstantial in terms of time and effort compared with the service of driving itself. However, it cannot be disputed that the activity of rating must have been seen as of value to Uber (not least because it is a practical requirement by Uber for drivers to rate riders), particularly in light of the safety purpose of collecting such feedback about riders. We do not accept the submission that the primary judge erred in having regard to the significant value to Uber of the provision of rating. That must inform the substantiality of the obligation.

The Chief Commissioner has also argued that Uber’s submission that any service of rating was de minimis is inconsistent with its own documents, which the Chief Commissioner says are replete with references to the rating and referring activities. In particular, the Chief Commissioner notes that the rating feature was mentioned in Uber’s videos explaining how to use the Driver App. There is no little force to that submission. The point is reinforced by the unchallenged fact found by the primary judge that “the driver was, in practical terms, forced to rate riders because the Driver App required them to rate the [rider] before another trip could be started” (at [116(2)]). Thus in practice rating would invariably be done by drivers for all trips. That point illustrates both the frequency of the service being provided and its significance to Uber.

Accepting that the issue is one of characterisation of the relevant contract, the question is whether the driver contract is one “under which” the rating service was supplied to Uber. 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) does not mean that it is 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. Whether considered in the aggregate or by reference to individual trips, in light of the safety rationale for the rating function advanced by Uber in its own documents, we cannot accept that rating is such a trivial function as to give rise to the application of the de minimis principle and we do not accept that the primary judge erred in rejecting Uber’s contention to that effect.

Ground 2(a) of Uber’s Amended Notice of Cross-Appeal is not made good.

The third of the activities identified by the Chief Commissioner as a service supplied to Uber under the driver contracts was that of referring people to Uber for the purpose of them becoming drivers.

The primary judge found that referring was a service “in relation to” the performance of work ([88], [103]). It is implicit in the primary judgment that the primary judge also found that referring was a service supplied by drivers to Uber ([141], [162]).

By Ground 2(b) of its Amended Cross-Appeal, Uber complains of the failure by the primary judge to address its submission that any service of referrals was de minimis and contends that the primary judge should have held that it was.

Uber submits that referrals were of such an insignificant nature, in the context of each driver contract, as to be trifling and hence should be disregarded. Uber emphasises that referring other persons to become drivers was not compulsory and says that, for the drivers who chose to refer other persons, this could be done quickly and simply with only a few buttons pressed or mouse clicks in the Driver App or online to share a referral code with the other person.

The Chief Commissioner argues that Uber’s submission understates what was involved in the process of referring a person to become a driver. In that regard, the Chief Commissioner says that, while a referral invite could be sent by using the Driver App or through the website (which he accepts does literally require pressing buttons on a phone or computer), that characterisation ignores the fact that successfully referring a person may involve persuading potential drivers of the benefits of being an Uber driver.

Further, the Chief Commissioner argues that Uber’s submission as to the service of referring being de minimis is inconsistent with its own documents. The Chief Commissioner notes that one of Uber’s witnesses gave evidence that referral bonuses were part of a suite of incentive programs which were “effective” in increasing the level of supply in the marketplace. The Chief Commissioner argues that if the referring (and rating) activities were de minimis, then one would not expect Uber’s own documents and evidence to highlight their importance.

The primary judge does not appear separately to have addressed in his reasons Uber’s submission that referring was a de minimis activity. However, it might well be considered to have been implicitly rejected, insofar as it was implicit in the primary judgment that referring was a service supplied by drivers to Uber and the primary judge then went on to consider referring as a service along with the services of driving and rating. In any event, we do not accept that the primary judge erred in not finding that the service of referring was de minimis in the context of the driver contracts as a whole.

Again, we attach more weight to the importance seemingly placed on this service in Uber’s own materials than on the likely time that it may have taken to complete the referral process (whether or not that involved persuasion of potential drivers, which is simply speculation). We do not accept that this service, though no doubt far less substantial than the driving service, is so insubstantial in the context of the contractual arrangements between Uber and the drivers as to warrant the application of the de minimis principle. Accordingly, Ground 2(b) of the Amended Notice of Cross-Appeal is not made good.

For completeness, we note that there do not appear to have been submissions specifically directed to Ground 2(c) of the Amended Notice of Cross-Appeal, namely that the primary judge erred in concluding that any service of rating or referring supplied by drivers to Uber was for or in relation to the performance of work. Insofar as the act of driving was for or in relation to the performance of work, it seems clear that the activities of rating and referring must have been in relation to the performance of that work – certainly, rating was sufficiently closely related to the act of driving to be considered to be in relation to the performance of that work; and the activity of referring was also in our opinion sufficiently related to the performance of work to satisfy this requirement (noting it was an activity contemplated in Uber’s own material). Thus, we have concluded that Ground 2(c) of Uber’s Amended Notice of Cross-Appeal is also not made good.

Ground 3 of Uber’s Amended Notice of Cross-Appeal relates to the service of referring. The primary judge described Uber’s incentive program (under which it paid money to drivers who successfully referred potential new drivers to it) at [54], noting that Uber published offers to drivers in different ways, including through in-app offers and promotional emails and that drivers were “paid separately for successful referrals” ([54]).

Uber contended before the primary judge that the service of referring, though provided to Uber, was not provided “under” the driver contracts. Uber says that its submissions on this point were not expressly addressed in the primary judgment but accepts that it is implicit in the finding that referring enlivened s 32(2B) of the Payroll Tax Act in respect of the driver contracts ([162]) and that the primary judge found that referring was provided under the same contract as driving or rating. Uber challenges that finding.

Uber complains that the primary judge did not give reasons for the implicit conclusion that referring was a service supplied “under” the driver contracts; and submits that that conclusion was in error.

Uber notes that the primary judge concluded at [106] that the referral scheme came within cl 13 (set out at [105] of the judgment) which, under the heading “Incentives”, provided that from time-to-time Uber may make incentive payment(s) to drivers “as consideration for your satisfaction of certain conditions as determined by [Uber] in its discretion”. That clause noted that the conditions might be included in promotional materials, and/or communicated to drivers including via text message and email and contained an express acknowledgement and agreement that any incentive payment(s) made to the drivers was at Uber’s sole discretion, subject to the conditions.

Uber says that the “published offers” to drivers were capable of acceptance by satisfaction of the criteria set out in the offers in consideration of Uber’s promised reward (referring to Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 456; [1954] HCA 20). Uber contends that the contracts formed by those offers and acceptances were the contracts “under” which the service of referring was provided to Uber (not the driver contracts themselves). Uber argues that the reference to incentive payments in the driver contracts does not alter this conclusion. Uber says that the offer and acceptance process in relation to the referrals was not facilitated by the incentives clause, as that clause was not necessary for Uber to be able to make the offers nor for those offers to be accepted. Uber points out that the clause placed no obligation on drivers, and did not provide them with any right to perform referrals or even to receive offers to perform referrals. Uber contends that the right to perform came from the separate “published offers”, which Uber was entitled to offer if and when it chose to do so. Uber says that there was no right for drivers to receive those offers. In reply submissions, Uber argues that the expanded definition of contract in s 31 does not permit the Chief Commissioner to “meld multiple contracts into one”.

Uber emphasises that the primary judge did not state that referral payments were made “under” cl 13. Uber says that the obligation to make those payments arose from the separate contracts under which referrals occurred; and so was “under” those separate contracts. However, Uber says that even if those payments were made “under” cl 13, whether such a payment was an incentive payment under that clause is not the relevant question; rather, the question is whether the service of referring was supplied under the driver contracts. Uber contends that it was not.

Uber points out that the service of referring could be performed outside of using the Driver App and says that this is one reason why it is not correct to describe the availability of referral payments as a term relating to the “features and functionality” of the Uber Services. Otherwise, Uber accepts that the primary judge’s statement in the second sentence of [106] regarding the evidence as to the referral scheme is correct. It says that the primary judge was also correct to find that offers made by Uber to drivers to provide Uber with referrals were not “Supplemental Terms” of the type identified in [105]. Uber says that the referral terms were terms governing a service that could be provided by drivers largely or wholly without using the Driver App and argues that they are not properly characterised as being supplemental terms “such as use policies or terms related to certain features and functionality”. Uber also says that the primary judge was correct in that there was no presentation of these offers as supplemental terms.

Therefore, Uber submits that the service of referring was not supplied to Uber under the driver contracts (and says that this error has consequences for the reasoning on s 32(2B) of the Payroll Tax Act – see Ground 5 of its Amended Notice of Cross-Appeal (which we address at [279]ff of these reasons)).

The Chief Commissioner submits that the primary judge was correct in concluding that all the entitlements and benefits stemming from use of the Driver App have their source in the driver contracts; and says that those entitlements included the entitlement to receive incentive payments as set out in the driver contracts (which the primary judge at [106] found included the referral scheme payments).

The Chief Commissioner argues that, in determining what constitutes a “relevant contract” in this case, a strict contractual analysis of the driver contracts and the referral scheme does not assist, again here noting the extended definition of “contract”. In any event, the Chief Commissioner says that it is possible for a service to be supplied under more than one contract, such that even if there were further contracts each time Uber published offers to drivers and drivers accepted those offers, the service of referring may still be under the driver contract (as well as under the further contract). In this regard, the Chief Commissioner argues that the referral scheme was part of the “arrangement” along with the driver contracts because it formed part of the “deal” for which drivers signed up and was a way they could earn money. The Chief Commissioner submits that this conclusion is fortified by the fact that some versions of the driver contracts expressly referred to the existence of incentive schemes (as noted in the primary judgment at [105]-[106]).

The Chief Commissioner says that the primary judge was correct in finding (at [106]) that the referral scheme was an incentive payment within the meaning of cl 13 of the driver contracts (or its equivalents) because it was a payment made to drivers upon the satisfaction of particular conditions (namely, referring new drivers). The Chief Commissioner argues that the referral payments were made “under” the driver contracts because those contracts expressly provided that Uber may make such payments and further provided that, while the condition of these payments could be included in particular promotional materials, ultimately payment was made at Uber’s discretion (and hence the driver contracts made clear where the conditions of payment were sourced).

In the alternative, the Chief Commissioner maintains his submission (rejected by the primary judge at [106]) that the referral policy is a supplemental term which was incorporated into the driver contracts. The Chief Commissioner refers to the clause dealing with supplemental terms (see at [105]) to the effect that “[s]upplemental terms may apply to your use of the Uber Services, such as use policies or terms related to certain features and functionality … . Supplemental Terms are in addition to, and shall be deemed a part of, this Agreement”.

The Chief Commissioner argues that the referral system is properly described as a policy related to a feature or functionality of the Driver App because one of the ways in which a driver could qualify for a referral bonus was by using the in-app referral button, and this scheme was only available to drivers. Thus, the Chief Commissioner submits that it was a feature of the Driver App which could be taken advantage of upon entering into the driver contract and he argues that it was therefore deemed to be part of the terms of the driver contract. The Chief Commissioner submits that neither of the reasons given by the primary judge for the rejection of that submission is compelling, those being that the evidence describing the referral scheme did not relate to the “features and functionality of the system” and that there was no evidence that drivers were “presented” with that material as a supplemental term.

As to the first reason, the Chief Commissioner argues that the terms on which referral bonuses were available related to the features and functionality of the Uber Services and thus fell within the supplemental terms clause (noting that the term “Uber Services” is defined to include, relevantly, the “electronic services” rendered via a “digital technology platform”, or “on-demand intermediary and related services rendered by a digital technology application”). The Chief Commissioner says that, as a result, they were deemed to be part of the driver contracts.

As to the second reason, the Chief Commissioner says that there was evidence that the drivers were presented with referral offers (and notes that the primary judge earlier had found at [54] that Uber “published offers to drivers and partners in different ways”). The Chief Commissioner argues that, in any event, nothing in the supplemental terms clause provides that a referral offer can only be a supplemental term if it is presented to drivers, pointing out that the clause does no more than say that drivers “may” be presented with supplemental terms and that Uber is only required to provide 14 days’ notice of any supplemental term if Uber reasonably considers that the supplemental term materially alters the driver’s rights under the driver contracts. The Chief Commissioner says that there is no evidence that Uber reasonably considered that any supplemental terms concerning referrals materially altered driver’s rights.

The Chief Commissioner thus argues that the terms on which referral policy payments were offered formed part of the relevant contracts and submits that the service of referring was provided in accordance with the relevant contract because the terms of the referral policy governed what a driver was required to do in order successfully to refer a person within the meaning of that scheme and governed the incentive to which they were entitled (and argues that it is not necessary to point to an obligation on drivers to refer, or a right to perform referrals).

The Chief Commissioner further argues that if Uber establishes that referrals were supplied under a separate relevant contract but does not establish that the act of referring provided “under” that contract was de minimis, then amounts paid under this separate contract may attract payroll tax. The Chief Commissioner says that Uber’s submissions on the application of the exemption in s 32(2)(a) do not address how that exemption might apply to this separate agreement. Thus, the Chief Commissioner says that Uber’s success on Ground 4 of its Amended Notice of Cross-Appeal would not overcome that conclusion.

We have difficulty with the proposition that incentive payments for referrals were made “under” the driver contracts, in circumstances where the referral scheme operated by the making of separate offers which could be accepted by satisfaction of conditions that then entitled the drivers to payment. We consider that the proper characterisation of what occurred was that there were separate contracts under which incentive payments were made for successful referrals. While we accept that the referral scheme would fall within the concept of an incentive which was foreshadowed in the driver contracts, cl 13 (and its equivalents) does nothing more than to provide an acknowledgement, in effect, that the making of incentive payments would be at Uber’s sole discretion, subject to the conditions of the offer.

There is a significant contrast between cll 13 and 31. Clause 31 foreshadows the possibility of supplemental terms which “are in addition to, and shall be deemed a part of, this Agreement”. Clause 13 refers to Uber making incentive payments on satisfaction of certain conditions “as determined by [Uber] in its discretion (‘Conditions’)”, and where any such payments are “made to you at [Uber’s] sole discretion, subject to the Conditions”. There is no suggestion that such conditions become part of the driver contracts.

The Chief Commissioner’s reliance on the broad definition of “contract” in s 31 does not advance matters. That definition expands what may be regarded as a contract, for example so as to include an agreement, arrangement or undertaking. It does not involve treating two distinct contracts or arrangements (etc) as though they were one.

Nor do we accept that the referral policy from time to time was a supplemental term incorporated into the driver contracts. It is hard to accept that it related to the “features and functionality” of the Uber Services given that it was a scheme that related to referrals of potential drivers (not the features or functions of the digital technology platform or services rendered to it). The fact that some offers may have been published and accepted on the digital technology platform does not persuade us otherwise, since the evidence included offers published by email as well. Nor could it be said that the referral policy applied “to your use of the Uber Services”, as it involved an optional action by drivers distinct from their driving pursuant to the driver contracts, done to obtain distinct benefits such as a cash payment.

Thus we would conclude that 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 source of the obligation on the part of Uber to pay the payments and the right of drivers to receive them (once the conditions of the offer were satisfied) was directly referable to the separate contracts; so was the source of the practical opportunity to receive such payments. 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. Even if the service of referrals were regarded in some sense as part of an overall “arrangement” whereby the driver contracts foreshadowed that there might be incentive payments to drivers, that would not mean that the service was supplied under the driver contracts, which is the issue for determination.

Therefore we consider that the primary judge erred in implicitly concluding that the referrals were supplied or provided to Uber under the driver contracts. While that may well have payroll tax consequences in respect of the payments made under the separate contracts, that was not how payroll tax was assessed in the present case.

Ground 3 of Uber’s Amended Notice of Cross-Appeal is therefore made good. As noted above, Uber accepts that this has consequences for the application of s 32(2)(a) (in that it does not apply to the service of referring). Uber, however, says that if referring occurred under contracts other than the driver contracts then s 32(2)(b)(iii) applies to all instances of referring other than in two instances where drivers performed more than 90 referrals in a single year (referring to the Chief Commissioner’s closing submissions at [142]; and the affidavit of Kiril Mitchev affirmed 9 July 2024 at [16]-[17]). However, given the conclusions we reach below on Issues 6-9, we do not understand that upholding this ground of Uber’s cross-appeal alters the result of the appeal and cross-appeal so as to be in Uber’s favour. If we are wrong in that respect, as explained below we will grant liberty to apply.

The only exclusion that is now in contention is that in relation to ancillary services in s 32(2)(a). The primary judge found that the services of driving and referring were not ancillary to the use of the vehicle and therefore did not engage the exclusion ([127], [129]). As to driving, the primary judge concluded that driving was the same thing as the use of the vehicle and therefore the driving could not be ancillary to the use ([127]). (As to referring, this does not arise given the conclusion we have reached on issue 5.) However, the primary judge found that rating a rider was ancillary to the use of the vehicle because it is “bound up with that use” of the vehicle ([128]). Although this would bring Uber within the scope of the exclusion, his Honour considered that the consequence of finding that the other two services were not caught was that the exclusion was disapplied by reason of s 32(2B) ([141]-[142]).

Uber notes that there is no challenge to the primary judge’s finding that a car driven by a driver was classified as “goods” that are the property of the driver ([25(2)]).

While Uber says that the primary judge correctly summarised the effect of the authorities on the meaning of the term “ancillary” in s 32(2)(a) of the Payroll Tax Act ([122]-[123]) and correctly rejected the Chief Commissioner’s argument that (for a service to be ancillary to the use of goods) the contract must be “primarily” for the use of goods, Uber contends that the primary judge erred in finding that driving was not ancillary to “the use” of the driver’s vehicle.

Uber challenges the conclusion at [127] (that driving could not be described as a service ancillary to the use of the vehicle) for two reasons.

First, Uber contends that “the use” of the vehicle is not the same as the driver’s service of driving because “the use” of the vehicle was, relevantly, the rider’s use by sitting in the vehicle and being physically transported by the vehicle. Uber says that the reference to “the use of goods” in s 32(2)(a) does not expressly or impliedly require that use to be by any particular person (such as the designated person, the person supplying the services to the designated person or someone else).

Uber argues that the driver’s service of driving and the rider’s use of the vehicle are two different but interlinked matters. Uber argues that the service of driving tends to: assist with, go naturally with or is in substance bound up with the rider’s use of the vehicle ([122(4)]) because it is the combination of the rider sitting in the vehicle together with the driver driving the vehicle that produces the desired outcome of the rider being transported to her or his destination. Accordingly, Uber argues that driving was ancillary to the use of the vehicle. Further, or alternatively, Uber says that the relevant use of the vehicle was by Uber. Uber says that, on the premise that Uber is found to have been supplied with the service of driving, in the same way Uber “uses” the vehicle.

Second, Uber argues that, even if driving and the use of the vehicle may be said to be the same, s 32(2)(a) was still satisfied. Uber submits that the primary judge’s construction to the contrary (at [127]) would cause the exception in s 32(2)(a) to miss much of its intended target. Uber identifies the purpose of s 32 as being to capture disguised employer-employee relationships but to exclude in s 32(2) “genuine service contracts” and “[b]ona fide independent contractors” (citing Downer First Instance at [98]-[99], [104]-[106]). Uber argues that the “use of goods” limb of the s 32(2)(a) exception is for cases where the contractor brings equipment or another good to the arrangement (which it says is a classic token of independent contracting) and the utility and substantiality of the equipment is such that the contract is not for labour in and of itself.

Uber notes that the relevant contract provisions were first introduced in Victoria by the Pay-roll Tax (Amendment) Act 1983 (Vic) and were then picked up in materially identical terms in NSW in 1985; and that the form of the relevant contract provisions remains materially identical in the harmonised payroll tax legislation throughout Australia. The primary judge referred to one example from the Explanatory Memorandum, Pay-roll Tax (Amendment) Bill (No 2) 1983 (Vic) (Victorian Explanatory Memorandum) at [124], where it was explained that the exemption would apply to the labour of a crane driver that was supplied together with a crane. Uber notes that the explanatory memorandum gave the following as another example of the intended application of the exemption: “if A in the course of his business sent certain machinery to B for testing on B’s equipment, the labour involved by B’s staff in operating B’s equipment would be regarded as incidental and not caught”. Uber says that, in that second example, B is the person supplying services of machinery testing, and B uses B’s goods (the testing equipment) to supply those services. Uber says that the service supplied by B is identical to the use of the goods by B. Uber argues that the primary judge’s conclusion at [127] cannot be reconciled with this example.

Uber submits that the Victorian Explanatory Memorandum demonstrates that the classic case to which s 32(2)(a) is directed is where the services are essentially bound up with the service provider’s goods and says that this is presumably because the service provider bringing substantial equipment to the arrangement is an indicator of the service provider carrying on her or his own business (citing, in reply submissions, ZG Operations Australia Pty Ltd v Jamsek (2022) 275 CLR 254; [2022] HCA 2 at [70], [88] (Jamsek)). Uber contends that it does not matter if the service is essentially the deployment of the goods and both are performed by the same entity.

Reference is made to Smith’s Snackfood where the scope of the term “ancillary” arose in the context of s 32(2)(d)(i), as it then stood, which referred to “services ancillary to the conveyance of goods”. Uber notes that in that case the Chief Commissioner’s submission, as recorded at [64], was that “the expression ‘services ancillary’ in the exemption necessarily comprehended the conveyance itself”.

Uber argues that, depending on the facts, two items may overlap, even entirely, with one still satisfying the requirement of being “ancillary” to the other; and says that that is the case here with driving and the use of the vehicle. Alternatively, if that is not so, Uber argues that the statute must contemplate that the notion of “conveyance of goods” (and equally, in s 32(2)(a), the “use of goods”) is strictly different from the relevant “services”; that is, that they exist at different levels of abstraction or physicality. Uber says that, just as the Court in Smith’s Snackfood at [65] observed that while driving may be conceptually distinct from conveyance, so driving is also conceptually distinct from the use of goods which are a vehicle.

While s 32(2)(d) was amended in 2014 to refer to “services solely for or ancillary to the conveyance of goods”, Uber notes that the 2014 Second Reading Speech (NSW) explained that the amendment was not intended to effect any substantive change but was to ensure that the law aligned with how it had been administered since 1986 (see 2014 Second Reading Speech (NSW) at 29,469).

Uber argues that, in any event, the contextual considerations applicable to s 32(2)(a) compel the conclusion that, where the service substantially overlaps with, or even is identical to, the use of the goods, then s 32(2)(a) still applies. Uber says that the intended target of the exception is where goods and services are “essentially bound up” together.

Uber argues that if the drivers supplied driving services to Uber (as his Honour found) then they did so using their own substantial goods. In reply submissions, Uber makes clear that it does not contend that the driver’s use of the vehicle is not a relevant use; rather, it says that the use of the good and the service being the same is not fatal to the exception applying and, in any event, Uber says that the driver’s use of the vehicle (a tangible use) is different from any driving services that Uber receives (an intangible service, since Uber is not physically transported by the drivers).

The Chief Commissioner supports the finding that the service of driving was not ancillary to the use of the vehicle on two bases. First, that the exemption was not engaged because there was “no room for separating … into elements” the service of driving and the use of the vehicle, with one ancillary to the other (as his Honour concluded at [127]). Second, the Chief Commissioner maintains his submission (rejected by the primary judge at [124]) that the exemption in s 32(2)(a) is only available where services are “ancillary” to the use of goods; in the sense of where the primary or principal matter or object of the contract is the supply or use of the good (rather than the supply of labour).

As to the first basis, the Chief Commissioner maintains that the service of driving and the use of the vehicle are inseparable.

The Chief Commissioner submits that Uber’s argument, that “the use” of the vehicle by the rider (or by Uber) is different to the service of driving which is supplied by the driver, is contrary to the legislative scheme. Noting that s 32(2)(a) only refers to two parties (the designated person who is supplied with services and the party who supplies those services), the Chief Commissioner argues that the rider (who is neither the person supplying nor receiving the service) is a third party who is not expressly contemplated in s 32(2)(a). The Chief Commissioner submits that this points against the construction advanced by Uber.

We note, as to this submission, that Uber says in response that there is nothing in the text, context or purpose of s 32(2)(a) that requires that Uber need be a party to the contract (cf the Chief Commissioner’s submissions), noting that that the other limb of s 32(2)(a), which is concerned with a “supply of goods”, can apply to a supply to a person who is not a party to the contract (Downer Appeal at [118]-[119]). Uber submits that it would be disharmonious to gloss the “use of goods” limb of s 32(2)(a) with a requirement that the use be by a party to the contract. Further, Uber says that there is no requirement that only an “operator” of goods can “use” the goods (arguing that a rider uses the car, in the sense of interacting with the vehicle, even though not at the wheel). Uber argues that if (as the Chief Commissioner contends) it receives driving services from drivers because it benefits from those services, then it can be said that Uber “uses” the relevant vehicle when those driving services are supplied to it.

As to Uber’s argument that a rider who sits in a car operated by a driver is a person who “uses” that car, and Uber’s reference to the crane example in the Victorian Explanatory Memorandum, the Chief Commissioner says that that example refers to the labour involved in “operating” a particular piece of equipment. The Chief Commissioner argues that this conforms with the ordinary meaning of the word “use” (to employ for some purpose or to operate) and confirms that the word “use” in s 32(2)(a) bears the meaning of “operating” rather than merely “benefiting” from the good. The Chief Commissioner points out that it is the driver who operates the car, not the rider (who is a passenger); and argues that Uber’s proposition that Uber “uses” the vehicle because it receives a service from the driver is not a natural use of language.

Thus, the Chief Commissioner submits that the primary judge was correct to conclude that the driver’s use of the car was inseparable from the service of driving, and therefore one could not be ancillary to the other ([127]) and that his Honour was correct only to consider the driver’s use of the vehicle as that is the only “use” of the vehicle in this case.

As to the submission by Uber that the primary judge’s construction would result in s 32(2)(a) not achieving its purpose, the Chief Commissioner submits that the testing equipment example quoted by Uber in its submissions by reference to the Victorian Explanatory Memorandum is of limited assistance. The Chief Commissioner says that the example does not explain what the equipment in question is, or what the “labour” involved in operating the equipment is; and says that it is not obvious that the labour in question is necessarily the same as using the equipment. The Chief Commissioner puts forward in his submissions the example of the labour involved by a mechanic in preparatory steps before the use of the equipment in question as an example to illustrate that whether a service and the use of a good is one and the same thing is fact sensitive.

In reply submissions, Uber says that this example demonstrates why the Chief Commissioner’s construction should be rejected because, on this example, the steps preparatory to the use of the instrument would be acts beneficial to the designated person (and hence another service). Uber argues that on this construction, s 32(2)(a) would have no work to do, since the use of the instrument would be the same as that second service, and so fall outside s 32(2)(a), with the result that s 32(2B) would disapply the exception.

The Chief Commissioner emphasises that the task is one of statutory construction (which Uber does not dispute). The Chief Commissioner adopts the approach by Gzell J in Smith’s Snackfood at [107] in rejecting a similar construction to that suggested by Uber, namely that the conveyance of goods could be a service ancillary to the conveyance itself, Gzell J referring to this as “an awkward interpretation and one that is hardly open by any distortion”. The Chief Commissioner submits that s 32(2)(a) sets up a distinction between the supply or use of goods, and the provision of ancillary services; and, for the exemption to apply, the service must be “ancillary” to the use of the good in question. It is noted that Gleeson JA referred to the definition of “ancillary” as meaning subsidiary, incidental, accessory, or auxiliary (Smith’s Snackfood at [96]). The Chief Commissioner argues that if the service and the use of the good are one and the same, the former cannot be accessory or auxiliary to the latter.

As to Uber’s alternative argument (that driving is conceptually distinct from the use of goods which are a vehicle), the Chief Commissioner says that s 32(2)(a) contemplates that the use of goods is “strictly different” from the relevant services. Therefore, the Chief Commissioner submits that if on the facts they are one and the same thing, then the exemption cannot be engaged. The Chief Commissioner argues that Uber’s distinction between “driving” and “the use of goods which are a vehicle” elevates form over substance.

As to the second basis on which the Chief Commissioner supports his Honour’s finding that driving was not ancillary to use of the vehicle, the Chief Commissioner submits that the primary judge erred in rejecting his contention that, for the purposes of s 32(2)(a), the primary object of the contract must be the supply or use of goods (see at [125]). The Chief Commissioner says that the need for the primary or principal object of the contract to be the use of goods is supported by the judgments in Smith’s Snackfood and Downer Appeal as well as by the Victorian Explanatory Memorandum that accompanied the Pay-roll Tax (Amendment) Bill (No. 2) 1983 (Vic) that originally introduced the exemption.

As to Smith’s Snackfood, where there was an issue as to whether the services provided to the taxpayer by subcontractors engaged in the transportation and restocking of vending machines were “services ancillary to the conveyance of goods” (under the then s 32(2)(d)), the Chief Commissioner notes that Gleeson JA (with whom Beazley P agreed) referred (at [95]) to the conveyance of the goods as being the principal matter and said that the exemption from the definition of relevant contract was provided where under the relevant contract services were supplied “which are ancillary to the principal matter”. In that case, his Honour noted that the parties were in broad agreement that the primary judge correctly construed the word “ancillary” to mean “subsidiary, incidental, accessory, auxiliary” ([96]). His Honour concluded that the “principal matter or subject” of the contract in that case, determined by reference to its terms, was the conveyance of goods (see [92]; [96]).

The Chief Commissioner says that, by analogy, in the present case the exemption in s 32(2)(a) is only engaged if the use of goods is the principal matter or subject of the contract. The Chief Commissioner says that this is confirmed by the Victorian Explanatory Memorandum which first introduced the relevant contract provisions in 1983, in which the first example regarding the predecessor to s 32(2)(a) (the crane example) included the word “primarily” (i.e., “the contract would be regarded primarily as one for the supply of the crane and any payment attributable to the crane driver’s labour would not be caught”).

As to Downer First Instance, that case concerned whether the exemption in the first limb of s 32(2)(a) applied so that payments made under a contract for the supply and installation of Foxtel set top boxes were exempt. Payne JA held that the first limb of s 32(2)(a) “does not require evaluation of the essentiality of different functions required under the contract on a relative scale” and said that it was a false premise that the statute demands some kind of measure of what is the principal function under the contract (at [139]). The Chief Commissioner notes that his Honour did not expressly refer to the passage referred to above from Smith’s Snackfood at [95] nor to the Victorian Explanatory Memorandum, both of which the Chief Commissioner says are inconsistent with his Honour’s comments. The Chief Commissioner argues that on appeal Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) implicitly rejected Payne JA’s conclusion when saying that the proper question was “whether the installation services were ancillary to the object of the contract, namely the supply of goods for use by the customer” (there citing Smith’s Snackfood at [86], [92]): Downer Appeal at [138].

The Chief Commissioner thus argues that for the exemption in s 32(2)(a) to be engaged in the present case Uber must establish that, properly characterised, the principal matter or subject of the relevant contracts must be the use of goods, and the relevant services must be ancillary to that matter or object, noting that this requires the contract to be characterised in accordance with its terms (Smith’s Snackfood at [86]).

In that regard, the Chief Commissioner argues that the principal subject of the driver contracts is not the use of the driver’s vehicle; rather, the principal subject matter of the driver contracts is the Driver App and regulation of the terms and conditions under which the Drivers may use the Driver App. The Chief Commissioner referred in this respect to the recitals to the driver contracts which refer to the provision and facilitation by Uber of lead generation services (described in the December 2017 driver contracts as “on-demand intermediary and related services rendered via a digital technology application”) and to the operative clauses of the driver contracts which regulate the use of the Driver App. The Chief Commissioner says that the driver contracts thus provide drivers a service to generate leads (potential customers) by using the Driver App and that this is the principal object or subject matter of the driver contracts.

Thus, the Chief Commissioner submits that the exemption in s 32(2)(a) cannot apply to the driver contracts, because the use of the vehicle is not the principal object of the contract.

In reply submissions as to the Chief Commissioner’s reference to the “primary object” of the contract, Uber says that the notion of subservience or hierarchy was rejected in Smith’s Snackfood at [111] and Downer Appeal at [127], [130]-[133], [138]. Uber says that the reference to “primarily” in the Victorian Explanatory Memorandum also does not assist the Chief Commissioner, noting the references in the balance of the relevant part of the explanatory memorandum to “incidental”. Uber submits that it is not necessary that the contract be primarily for the supply of goods, emphasising that in Downer Appeal the Court explained that “ancillary” refers to something that tends to assist with, goes naturally with or is in substance bound up with the thing to which it is putatively ancillary (and that quantitative comparisons are of limited assistance). Uber says that in Downer Appeal, the reference to the “object of the contract” at [138] is a reference to Navy Health Ltd v Federal Commissioner of Taxation (2007) 163 FCR 1; [2007] FCA 931 (Navy Health), where the statutory enquiry was as to whether a particular object of a charity was ancillary to its main (charitable) object.

Further, Uber argues that, even if the Chief Commissioner’s construction of “ancillary” were correct, the Chief Commissioner’s characterisation of the object of the driver contracts (as being primarily for the drivers’ use of the Driver App) focusses on the wrong subject matter; and that the relevant statutory enquiry is whether the designated person (here, Uber) is supplied with services for or in relation to the performance of work that are ancillary to the supply of goods or to the use of goods (i.e., whether the services supplied to Uber are ancillary to the supply or use of goods). Uber says that, so understood, even construing “ancillary” as importing some requirement of primacy in the supply or use of goods, the exception would apply. On the premise that Uber is provided with driving services, Uber says that it is provided under the driver contracts with an integrated package of a vehicle that is being driven (referring to Jamsek at [66]; Downer Appeal at [132]-[133]). In terms of importance, Uber says that that which is of greatest importance must be the use of the vehicle because the vehicle is the thing that transports the rider; and that the driving is necessary to make the means of transportation work (referring to Downer Appeal at [132]).

As is apparent from the arguments outlined above, the parties disagree as to the proper construction of s 32(2)(a). In particular, they disagree with respect to the Chief Commissioner’s second argument that the exemption only applies where services are “ancillary” to the use of goods in the sense that the primary or principal matter or object of the contract is the supply or use of the good rather than the supply of labour. The appropriate construction of the provision is also relevant to the parties’ other arguments.

Section 32(2)(a) relevantly provides that a contract is excluded from being a “relevant contract” if it is one under which the designated person, in the course of a business carried on by them, is supplied by another person during a financial year with services “for or in relation to the performance of work that are ancillary … to the use of goods which are the property of that person”. The provision connotes a relationship between the supply of work-related services (as it is convenient to label services for or in relation to the performance of work) and use of the goods belonging to the person supplying the services, where the former is ancillary to the latter. The provision also captures such a relationship between supply of such work-related services and the supply (as opposed to use) of goods under the contract in question.

The word “ancillary” is also employed in the further exemption in s 32(2)(d), being where the designated person “is supplied with services solely for or ancillary to the conveyance of goods by means of a vehicle provided by the person conveying them”. Again, that usage connotes a relationship between the supply of the work-related services and the use of goods belonging to the other person (being specifically a vehicle being used for the purpose of conveying goods), where the former is ancillary to the latter (note Smith’s Snackfood at [79]). The word “ancillary” is not otherwise used in the Act.

As explained, s 32(1) relevantly designates a contract a “relevant contract” if (to simplify) it involves the supply of work-related services by one person to another. Section 32(2)(a) is addressed to excluding a subset of such contracts from being so designated, being contracts which do involve the supply of such services but where that supply is ancillary to the supply or use of goods by the person who is providing the work-related services. Determining whether the supply of the work-related services is ancillary involves an issue of characterisation. The task involves examining the nature of the relationship in question between the work-related services and the supply/use of goods. It has been held that what is being characterised is the contract as a whole (see Smith’s Snackfood at [76], [79], [81], [86], [92] and [116]-[117]; Downer Appeal at [138]). That is so because s 32(2) provides that the designation of “a relevant contract” does not include contracts which involve the supply of services of the kinds identified in pars (a)-(d). It is the contract which is the “focus of the exemption” (Smith’s Snackfood at [79]). As with most such matters of characterisation, it is an issue of fact and degree (note Smith’s Snackfood at [109]; Downer Appeal at [129]).

That the focus is on the contract does not mean that reference can only be made to the terms of the contract for characterisation purposes. In both Smith’s Snackfood and the Downer litigation account was taken of what activities had actually occurred pursuant to the contract in the financial year in question (recalling that in substance the tax is payable in arrears – see above at [11]). Doing so is consistent with the fact that “services” is defined in s 31 to include “results (whether goods or services) of work performed” (emphasis added).

Thus s 32(2) requires an exercise of characterising contracts so as to exclude a subset of contracts involving the supply of work-related services from being relevant contracts where the Parliament has specified that a further characteristic of the contract is such that the payments for the performance of the work-related services should not be treated as taxable wages. It is reasonable to infer that Parliament intended for that further characteristic to be one of significance such as to merit exclusion of such contracts.

That point is reinforced by s 35(1) of the Act, which provides that what is taken to be wages (on which tax is payable) is “amounts paid or payable by an employer during a financial year for or in relation to the performance of work …”. Other amounts paid under a relevant contract are not taxed as wages. For example, in the Downer litigation the Chief Commissioner ended up accepting that 57.7% of the amounts paid or payable under the contacts in question were not attributable to the performance of work and were thus not subject to payroll tax (Downer First Instance at [3] and [38]-[43]). Thus the provisions in Div 7 do not render taxable all payments due under a relevant contract. If the contract falls into an exemption under s 32(2) then all payments are excluded from being taxable, even if some of those payments might be said to be attributable to the performance of work. That operation reinforces the understanding that the Parliament can be taken to have intended to grant a complete exemption if the exempting characteristic was of such significance as to warrant complete disapplication of the taxation provisions.

Uber gave some emphasis to the legislative history of the provisions in its submissions. The first version of the Victorian bill which introduced the progenitor of s 32(2)(d) of the NSW legislation was in materially the same terms as that provision, save that instead of the word “ancillary” it used the words “only incidental” (Pay-roll Tax Amendment Bill (No 2) 1983 (Vic)). The then Victorian Treasurer moved an amendment to the Bill in the Legislative Assembly on 22 November 1983, replacing those words with “ancillary”. His explanation for the change was as follows (Victorian Legislative Assembly, Parliamentary Debates (Hansard), 22 November 1983 at 2085-2086):

There is room for argument about whether the concepts of “ancillary” and “only incidental” are much different. The difference that the Treasurer seemed to perceive was that something might have been regarded as not “only incidental” if it was essential (a word he used twice in his explanation), whereas he implied that essentiality would not necessarily exclude it from being “ancillary”. In any event, it is also significant that this exemption was designed to ensure that the Act “captures only those situations where the labour content is the key ingredient of the contractual arrangement”. There was some echo of that idea in this State some thirty years later when Minister Perrottet said, with respect to the s 32(2)(d) exemption (whilst introducing amendments extending to s 32), that it applies where the “value of the personal services of the driver represents a relatively small proportion of the payments to owner-drivers” (2014 Second Reading Speech (NSW) at 29468). Both of these parliamentary statements suggest that it was intended that the notion of services being “ancillary” involved the work-related services being of secondary significance compared to the other thing (i.e. the supply or use of goods or the vehicular conveyance of goods) for characterisation purposes.

That point was made more directly in a version of the explanatory memorandum for the 1983 Victorian Bill which is dated 24 November 1983 (two days after the provision was amended in the Legislative Assembly). It said:

The first example, in particular, involves a notion of the thing other than the work-related services (i.e., providing the use of a good) having primacy for characterisation purposes.

This understanding of the notion of something being “ancillary” is unsurprising. The ordinary meaning of the word is “1. accessory; auxiliary … 2. an accessory, subsidiary or helping thing or person. [Latin ancillaris relating to a handmaid]” (Macquarie Dictionary). Picking up on such definitions, it has been said that the word “means ‘subservient’ or ‘subordinate’” (Koala Motels Pty Ltd v Chief Licensing Inspector (1977) 18 ALR 12 at 14 (Muirhead J, Northern Territory Supreme Court); note also Nix v Pittwater Council (1994) 84 LGERA 199 at 205 (Gleeson CJ, Priestley and Powell JJA agreeing)).

The notion of being ancillary has been considered in various other legal contexts. The Land and Environment Court has jurisdiction to hear and dispose of any matter not otherwise within its jurisdiction which is “a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act” (Land and Environment Court Act 1979 (NSW), s 16(1A)). This Court has said the following of that provision (Arnold v Minister Administering the Water Management Act 2000 (2008) 73 NSWLR 196; [2008] NSWCA 338 (Spigelman CJ, Allsop P and Handley AJA agreeing)):

As was said more recently in that context in Council of City of Ryde v Azizi [2021] NSWCA 165; (2021) 248 LGERA 204 at [31], “an ‘ancillary’ matter is one which is subordinate or subservient to the matter with respect to which jurisdiction is expressly conferred”.

The notion has been invoked in planning cases. There it has been employed to identify a use of land for one purpose which serves another use, such that the former use is subsumed for characterisation purposes within the latter use (e.g. such that a prohibition in a planning instrument on that former use does not preclude it); but where such a single characterisation cannot be adopted if neither purpose subserves the other but they are independent, regardless then of whether one or other purpose is “dominant” (Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 at 161-162; referred to approvingly e.g. in Lizzio v Ryde Municipal Council (1983) 155 CLR 211 at 216-217; [1983] HCA 22; see also Baulkham Hills Shire Council v O’Donnell (1990) 69 LGRA 404 at 409-410).

In Macquarie International Health Clinic Pty Ltd v University of Sydney (1998) 98 LGERA 218 (Macquarie International) at 223 this Court said (as quoted in Smith’s Snackfood at [104] and Downer Appeal at [131]):

That passage thus rejects a notion that an ancillary use in that context must necessarily be minor or subordinate or subservient to the other use, but does suggest it should be auxiliary or accessory. As Young JA later stated, the passage illustrates that the word “ancillary” can mean “something which is supplemental and is not subordinate” (Batterham v Makeig [2010] NSWCA 86; (2010) 15 BPR 28,713 at [63]). There can be a difference between being subordinate or subservient on the one hand and being secondary on the other. The former goes to the relationship of the two things; the latter goes to relative significance of the two things for characterisation purposes.

In Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2024] HCA 20; (2024) 98 ALJR 808, at [59]-[60], Jagot J referred to earlier High Court authority identifying a “wholly ancillary” purpose as being distinct from one that is “collateral” or “additional” (referring to Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 at 643; [1978] HCA 58).

One other point of note emerges from the planning cases. In Macquarie International an issue arose as to whether a use of land as a teaching hospital constituted a use as a “hospital” or for “education” and, if so, whether one use was ancillary to the other. This Court upheld the primary judge’s conclusion that the two could not be disentangled such that it could in effect be characterised as either or both of those uses, saying (at 222):

That issue was also touched upon by this Court in Bardsley-Smith v Penrith City Council [2013] NSWCA 200; (2013) 195 LGERA 34 at [91] and [120]. And in a case involving development of a supermarket with an associated carpark, Preston CJ of LEC similarly said the following (Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400, citations omitted):

Another area of law where the notion of being incidental or ancillary arises is with respect to charitable trusts or institutions (this issue is often considered in statutory contexts exempting such trusts or institutions from taxation). As was said in Stratton v Simpson (1970) 125 CLR 138 at 159–160; [1970] HCA 45 (citations omitted):

Four members of the High Court expanded on the distinction between a main purpose and those which were incidental or ancillary in Commissioner of Taxation (Cth) v Word Investments Ltd (2008) 236 CLR 204; [2008] HCA 55 (Word Investments):

That understanding involves a process of characterisation having regard to both the stated objects and to the nature of activities undertaken by the body in question. The issue can arise where the institution has more than one object and not all are clearly charitable, or it can arise where the institution is engaging in activities which are not charitable in nature. In Word Investments the entity in question engaged in commercial businesses, and no charitable activities, but in pursuit of purposes which were solely charitable. That was held to be sufficient for it to be characterised as a charitable institution.

Justice Jessup examined various leading cases dealing with that issue in Navy Health, and said the following (referred to approvingly in Downer Appeal at [132]):

The approach outlined is consistent with that seen in the planning cases referred to above, in that an object that is characterised as incidental or ancillary to a dominant charitable object is in effect regarded as subsumed within that dominant object.

The key ideas which emerge from the cases in these various contexts are that something can be characterised as ancillary if, first, it tends to assist another thing (i.e., that it is incidental, accessory or auxiliary) and, second, that it is secondary to that other thing, such that the other thing is the primary or dominant characteristic. In some contexts the ancillary matter must also be subservient. It need not be minor in quantitative terms. Independence – i.e. being of substance in its own right – will render the thing not ancillary even if the other thing can be characterised as dominant. That does not imply the converse; in other words, if the thing is dominant that may rule it out from being ancillary.

Of course, it cannot simply be assumed that such an understanding applies here. The particular statutory text, context and purpose must be considered. Nevertheless, it is notable that that type of understanding is consistent with what is implicit in relevant extrinsic materials here (referred to above at [226]-[228]).

How, then, has the concept been understood in the case law relating to s 32(2)? This Court considered the exemption that is now in s 32(2)(d) in Smith’s Snackfood in 2013 (it was then in s 32(2)(d)(i)). The main judgment was that of Gleeson JA, with whom Beazley P agreed. Sackville AJA agreed in part with his Honour and agreed with the orders made. As already noted, Gleeson JA held that the issue involves characterisation of the contract in question as a whole, and that this involves an evaluative matter of fact and degree. His Honour referred to and obtained some assistance from a range of sources considering the notion of being “ancillary”, including case law in the context of planning and the jurisdiction of the Land and Environment Court (at [99]-[109]). His Honour accepted that “ancillary” in the provision in question means “subsidiary, incidental, accessory, auxiliary” (at [96], and applied e.g. at [141]). He rejected an argument that the notion requires that the ancillary service need be a subordinate or subservient one to the conveyance of goods (at [78] and [95]-[111]).

Relatedly, Gleeson JA also rejected a variant argument by the Chief Commissioner that “there is an implied requirement in the exemption that the services supplied to Smith’s are primarily ancillary to the conveyance of goods by means of a vehicle” (at [76(3)], emphasis in the original; see also [84]-[86] and [92]). Uber sought to argue that in so holding, Gleeson JA was rejecting any suggestion that the primary object or characteristic of the contract needed to be (relevantly) the conveyance of goods by means of a vehicle (the conveyance service). Yet that is not so and the contrary is true. The argument rejected was to the effect that it was necessary that the primary characteristic of the services said to be ancillary was being ancillary to the conveyance service. This was a variation on the Chief Commissioner’s subservience argument (referred to above at [245]). That argument was made in a context where some of the work-related services supplied under the contract in question were not ancillary to the conveyance of goods, and an issue arose as to whether that precluded the exemption applying. The focus of the “primarily ancillary” argument was on the nature of the services which were not work-related, not the relative significance of the service said to be ancillary and the conveyance service in the context of the contract. As regards the latter issue, relative significance, his Honour indicated that the conveyance service was to be the “principal matter”, saying:

The difference between that conclusion and the rejection of the “primarily ancillary” argument, was manifest in the following:

Uber argued that these passages simply involved Gleeson JA making a finding about the specific contract at issue, without establishing any broader principle. Yet his Honour’s explanation at [95] was expressed as a statement of principle, immediately under the heading “Meaning of ‘ancillary’”. It was followed by his Honour’s approving reference at [96] to the parties’ agreement that the word meant “subsidiary, incidental, accessory, auxiliary”, being a meaning consistent with what is stated at [95]. And there would have been no reason for his Honour to have twice identified the principal matter or subject of the contract if the point was not significant to his conclusion.

Although there was some argument in this appeal about the meaning of what Gleeson JA said in Smith’s Snackfood, the parties did not dispute that his Honour’s conclusions about the notion of being ancillary in that case were of assistance with respect to the exemption in s 32(2)(a).

The exemptions in both pars (a) and (d) of s 32(2) arose in the Downer litigation. As noted above (at [212]), at first instance Payne JA did not accept that s 32(2)(a) requires assessment of what was the principal function under the contract in question, saying the Chief Commissioner “did not identify what measure of principality is applied or from whose perspective an aspect of a contract is principal” (Downer First Instance at [139]). His Honour also appeared to doubt that it was necessary to characterise the contract (at [141]). It is difficult to reconcile what his Honour said with the view taken in Smith’s Snackfoods regarding consideration of the principal matter of the contract. That being said, his Honour went on to hold – lest his view be wrong – that in any event “the essential character of the subcontract [in question] is the supply of goods”, referring also to the “fundamental purpose of the contract” as being to supply goods and then to connect those goods to the service-provider’s infrastructure (at [141], emphasis added). In that regard his Honour considered amongst other things the relative time spent by the contractor in performing the different tasks and the economic value of those tasks (at [147]-[148]). We note that taking that approach is consistent with what was suggested in relevant extrinsic materials (see above at [226]). Thus his Honour did not appear to have difficulty in practice assessing the relevant principal characteristic of the contract in question.

On appeal to this Court the Chief Commissioner challenged the views Payne JA had expressed about not characterising the contract nor looking to its principal feature (see Downer Appeal at [74] and [96]-[98]). The Chief Commissioner’s appeal was dismissed but Bathurst CJ, speaking for the Court, followed what had been decided by Gleeson JA in Smith’s Snackfood. His Honour said:

His Honour then expressed some doubt about the utility of parsing the time spent by sub-contractors under the contract:

The Chief Justice thus took some guidance from the planning and charity contexts (at [130]-[132] and [137]). His Honour did not depart from, but rather applied, the approach taken by Gleeson JA in Smith’s Snackfood. In particular, at [138] he cited [86] and [92] of that judgment, the former of which indicated that it is necessary to characterise the contract in question having regard to its terms, and in the latter Gleeson JA concluded that “the principal matter or subject” of the contract in question was the conveyance of goods. In this context the view expressed by Payne JA at [139] of Downer First Instance must be taken to have been rejected. That understanding is supported by the fact that Bathurst CJ said at [134] that the extent and nature of the services provided were relevant though not necessarily determinative. And similarly at [137] he noted that the payment for the work-related services comprised a relatively minor part of the total payment under the contract.

For our part, we also see no reason to depart in substance from what was resolved in Smith’s Snackfood, save only that we would express this (for the purposes of s 32(2)(a)) in terms of assessing whether the principal or dominant characteristic of the relevant contract is the supply of goods or the use of goods which are the property of the other person (thus expanding things somewhat by invoking the notion of “dominant”). That understanding, as developed in Smith’s Snackfood, may not be required in express terms by s 32(2)(a) or (d) but such a requirement can be regarded as implicit in the invocation of the notion of “ancillary”, as illustrated by the case law from other legal contexts (and those contexts also support expressing the notion in terms which encompass a dominant characteristic). It is consistent with the textual and purposive imperative to exclude a subset of relevant contracts having a particular character of significance (see above at [221]-[224]). It is supported by the extrinsic materials (see above at [225]-[228]). Applying that approach involves a not unfamiliar legal exercise of characterisation.

Thus, consistently with the understanding in other areas of the law (see above at [243]), there are two aspects relevantly involved when considering whether the work-related services are ancillary to the supply or use of goods under the contract: first, whether the work-related services tend to assist the supply/use of goods in the sense of being subsidiary, incidental, accessory or auxiliary to the supply/use; second, whether the principal or dominant characteristic of the relevant contract is the supply of goods or the use of goods which are the property of the other person. The first aspect is addressed to the relationship between the work-related services and the supply/use of goods. The second is addressed to the relative significance of the two. A consequence of this understanding is that merely because there is one work-related service which is ancillary to the supply or use of goods in the sense of tending to assist the supply/use that does not suffice of itself to characterise the contract as falling within the exemption.

Part of Uber’s own argument was that the utility and substantiality of the equipment is such that the contract is not for labour in and of itself (see above at [191]). That submission illustrates that the characterisation exercise required here naturally looks to the relative significance of the provision under the contract of the work-related services.

One further matter should be addressed. There is an artificiality about the way in which the parties in this matter sought to deal with the s 32(2)(a) exemption. The provision is addressed to cases where the designated person “is supplied with services for or in relation to the performance of work that are ancillary to” the supply or use of goods. The parties approached the issue as though each separate work-related service was to be assessed as satisfying or not satisfying the exemption. But the provision speaks in an encompassing manner with respect to work-related services (plural). And, as explained, what is being characterised is the whole contract for the financial year. The question is whether all such work-related services under the contract are ancillary in the relevant sense to the supply or use of goods. That is not to say – taking s 32(2)(a) by itself – that the presence of one work-related service which is not ancillary to the supply or use of goods would necessarily have precluded the contract being characterised as falling within the exemption (note Smith’s Snackfood at [75] and [94]). However, that matter now falls to be considered in light of s 32(2B), as addressed below when dealing with Issue 8 (from [279]ff).

A somewhat similar point about treating the services together was raised below by the primary judge and stridently resisted by Uber, which said that to apply that approach would be contrary to procedural fairness (at [83]-[85]). That Uber chose to run its case in a particular way does not mean the terms and effect of the statute can or should be ignored.

In summary, then, the following principles apply with respect to the operation of s 32(2)(a). It applies to a contract where during a financial year the designated person is supplied in the course of their business with some work-related services under the contract, where those services are ancillary to the supply of goods or the use of goods which are the property of the other person. The exemption involves characterising a contract as falling within the exempt category, taking account of the terms of the contract as a whole and what actually occurred pursuant to the contract in the financial year in question. This is an evaluative matter of fact and degree. It involves consideration of two aspects being, first, the relationship between the work-related service(s) said to be ancillary and the supply or use of goods under the contract and, second, the relative significance of the categories of services. As to the first, this involves the work-related service (or set of services) tending to assist the supply/use of goods in the sense of being subsidiary, incidental, accessory or auxiliary to the supply/use. In this regard it is not necessary that the work-related services be subservient or subordinate to the supply/use of goods, nor is it necessary that they be minor in nature. As to the second, it is necessary that the supply/use of goods can be regarded as the principal or dominant characteristic of what occurred under the contract in question. Thus the presence of a work-related service which is ancillary in the first sense of tending to assist the supply/use of goods is not of itself sufficient to conclude that the work-related service is ancillary in the relevant sense.

The core matters in dispute on this issue are:

The nub of the first dispute between the parties is as to whether in the present case the driving service is one and the same as the use of the vehicle. The primary judge in our opinion correctly accepted that it was. The driving service is supplied by the very use of the driver’s car to pick up and transport the rider to the destination. It is inherent in the driving service that there will be the use of a vehicle, provided by the driver (there was no challenge to the primary judge’s conclusion at [139] that drivers’ cars are their property for the purposes of s 32(2)(a)). And at least for the periods in question (and still currently) it was inherent in the use of the vehicle that there be a driver driving. The driving service and use of the vehicle are inseparable and practically intertwined, analogously to the conclusion in Macquarie International that teaching and provision of medical services in a teaching hospital are inextricably bound together (see above at [236]-[237]). The driving service supplied is not one that is ancillary to the use of the goods, as the driving service is not subsidiary, incidental, accessory or auxiliary to the use of the car.

Uber noted (at AT 42-43) that in Jamsek three members of the High Court said of arrangements involving truck owner-drivers that “the ownership of the trucks alone was of no use to anyone unless they were operated by drivers with the skills of the respondents” (at [66]) and held this was consistent with the drivers being independent contractors (at [70]). Yet the issue here is not whether or not Uber drivers are employees or independent contractors (see above at [22]-[24]). In any event, Gageler and Gleeson JJ said in Jamsek that where work “involves use of a substantial item of mechanical equipment for which the provider of the work is wholly responsible, the personal is overshadowed by the mechanical”, thus tending against a characterisation of the arrangement as one of independent contractor (at [88]). Uber accordingly acknowledged (AT 43.25) that “there is a spectrum and it is a matter of scale”. Provision of a passenger car is quite different from provision of a large truck. Cars are a common item of ownership of, and are commonly driven by, ordinary members of the community. When an Uber driver drives a rider in the driver’s car, the personal is not overshadowed by the mechanical.

Uber argued that either or both the rider or Uber itself could be seen as using the vehicle. It said that the “intangible service received by Uber is manifestly not the same thing as the tangible use of the vehicle [and] is ancillary to it”. These distinctions are artificial. No doubt each of the rider and Uber obtains a benefit by use of the vehicle, and those benefits are of a different nature (being transportation for the rider and a financial return for Uber). But the vehicle is being used by the driver, to whom it belongs, in order to provide the service of driving the rider. The service and benefit provided to each of the rider and Uber are through the intertwined provision of the driver’s car and the driver’s services in operating the car to transport the rider.

Uber’s second argument was that the legislative history of s 32(2)(a) indicates that it is directed “to where the services are essentially bound up with the service provider’s goods, presumably because the service provider bringing substantial equipment to the arrangement is an indicator of the service provider carrying on her or his own business”. This argument was founded on the second example given in the Victorian explanatory memorandum (see above at [227]), relating to where “A in the course of his business sent certain machinery to B for testing on B’s equipment, the labour involved by B’s staff in operating B’s equipment would be regarded as incidental and not caught”. But neither the statutory text nor the extrinsic materials generally suggest that the appropriate test or focus is whether or not the contractor is carrying on their own business, which is an issue which may have its own practical complexities (as common law employment cases illustrate). If anything, the extrinsic materials suggest a focus on where the labour content is not the “key ingredient” or most valuable aspect of what was done under the contract (see above at [226]).

That issue leads to the Chief Commissioner’s argument about primacy. For the reasons outlined above, in essence that argument should be accepted. Here, it cannot be said that the provision of the work-related services is ancillary to the use of the drivers’ cars in the (second) sense that the principal or dominant characteristic of the contracts is that they involve the use of the drivers’ vehicles. The service is transportation. As explained, the use of the vehicles and the drivers’ provision of work-related services cannot be separated. Even if they could be, it still could not be said that the use of the vehicles is the principal or dominant feature of the contracts, given in particular the practical and economic significance of the drivers driving their vehicles to pick up and transport riders.

Uber asserted (AT 48.5-15) that the Chief Commissioner’s argument was not that the drivers’ provision of services was the primary object, but rather that the “supply of the driver app” was the primary object. It is correct that that was part of the Chief Commissioner’s argument. But it was not a necessary step. The relevant aspect of the issue is not whether some other primary object or characteristic of the contract in question can be identified. It is whether the supply of work-related services is ancillary to the use of the drivers’ cars, including in the sense that the principal or dominant characteristic of the contract was the use of the drivers’ cars. We have concluded that that is not the case.

By his Amended Notice of Contention, the Chief Commissioner challenges the finding by the primary judge that the rating service was ancillary to the use of the vehicle ([128]). The Chief Commissioner contends that rating is not ancillary to the driver’s use of the car because the rating of the rider at the conclusion of a trip does not assist the driver to use the car. The primary judge concluded, contrary to the Chief Commissioner’s contention, that the service of rating was ancillary to the use of the vehicle because it is “bound up with that use”, pointing out that a driver cannot rate a rider if they have not used a vehicle (see at [128]).

The Chief Commissioner argues that in reasoning as his Honour did on this issue the primary judge has inverted the relevant analysis. The Chief Commissioner notes that in Downer Appeal at [133], Bathurst CJ concluded that the installation services were “bound up with” and ancillary to the supply of goods required to access the Foxtel service because supplying a set-top box was of no benefit to the customer until it was actually installed (see Downer Appeal at [132]). The Chief Commissioner argues that in the present case the rating service does not assist with the use of the car because whether a rating is given after the trip has finished has no bearing on the use of a vehicle to transport a rider. The Chief Commissioner says that a rider could have the benefit of being transported from their pick-up point to the destination without the driver giving a rating in relation to the rider. The Chief Commissioner argues that it is beside the point that a driver cannot rate a rider if the vehicle was not used or that Uber uses the ratings to improve the overall safety of the platform (as the primary judge noted at [75]) or that the driver is practically forced to provide ratings.

In that regard, the Chief Commissioner points to the reasoning by Gleeson JA in Smith’s Snackfood that the various services in that case (placing promotional material on vending machines (at [145]-[148]); cleaning vending machines (at [145]-[148]); and looking for business opportunities when conveying goods (at [149]-[153])) were not “ancillary” to the conveyance of the goods (see at [145], [148], [152]) in effect because they did not assist the contractors in the delivery of the goods; and the observation by Sackville AJA that services were ancillary where those services were necessary for the conveyance of the goods (at [242]). The Chief Commissioner says that, in the present case, a driver providing a rating to a rider did not assist the driver in driving that vehicle; nor was it necessary for the use of the vehicle. The Chief Commissioner argues that the fact that Uber uses ratings to improve the overall safety of the platform ([75]) is immaterial; the question is whether the service of rating assists the use of the vehicle.

While the Chief Commissioner disavows an argument that rating cannot be an ancillary service simply because it occurred after the completion of the trip, he argues that in this case the temporal proximity between the use of the vehicle and the service of rating is not sufficient to establish that rating is an ancillary service (noting that in Smith’s Snackfood placement of promotional material on vending machines was not considered an ancillary service even though it occurred shortly after the conveyance of goods – see Smith’s Snackfood at [146]). The Chief Commissioner says that the conclusion in Smith’s Snackfood that returning spoiled goods was ancillary to the conveyance of goods (see at [136]) did not turn on the fact that the return of goods occurred immediately after the conveyance of the fresh goods; rather, the removal of spoiled goods assisted the conveyance of the fresh goods.

Thus, the Chief Commissioner submits that the rating service was not ancillary to the use of the vehicle and therefore it is a service supplied under the driver contracts which does not attract the exemption in s 32(2)(a) (and, hence, even if the service of driving is ancillary to the use of a vehicle, Uber cannot rely on the exemption in s 32(2)(a) because, by reason of s 32(2B) (considered in relation to Issue 8), there are additional services supplied under that contract which are not exempt). The Chief Commissioner argues that, to rely on the exemption in s 32(2)(a), Uber needs to demonstrate that every service supplied under the driver contracts is exempt.

Uber submits that the primary judge correctly found that rating was ancillary to the use of the vehicle because it was “bound up with” that use ([128]). Uber argues that the act of rating tends to assist with, or goes naturally with, the use of the vehicle, noting the finding that drivers were practically forced to rate riders ([116(2)]). Uber says that rating occurs immediately after the trip is complete, that it takes only a moment to do, and that it is an expression of the driver’s opinion about that act of transporting the rider. Uber refers to the fact that, in Smith’s Snackfood, the return transportation of spoiled products and packaging from the vending machine was ancillary to the conveyance of goods to the vending machine (at [136]) and argues that, similarly, in the present case rating was practically required to be done immediately after, and in response to, the use of the vehicle.

Uber points to the acceptance by the Chief Commissioner that rating improved “the overall safety of the platform” and Uber argues that this assists with the specific use of the vehicle by the driver because the fact that a rider is going to be rated at the end of a trip encourages the rider to be well-behaved during that trip (since if not the rider could suffer a bad rating and its attendant consequences). Thus, Uber argues that rating tended to assist with (or went naturally with) the use of the vehicle because the fact that rating was going to occur after the use of the vehicle tended to make that prior use of the vehicle safer and more pleasant.

Once it is accepted that the rating of riders performs a function in assisting with the overall safety of the Uber platform, then the conclusion that it assists with the use of the vehicle both in the instant case of rating the trip that has just been completed and more generally by permitting badly behaved riders to be excluded from use of the Rider App (by way of a low rating) supports the primary judge’s conclusion that the rating service is bound up with the use of the vehicle and therefore is ancillary – in the first sense of being subsidiary, incidental, accessory or auxiliary – to the use of the vehicle. His Honour did not err in so concluding.

Moreover, the Chief Commissioner’s approach is too narrow in focusing on the fact that what is rated is a particular trip that has finished. As explained, what is being characterised is the contract for the relevant financial year. The primary judge made an unchallenged finding that “the driver was, in practical terms, forced to rate riders because the Driver App required them to rate the driver before another trip could be started” (at [116(2)]). Thus the driver providing the rating service with respect to riders was a practical necessity for the driver’s continued engagement under the contract. In that context it can be regarded as a service incidental to the use of the vehicle under the contract.

To that extent, Ground 1 of the Chief Commissioner’s Amended Notice of Contention is not made good.

However, that does not mean that the exemption in s 32(2)(a) therefore applied to the driver contracts by reference to the rating service. As explained above in relation to Issue 6, for the exemption to apply it is also necessary that the work-related service is ancillary to the supply/use of goods under the contract in the second sense that the contract is characterised as having as its principal or dominant characteristic the supply or use of the good. Uber has established that one work-related service supplied under the contract – rating – is ancillary to the use of the good in the sense of being subsidiary, incidental, accessory or auxiliary to driving the vehicles. That is necessary but not sufficient to establish that the exemption applies. As already explained, the use of the vehicle cannot be characterised as the principal or dominant characteristic of the contract. That being so, the fact that the rating service can be said to be ancillary in the first sense is not sufficient to establish that the exemption applies.

This point illustrates the artificiality in the way in which Uber presented its case, as discussed above at [257]-[258]. For the avoidance of doubt, we would not have reached a different conclusion if the driving and rating services (and, if relevant, the referral service) were assessed compendiously. The fact remains that the use of the driver’s vehicle was not the principal or dominant characteristic of what occurred under the contract.

Issue 8 goes to the proper construction of s 32(2B) of the Payroll Tax Act, which provides that:

On the premise that s 32(1) was satisfied (in relation to the supply of the service of driving) but the exemption in s 32(2)(a) applied (i.e., because the driving service was ancillary to the use of the vehicle as Uber had contended), the Chief Commissioner relied on s 32(2B) of the Payroll Tax Act to disapply s 32(2)(a) on the basis that the service of referring that was supplied to Uber was an additional service that was not ancillary to the use of the vehicle (and therefore not within the exception). The primary judge accepted that contention ([162]). Uber contends that the primary judge erred in so finding.

In the first iteration of its Notice of Cross-Appeal, Uber raised three errors in relation to the conclusion reached by his Honour at [162] (Grounds 5(a)-(c)). By its Amended Notice of Cross-Appeal filed 5 March 2025, Uber raised a fourth (Ground 5(d)).

First, (Ground 5(a)), in respect of all drivers, Uber repeats its argument that any service of referrals was de minimis (see Issue 4 above) or not for or in relation to the performance of work. Uber argues that, in the context of a contract under which (on this scenario) both driving and referring services are supplied to it, referrals are of such a minor nature that, when characterising the contract, it should not be concluded that it is a contract under which “additional services or work” are supplied or performed.

Second, (Ground 5(b)), again in respect of all drivers, Uber repeats its contention (see Issue 5 above) that the service of referring was supplied to it under a different contract from the driver contracts. Uber says that if the driver contracts were within s 32(1)(b), then they were also within s 32(2)(a) (the ancillary exemption) but not s 32(2B), and so were not relevant contracts. In that case, Uber contends that the contract under which any service of referrals was supplied could at most result in Uber being taxed on the amounts paid by Uber to drivers for those referrals. Uber says that the orders made by the primary judge address those amounts.

Third, (Ground 5(c)), Uber maintains that s 32(2B) cannot apply in respect of those drivers who made no referrals in a given financial year. Uber complains that the primary judge did not recognise that most drivers did not in fact perform the service of referring. Uber says that those drivers who did not in fact perform that referral service did not supply or perform an additional service of referring and so s 32(2B) cannot apply to them. In reply submissions, Uber emphasises that, of those drivers who made referrals, most did so on less than 90 days per year and thus that service is covered by the s 32(2)(b)(iii) exception (the 90 day exception).

Uber argues that both the driving and rating services (to the extent that those services are found to be supplied to Uber) are covered by s 32(2)(a) (i.e., are ancillary to the use of the vehicle) and that the preferable construction of s 32(2B) is that it does not apply if the designated person is supplied with two or more services each of which is covered by an exception in s 32(2) but under different exceptions (i.e., here, if driving or rating are covered by the s 32(2)(a) exception and referring is covered by another exception, such as the 90 day exception in s 32(2)(b)(iii)).

Fourth (Ground 5(d)), which is premised on Ground 4 of Uber’s Amended Notice of Cross-Appeal (that the primary judge erred in concluding that the driving service was not ancillary to use of the vehicle) succeeding, Uber contends that contracts with drivers who referred on fewer than 90 days per year were not within s 32(2B) because all services supplied were covered by exemptions.

As to the first two of the three reasons by reference to which Uber challenges the conclusion that s 32(2B) disapplied the exemption under s 32(2)(a) (because referring was an additional service that did not fall within any of the exemptions), the Chief Commissioner relies on his submissions in relation to Issues 4 and 5 (see above). As to the third, the Chief Commissioner accepts that s 32(2B) cannot relevantly apply in respect of drivers who made no referrals in a given financial year.

As to the fourth, Ground 5(d), this arises in the context that the service of driving and rating are only captured by the ancillary exemption, whereas the service of referring is only captured by s 32(2)(b)(iii). The Chief Commissioner argues that, properly construed, s 32(2B) provides that the exceptions in s 32(2)(a)-(d) do not apply if there are additional services supplied under the relevant contract which are not covered by that same exception.

The Chief Commissioner submits that two aspects of the text confirm this construction: first, that s 32(2)(a) and (c) cannot be combined (nor can (b) and (c)) and, second, that the chapeau to s 32(2) applies to the entire contract (see AT 84.1-16). The Chief Commissioner further submits that the statutory purpose and context of s 32(2B) confirm that this is the correct construction of the section, namely that s 32(2B) was inserted in response to Smith’s Snackfood (where the issue was whether the exception in s 32(2)(d) as it then was applied in that case and Gleeson JA concluded (at [94]) that the primary judge erred in finding that the exception was not engaged). The exception in s 32(2)(d) was held to have applied to the contract even though there were additional non-ancillary services supplied under the contract.

The Chief Commissioner argues that the 2014 Second Reading Speech (NSW) when s 32(2B) was inserted makes clear that the mischief to which s 32(2B) was directed was tax avoidance in respect of contracts which only require the incidental use of a vehicle where this is not the specific purpose of the contract. The Chief Commissioner says Uber’s reliance in reply submissions on Chief Commissioner of State Revenue v McIntosh Bros Pty Ltd (in liq) [2021] NSWCA 221 (McIntosh Bros) does not support Uber’s construction because it concerned a very different question (as to the dominant use of land for primary production and whether a number of uses could be aggregated).

Noting that there is no challenge to the finding by the primary judge that the service of referring people to become drivers was not ancillary to the use of any vehicle ([129]), the Chief Commissioner submits that, even though the primary judge found that the rating service attracted the exemption in s 32(2)(a), the driver contracts were nonetheless not exempt pursuant to s 32(2B) because referring was an additional service not covered by that (s 32(2)(a)) exemption.

The Chief Commissioner’s position is thus that even if both driving and rating were covered by the ancillary exemption in s 32(2)(a), that exemption is disapplied because the service of referring is not covered by that same exemption (and hence it does not matter if referring falls within the exemptions in s 32(2)(b)) (see AT 82.1-6).

We have already dealt with Uber’s arguments based on referring being de minimis and referring being supplied under a different contract. The concession by the Chief Commissioner that s 32(2B) cannot apply in the manner suggested by the primary judge in respect of drivers who made no referrals in a given financial year deals with the remaining reason proffered by Uber for the finding by his Honour at [162] being in error.

However, the application of s 32(2B) must here be considered having regard to the conclusions reached on appeal, namely that: driving is a service which is not ancillary to the use of the vehicle; nor is rating a service which is ancillary to the use of the vehicle in the relevant sense; and referring is not a service supplied to Uber under the driver contracts (but, rather, under separate contracts entered into when an incentive offer is accepted from time to time). On those conclusions, the ancillary exemption in s 32(2)(a) does not apply on any view. There is thus no occasion to consider whether the exemption is disapplied pursuant to s 32(2B). On this basis the dispute between the parties as to the construction of the parenthetical words in s 32(2B) – i.e., whether the additional services or work must be of a kind not covered by the particular exemption or more broadly whether the additional services or work may be of a kind not covered by any exemption – does not arise. Even so, for completeness and lest this matter go further, it is appropriate to address it.

The nub of the dispute is that the Chief Commissioner argues that subs (2B) applies on a paragraph by paragraph basis with respect to s 32(2). Relevantly, for s 32(2)(a), he argues that the effect of subs (2B) is simply that if there are any additional services or work of a kind not covered by the paragraph – i.e. beyond work-related services that are ancillary to the supply or use of goods – then that is enough to disapply that exemption. Uber argues that its effect is simply that if two services are supplied under one contract and they are each exempt under a different subparagraph of s 32(2), then subs (2B) does not switch them both off.

There seems to be an element of boxing at shadows in Uber’s argument, as on one view it proceeds on a misapprehension as to the operation of s 32(2). As stated in the chapeau to that provision, if at least one of the exemptions is established then the contract is not a relevant contract. That point is echoed by s 32(2B), which is addressed to whether pars (a)-(d) apply to “a contract”, and not whether or not they apply to a service. Thus if any exemption is established the whole contract for the relevant financial year, including all services provided under it, are not subject to payroll tax. There is no sensible reason why any different result would follow if more than one exemption was established. The use of the word “or” at the end of each paragraph and subparagraph in s 32(2) does not require a construction to the contrary. In that context, it is difficult to see how Uber’s construction of s 32(2B) would give it work to do.

The argument also seems to presuppose that the “services for or in relation to the performance of work” referred to in s 32(2)(b) can be sliced into different types of such work – so, for example, the services of driving, rating and referrals are to be treated separately. That view has already been rejected for s 32(2)(a) (see above at [278]) and the same conclusion applies as regards s 32(2)(b).

In any event, Uber’s argument is unpersuasive. As to text, Uber accepted (AT 56-57) that its construction involves treating subs (2B) as though the underlined words were added:

Those additions are not insignificant. Of course the singular can generally be taken to include the plural and vice-versa pursuant to s 8 of the Interpretation Act 1987 (NSW), subject to any contrary intention (per s 5(2) of that Act). But here the fact that the paragraph uses the singular throughout by use of the “or”, the associated “does”, and the word “paragraph”, tends to suggest that it was only the singular which was meant to be included. That the provision refers to “the relevant paragraph” reinforces a focus on a particular paragraph. What this Court said about the potentially variable meaning of the word “or” in McIntosh Bros at [13]-[15] does not advance matters in the statutory context at hand.

It is then necessary to consider the legislative context and the purpose of the paragraph. The bill containing that amendment was introduced to the Legislative Assembly on 29 May 2014 by Minister Perrottet. In his second reading speech he said as follows (2014 Second Reading Speech (NSW) at 29469):

It can be inferred that the recent court decisions the Minister was referring to were those in the Smith’s Snackfood litigation, the first instance decision in which was handed down on 28 August 2012, and the appeal was argued on 9 July 2013 and was handed down on 23 December 2013. As explained above, the case concerned the conveyance exception (now in s 32(2)(d)). At first instance, Gzell J said that “the exemption is not defeated if there be services provided in the GDA that are ancillary to the conveyance of goods and others that are not” (Smith’s Snackfood Co Ltd v Chief Commissioner of State Revenue [2012] NSWSC 998; (2012) 90 ATR 188 at [50]). On appeal, Gleeson JA noted a concession to similar effect made in the course of argument by the Chief Commissioner in that case (see at [94], see also [79]), saying:

His Honour accepted that concession (at [94]). He concluded that the exemption did apply even though he found that certain services supplied under the contract in question were not ancillary in the relevant sense (see at [145]-[153] and [158]), albeit that he concluded those non-ancillary services were de minimis.

In this context it can also be inferred that the purpose of the provision, responding to that litigation, was to ensure – contrary to the view taken by Gzell J and then conceded in argument on appeal – that an exemption would not apply if (relevantly) other non-ancillary services were provided under the contract. The concern expressed by the Minister about “tax avoidance opportunities” can be understood to include a concern about contracts for which not all work-related services supplied under the contract were ancillary to the use of a vehicle for conveying goods.

The equivalent Victorian provision to which Minister Perrottet referred – and which he appeared to suggest had the same effect – is not expressed in identical terms, it being s 32(2A) of the Payroll Tax Act 2007 (Vic). It commenced on 1 July 2013 (and Minister Perrottet should therefore have used the past tense in that respect). It states:

This provision is even less susceptible to Uber’s construction. The explanatory memorandum for the bill which introduced the amendment said of that provision, amongst others, that (Explanatory Memorandum, Introduction Print, State Tax Laws Amendment (Budget and Other Measures) Bill 2013 (Vic), p 21):

That understanding is consistent with the construction of s 32(2B) that we prefer, and which is consistent with the ordinary meaning of the words employed. Section 32(2B) is directed to preventing reliance on an exemption if any additional services or work are supplied or performed under the contract which are not of the kind addressed in the particular exemption in question. Thus if we had held that driving was an ancillary service for the purpose of s 32(2)(a), but rating was not, then Uber would not have been able to invoke that exemption. The provision is not directed to instances where different exemptions apply to different services.

Therefore, the primary judge did not err in concluding that the exemption in s 32(2)(a) was disapplied by operation of s 32(2B), although we have reached that conclusion by a different path of reasoning. Ground 5(d) of Uber’s Amended Notice of Cross-Appeal is not made good.

The critical issue raised by the Chief Commissioner’s appeal in relation to the payroll tax liability of Uber for which the Chief Commissioner contends is that the primary judge concluded that the payments by Uber to the drivers were not “for or in relation to the performance of work” and hence not deemed to be wages under s 35 of the Payroll Tax Act. The primary judge considered that some “reciprocity or ascertainable calibration between the money paid and the work done” was required ([170]) and that this was absent in the present case because the payments made by Uber to the drivers were only made pursuant to an obligation to account ([180]-[181]). In so concluding, the primary judge applied the noscitur a sociis maxim ([167]) and, secondly, relied on the intention behind Div 7 of the Payroll Tax Act as being to capture the “means of disguising the employer-employee relationship” ([171], [179]).

The Chief Commissioner points out that the primary judge’s analysis of s 35 did not expressly deal with other payments made by Uber to the drivers which were not simply remitting part of the fare paid by riders (such as the payment of referral fees) but that the final orders made by the primary judge excluded payments from attracting payroll tax “to the extent those payments represent amounts received from riders and remitted to those drivers or partners”. As a consequence, the Chief Commissioner says that these other payments (i.e., not representing remission of part of the fare paid by riders) attracted payroll tax (a matter of some relevance when considering the order made for remission of premium interest, which does not in terms take note of the difference in treatment of the respective payments).

The Chief Commissioner submits that the primary judge erred in reading s 35 down so that some form of reciprocity was required.

The Chief Commissioner emphasises that the words “reciprocity” or “ascertainable calibration” do not appear in s 35 of the Payroll Tax Act and says that the construction adopted by the primary judge in the present case was argued in Thomas & Naaz (at [64]) and rejected, Leeming JA there considering that the contention that there needed to be something more (a “quid pro quo”) for the payments to fall within s 35 was to place a gloss on the section (see at [68]).

Similarly, the Chief Commissioner argues that insofar as Uber submits that the connection demanded by s 35(1) should be construed to import some requirement analogous with the common law concept of wages, this puts a gloss on the statute.

The Chief Commissioner submits that the correct construction of the phrase “for or in relation to the performance of work” is that it requires the payment to be “work-related” (referring here to Odco at 612) in the sense that there be a relationship, whether direct or indirect, between the payment and the work. The Chief Commissioner contends that the amounts paid by Uber to drivers for performing a trip satisfied that description. In reply submissions the Chief Commissioner disavows any argument that every transfer of money from a putative employer to a putative employee is deemed to be wages.

The Chief Commissioner notes that the phrase considered in Odco (“for or in relation to the performance of work”) as used in s 9 of the Accident Compensation Act 1985 (Vic) is identical to the phrase in s 35(1) of the Payroll Tax Act, pointing out that the statutory provision considered in Odco was transposed from s 3C of the Pay-roll Tax Act 1971 (Vic) (the Victorian Act), which formed the basis for the New South Wales provisions. The Chief Commissioner further notes that the High Court’s construction of “for or in relation to the performance of work” was applied to s 32 of the Payroll Tax Act in Smith’s Snackfood, Gleeson JA finding that there was no indication in s 32(1)(b) or its legislative history that the words “for or in relation to” should be read narrowly (i.e., that the phrase “in relation” requires “no more than a relationship, whether direct or indirect, between two subject matters”).

The Chief Commissioner submits that the same words should be given the same meaning in s 35, i.e., “work-related”, and says that the required relationship (in s 35 between the payment and the work) may be direct or indirect. The Chief Commissioner points out that this was the approach taken to s 35(1) by Richmond J in Loan Market at [288], where his Honour said that in the context of s 35(1) “the phrase ‘relating to’ or ‘in relation to’ requires no more than a relationship, whether direct or indirect, between two subject matters” and by Croft J in Commissioner of State Revenue v Optical Superstore Pty Ltd [2018] VSC 524 (Optical Superstore (First Instance)) (see at [50] in respect of s 35(1) of the Victorian Act).

The Chief Commissioner thus contends that the primary judge erred in taking a narrower approach to the construction of s 35(1), noting that the primary judge did not refer to Odco, Smith’s Snackfood or Optical Superstore (First Instance) when construing s 35(1) (and only referred to Loan Market at [288] in this context by way of contrast – indicated by the “cf” at [170]).

As to the primary judge’s application of the noscitur a sociis maxim, the Chief Commissioner argues that this was inconsistent with the approach taken in Odco and Smith’s Snackfood, in neither of which cases did the Court invoke the maxim or otherwise seek to narrow the meaning of “in relation to” by its use in association with the word “for”. The Chief Commissioner notes that Gleeson JA in Smith’s Snackfood (at [60]) expressly rejected the submission that the words “for or in relation to the performance of work” were words of limitation and expressly applied the meaning of those words as explained in Odco at 612. It is noted that Gleeson JA there said that the relevant connection or association is that the “services” supplied under the relevant agreement must be “work-related”.

The Chief Commissioner also points to the caution expressed by Lord Diplock in Letang v Cooper [1965] 1 QB 232 at 247 in relation to the maxim applied by the primary judge (i.e., that the maxim “is always a treacherous one unless you know the societas to which the socii belong”). The Chief Commissioner says that neither the word “for” nor the words “in relation to” belong to an identifiable societas and the primary judge ought to have found that “in relation to” has a broader and different meaning than “for”. The Chief Commissioner notes that the primary judge recognised “in relation to” had a broader ambit at [170] and says that the primary judge erred in reading “in relation to” in “the same sense” as “for”, thereby limiting the ordinary meaning of “in relation to”. The Chief Commissioner submits that the noscitur a sociis maxim does not support that approach.

As to the second reason identified by the primary judge for confining the words “in relation to” (i.e., by reference to the statutory purpose of Div 7 as an anti-avoidance measure), the Chief Commissioner argues that this statutory purpose does not provide a reason for interpreting “in relation to” so that it requires some form of reciprocity. The Chief Commissioner notes that a similar submission to that accepted by the primary judge was rejected in Thomas & Naaz at [68], where Leeming JA (with whom Meagher JA and Griffiths AJA agreed) said that the submission amounted to the assertion that the scope of the Division is confined to “tax avoidance” and (as referred to above) placed a gloss on the statutory text.

The Chief Commissioner further says that, even if the only statutory purpose was to defeat tax avoidance, it does not follow that the words “in relation to” should be limited to require some form of reciprocity. The Chief Commissioner argues that if tax avoidance is the purpose, then a broad interpretation of “in relation to” should be adopted, referring to what was said by Croft J in Optical Superstore (First Instance) as to the function of s 35(1) being “to expand the circumstances in which a payment may be treated as ‘wages’ for payroll tax purposes so as to guard against erosion of the payroll tax base” and the need for the phrase “for or in relation to” in s 35(1) to be interpreted broadly.

The Chief Commissioner argues that it is not the role of s 35 to distinguish between genuine independent contractors on the one hand, and tax-avoidance schemes on the other. The Chief Commissioner notes that previous cases have explained that s 32(1) operates by casting a wide net in its principal definition of a “relevant contract” and that it is the purpose of the exemptions in s 32(2) to exclude genuine independent contractors. The Chief Commissioner says that the exemptions in s 32(2) perform the work of excluding genuine independent contractors and there is no need for s 35 to be given a strained construction to achieve that same purpose.

Alternatively, the Chief Commissioner says that, even if the primary judge’s construction was correct, his Honour should have found that there was some “reciprocity” or “ascertainable calibration” between the fares remitted to drivers and the work they performed.

The Chief Commissioner points to the recognition by the primary judge that Uber would not have to pay money to a driver if the driver did not drive a rider ([179]) and argues that on the Chief Commissioner’s construction of “for or in relation to” there is a direct or indirect relationship between the payments to drivers and the work of driving. The Chief Commissioner also submits that the mechanism by which the amount paid to drivers is calculated shows that the payments are work related and that there is a reciprocity and calibration between the work performed and the payments made (referring to the fact that the amounts paid to the drivers depend on factors such as the time taken, the route and distance of the journey and when the journey occurs). Thus, the Chief Commissioner argues that the moneys “were earned through the relevant work” (adopting the words of Croft J in Optical Superstore (First Instance) at [54]).

The Chief Commissioner submits that the primary judge erred in concluding that there was no element of reciprocity or calibration between payments to drivers and the work of driving because Uber’s payments were “made pursuant to an obligation to account, and no more” such that “[w]hat Uber pays the driver is in relation to the payment Uber has received, not in relation to the work itself” ([180]-[181]). First, because this incorrectly assumes that, because a payment is in relation to an obligation to account, it cannot also be in relation to work and, second, because the conclusion is inconsistent with this Court’s decision in Thomas & Naaz, and the Victorian Court of Appeal’s decision in Optical Superstore Appeal.

As to the first, the Chief Commissioner cites Lenz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65 at [67] (Leeming JA, with whom Payne and White JJA agreed) for the proposition that in cases where an issue of characterisation arises it will usually not be a sufficient answer to say that the matters bear a different character. The Chief Commissioner contends that s 35 does not require the payment to be for or in relation to the performance of work and not in relation to anything else. As to the second, those decisions are considered in the context of the submissions in relation to Ground 6 of Uber’s Amended Notice of Cross-Appeal (see Issue 10 below).

Uber submits that his Honour correctly construed the words “for or in relation to the performance of work” as used in s 35(1) of the Payroll Tax Act.

Uber maintains that the word “for” in the connecting phrase “for or in relation to” is protean and has no single ordinary meaning; and says that the constructional choice that arises is guided by the legislative context of adding on to (but not entirely outflanking) common law notions of employment (there citing E Group at [46]).

As to the phrase “in relation to”, Uber notes that this is used in a variety of contexts and that the degree of connection required between the two subject matters which it joins depends heavily on context (citing Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510; [2010] HCA 33 (Travelex) at [25], [90]; Khazaal at [31]), involving judgment about the purpose and intended range of the provision, with resort to dictionary meanings being of little assistance (citing R v Orcher (1999) 48 NSWLR 273; [1999] NSWCCA 356 at [28]-[32], [42] (Spigelman CJ, with Grove and Sully JJ agreeing); Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456 at 288-289 (Neaves, French and Cooper JJ)).

Uber argues that the context of s 35 in Pt 3 Div 7 of the Payroll Tax Act, and within the Payroll Tax Act more generally, is critical to resolving the proper construction of “in relation to” in s 35. Uber says that the Chief Commissioner’s submission to the effect that s 32 provides the only filter “to exclude genuine independent contractors” fundamentally misconceives the statutory purpose of s 35. Uber says that once s 32 is satisfied and there is a relevant contract, there will then be a deemed employer and a deemed employee (referring to ss 33, 34 of the Payroll Tax Act) but that it does not follow that, having recognised that deemed employment relationship, every payment between the respective entities is deemed to be wages.

Reference is made to E Group (at [45]-[46]), where Bell CJ, Gleeson and Leeming JJA noted that the primary subject matter of the Payroll Tax Act is a tax upon the wage and salary earnings of employers, and that the provisions in Divs 7 and 8 “to an extent expand common law notions of employment” but that there was nothing to suggest that Div 8 “should entirely outflank its role as an add-on to common law notions of employment”. Uber argues that the same consideration applies to the relevant contract provisions in Div 7, namely, that while it may be accepted that the relevant contract provisions extend the scope of the Act beyond traditional employment relationships, that does not mean that such extensions should be “entirely disconnected” from what is otherwise the subject matter of the Act. Uber argues that the recognition of a deemed employer/employee relationship does not mean that the relationship ought be “entirely divorced” from the basal operation of the Act. In answer to this submission, the Chief Commissioner says that there is no support in s 13 for the construction that there must be an element of reciprocity or calibration between the money paid and the work performed ([170]); rather the Chief Commissioner says that the purpose of s 13 is to expand the concept of wages to include other types of payments; it does not incorporate the concept of reciprocity.

Uber argues that in the case of a common law employer/employee relationship, the amounts that are “wages” are more limited than simply every transfer of funds between employer and employee; rather, to be “wages”, the character of the payment must bear a particular connection to that relationship of employer and employee. Thus, it says that in the case of a common law employment relationship, “wages” relevantly means “wages, remuneration, salary, commission, bonuses or allowances paid or payable to an employee” (referring to s 13(1)). (The Chief Commissioner says that his construction does not mean that every transfer of funds between the putative employer and employee is captured, referring, by way of example, to a loan made by an employer to an employee unrelated to work which would not be captured by s 35.)

Uber says that its interpretation is reinforced by s 46(1), which provides for certain amounts to be wages even where they are not paid to the employee (but to someone else), or they are not paid by the employer (but by someone else). However, Uber points out that such an amount is only taken to be wages if it is “for the employee’s services as an employee of an employer”. Uber says that it identifies a capacity (“as” an employee) and a relation between the payment and that capacity (“for” the “services” in that capacity). (The Chief Commissioner says that s 46(1) provides no support for the construction advanced by Uber, that provision being directed to circumstances where amounts which would otherwise be wages are paid by someone other than the employer, or to someone other than the employee. The Chief Commissioner notes that the relationship specified in that provision is that the payment be “for the employee’s services as an employee of an employer” and says that this language is markedly different to, and narrower than, that of s 35.)

Uber argues that the Chief Commissioner’s construction of s 35(1) is to the effect that, once there is a deemed employment relationship under ss 32, 33 and 34, an amount is deemed to be wages if it is a payment that bears some relationship with work that itself bears some relationship with a contract under which the taxpayer is supplied with services relating to some potentially other work. Uber argues that this construction “disconnects” the operation of s 35 and the intended role of Div 7 in extending a tax on payroll to relationships falling short of a formal employer/employee relationship. Uber argues that such a construction is inconsistent with what was said in Smith’s Snackfood at [119] to the effect that s 35 provided for a power of apportionment such that, where multiple services are supplied under a contract with some being exempt and some not, only the amounts attributable to the services that are not exempt would be deemed to be wages. Uber submits that the Chief Commissioner’s construction would give the apportionment nexus in ss 35(1) and 35(2) no real work to do. (The Chief Commissioner also cavils with Uber’s submission that his construction of s 35 is contrary to previous decisions. In particular, the Chief Commissioner says that the observations in Smith’s Snackfood at [119] (as to the Chief Commissioner’s power in s 35(2) to determine that an amount paid by a deemed employer is not attributable to the performance of work and therefore not deemed to be wages) do not assist in resolving the proper interpretation of s 35(1).)

Additionally, Uber argues that the Chief Commissioner’s construction would render otiose s 35(3), submitting that the amounts there referred to would, of necessity, be included under s 35(1) without the need for special mention. The Chief Commissioner maintains that his construction does not render otiose the apportionment power in s 35(2). The Chief Commissioner says that payments made by the putative employer for goods supplied by the putative employee would not be “for or in relation to the performance of work” within the meaning of s 35(1) and therefore would be “ripe for apportionment”. The Chief Commissioner submits that, consistent with that approach, in the assessments a deduction was made for car-related expenses of drivers while taking trips on a cents per kilometre basis. As to the references in s 35(3) to superannuation contributions, shares or options, the Chief Commissioner says that this subsection appears to have been included to clarify that these specific examples fall within the scope of s 35 and that there might otherwise be doubt as to whether a superannuation contribution was in relation to the performance of work, or whether the grant of a share or option was relevantly an amount paid or payable. In oral submissions the Chief Commissioner maintains that s 35(3) is more concerned with whether particular types of benefits (being superannuation contributions and share options) are deemed to be payments (see AT 101.26-50).

Uber submits that the principle recognised in the primary judge’s construction of s 35(1) was also applied by White J (as his Honour then was) in Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127 (Freelance), where White J recognised that there were several relevant contracts arising from the arrangements in that case under which the taxpayer could be deemed to be an employer because the arrangements provided for services to be provided by the independent contractors to the taxpayer and also for services to be provided by the taxpayer to the independent contractors. It is noted that in that case the taxpayer paid money to the independent contractors (through distributions from the discretionary trust), but his Honour recognised that not every such payment was subject to s 35 merely because it related to work that related to the contract (see at [177]-[179]), saying at [177] that the focus under s 35 is to determine what amounts were paid or payable by the employer for or in relation to the performance of work that constituted wages.

The Chief Commissioner says that Freelance turned on the particular facts of that case, where White J was addressing whether Freelance or its contractor(s) was deemed to be an employer for the purpose of s 33 of the Payroll Tax Act (the difficulty there arising because Freelance both supplied services and was supplied with services (see at [177])). The Chief Commissioner argues that the characterisation of an employer was of no moment because “Freelance did not pay and was not liable to pay any amount in relation to the work-related services it provided” to the beneficiary contractors (at [177]). The Chief Commissioner argues that the amounts paid by Freelance to its contractors were, in effect, remitting payments made by its clients less a management fee (at [175]); that payment having no relationship with services provided by Freelance to the contractors. The Chief Commissioner emphasises that, in the present case, no one suggests that amounts paid to drivers are for or in relation to the performance of work by Uber.

The Chief Commissioner argues that, understood in that context, White J did not hold that the payment under s 35(1) must relate to the performance of work that constitutes the service provided to the payer nor was his Honour explaining what the phrase “for or in relation to” meant in the context of s 35(1). Rather, the Chief Commissioner says that the point being made was that, even though Freelance might be taken to be an employer both because it received services as well as supplied services, payroll tax was payable under s 35 only on payments made in relation to the performance of work.

Uber next argues that it is not sufficient, when applying s 35(1), simply to identify a relevant contract and a payment that relates to the performance of work; rather, the payment must be for, or (in the relevant sense) relate to, the performance of work that constitutes the service provided to the payer. Uber accepts that ss 32, 33 and 34 create a deemed employment relationship where there is none in reality but says that it remains the case that the deemed employment relationship is deployed in the context of an Act that is a tax on payroll. Uber says that this construction does not depend on an appeal to the relevant contract provisions in Pt 3 Div 7 being “anti-avoidance” provisions; rather, that its construction is compelled by reason of the need to give harmonious effect to the scheme of the Act as a whole.

As to the Chief Commissioner’s reliance on Odco at 650, Uber says that the High Court was there referring to services being for or in relation to the performance of work, whereas, here, the phrase is not used to qualify the word “services”; it is used to qualify the phrase “amounts paid or payable”. Uber says that in Odco, the observation that the phrase qualified the content or scope of the word services was in response to the submission that the services and the work must be different things, with the Court concluding that they could be the same thing (see at 650-651); and Uber submits that the Court was not expressing any test for the degree of interconnectedness between payments and work. The Chief Commissioner accepts that Odco concerned the concept of “for or in relation to the performance of work” in the context of services (not payment), but says that the conclusion that this phrase meant “work-related” was not limited to that context.

Uber says that in s 35(1), the words “in relation to” expand the scope of that which is deemed to be wages by including amounts that bear a “looser” relationship with the performance of work (such as a cancellation payment or holiday pay and pay while on sick leave) but are strictly for “not working”.

Uber disputes the contention by the Chief Commissioner that the primary judge’s construction of s 35(1) is inconsistent with existing authority. Uber says that in Optical Superstore Appeal the Victorian Court of Appeal did not have to decide the point, there being no appeal on the issue (at [87]-[88]), and that in Thomas & Naaz, Leeming JA made clear (at [60]) that, once the “payment” argument there being made was disposed of, then the question as to whether the payment was “for or in relation to the performance of work” did not raise a question of law, and so was outside the scope of the Court’s jurisdiction in the appeal. Uber submits that the primary judge’s reasons at [64], when read in light of [63], were referring to the “payment” argument.

The Chief Commissioner accepts that in Optical Superstore Appeal it was not necessary for the point to be decided (but notes that it was addressed by the primary judge at first instance in that case). As to Thomas & Naaz, the Chief Commissioner says that the observations in that case were persuasive, noting that although leave was there refused the substance of the appeal was heard concurrently with the application for leave.

Uber points to the explanation by the primary judge (at [178]) that the rider pays the driver the amount that the rider owes the driver for the trip through a payment by direction to Uber, which thereby discharges the rider’s obligation to pay the driver (Uber referring here to Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 1 WLR 1048 at 1052, 1055, 1056). Uber says that the payment by the rider is for the driver’s work done for the rider, and the driver has thus been paid by the rider for her or his work of driving for the rider.

Uber says that the primary judge at [180] was not saying that there was no economic calibration between the payment and the work. Uber accepts that the amount that a driver receives from Uber has a direct correlation with the work done by the driver for the rider but emphasises that the payment by Uber to the driver is not for that work. Uber says that it is only the payment by the rider to the driver (which is paid by direction to Uber) that has that relationship with the work done by the driver.

Uber submits that if s 35 falls for application then there must be a relevant contract, which means that, here, Uber must be a deemed employer and the driver must be a deemed employee but says that the remitting by the deemed employer to that deemed employee of funds earned by the employee herself or himself from a third party but paid by direction to the employer does not have the necessary nexus with that deemed employment relationship.

In our view the primary judge erred in his construction of s 35(1) of the Payroll Tax Act insofar as his Honour found that it required there to be some reciprocity or ascertainable calibration between the money paid and the work done, in the sense that his Honour invoked those notions. That construction puts an unsupportable gloss on the section. The word “for” in the phrase “for or in relation to the performance of work” indicates some distinction between payments “for” the performance of work and payments “in relation to” the payment of work. The two are not synonymous, even if they may overlap.

The phrase “in relation to” is one used “in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ”: Travelex at [25]. The nub of the issue raised here is as to the nature and strength of the required relationship between the amounts paid or payable on the one hand and the performance of work under the contract on the other, such that those amounts are taken to be wages pursuant to s 35(1). The answer to the question lies in consideration of the role the phrase is intended to play in the statutory scheme in question: see the authority referred to above at [328]. However, a court should be cautious in answering such a question beyond the extent needed, as French CJ explained in Khazaal at [31], quoted above (at [105]).

It is not necessary here to seek to articulate with specificity the strength of connection that is required by the phrase at issue. It suffices to reject the construction adopted by his Honour and his conclusion based upon that construction.

The Chief Commissioner’s construction was that the relevant connection was simply that the services be “work-related”. He relied on the following passage in Odco, addressing a similarly structured and worded Victorian provision relating to liability to pay a workers compensation levy (at 612, emphasis added):

By use of the notion “work-related” the High Court was paraphrasing the words “for or in relation to the performance of work” to explain the role that the notion played – namely, that the services must be work-related – in order to address an argument on a different topic. The Court was not addressing the issue at hand here.

The Chief Commissioner’s argument that “in relation to” means “work-related” is not to answer the question at hand. It is to restate the question in another form, again involving the word “related”.

What was said by Gleeson JA in Smith’s Snackfood is of greater assistance in resolving the issue:

Thus his Honour rejected the submission that a narrow construction of the phrase should be adopted. That being said, his Honour was not addressing the issue in the context of s 35(1). However, that fact itself points to a core problem with the approach adopted by the primary judge.

His Honour’s construction is inconsistent with other parts of his Honour’s judgment. His Honour indicated he was construing the phrase “for or in relation to the performance of work” in s 35(1), and it was with respect to the words “in relation to” within that phrase that he read in the requirement for some form of reciprocity or ascertainable calibration (see e.g. at [169]-[170]). Yet that same phrase appears throughout the provisions in Div 7, including in the definition of “relevant contract” in s 32(1), along with some of the exemptions in s 32(2). And his Honour held that the driving, rating and referral services were supplied for or in relation to work for the purposes of those provisions (at [25(1)-(2)], [89]-[103], [122]-[129]). There is no sensible reason why Parliament would have intended the phrase to mean different things when employed in different provisions within Div 7. The High Court implicitly made much the same point in Odco in the passage just quoted.

Although not articulated in these terms, the primary judge appears to have treated the fact that s 35(1) refers to “paid or payable … for or in relation to the performance of work” as a distinguishing feature from the other contexts in which the phrase is used. Yet his Honour noted the formal submission made below by Uber that no money was payable or paid, and his Honour rejected it (at [182]). He did so the basis of the decision of the Victorian Court of Appeal in Optical Superstore Appeal and this Court’s decision in Thomas & Naaz. Those decisions are addressed when addressing Issue 10 (immediately below). They establish that where the designated person pays or is liable to pay amounts under the relevant contract to the other party, the fact that the other party may have some contractual or beneficial entitlement to the money does not preclude the application of s 35(1). In both cases the other party had such an entitlement because of work done by the other party for third party customers/patients. As we explain below, we reject Uber’s argument that those decisions should not be followed. Despite the primary judge accepting the authority of those decisions, in substance his conclusion is inconsistent with them.

His Honour’s conclusion on the lack of reciprocity or calibration was expressed as follows:

Thus the basis for the conclusion was in substance that Uber had an obligation to account to the driver with respect to fees collected from the rider, and that such work as had been done was by the driver for the rider. That is not materially distinguishable from the position in Optical Superstore Appeal and in Thomas & Naaz. His Honour’s notion of reciprocity or calibration was contrary to those decisions.

The effect of his Honour’s construction is to treat the phrase “paid or payable … for or in relation to the performance of work” as though it only encompassed payments for work done for the designated person. Section 35(1) does not state that the work services must have been supplied to the designated person. And the words “in relation to” are meant to expand what is encompassed. His Honour’s reliance on the noscitur a sociis maxim was inapposite.

His Honour accepted Uber’s argument that the “overall intention” of Div 7 was “to capture several means of disguising the employer-employee relationship by contractual arrangements which had been increasingly resorted to by persons seeking to defeat the objects of the Act”, and that this was not such a case (at [171]). As explained above (at [19]-[24]), that high level argument distracts from application of the statutory text, as construed purposively and in context.

Relatedly, Uber’s reliance on s 46 of the Act does not support its argument. That section deals with situations where wages are paid by or to third parties. It refers to employers and employees. Division 3 extends the reach of the Act beyond where the contract in question provides for an employment relationship.

We do not accept that the construction advanced by the Chief Commissioner would give the apportionment nexus no real work to do and would render s 35(3) otiose. In this matter, for example, the fact that the payments made by Uber to drivers may include payments for car-related expenses (which the Chief Commissioner accepted should be deducted from the assessments) indicates that there is scope for apportionment on the Chief Commissioner’s construction. Nor is s 35(3) rendered otiose in circumstances where it may have meaningful operation in making clear what might otherwise have been suggested to fall within the concept of payments for or in relation to the performance of work.

The reasoning in Freelance does not assist Uber’s argument and does not support the conclusion reached by the primary judge. The case was not directed to the issue at hand. Even if it had been, it would have been overtaken by subsequent appellate authority.

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. They are calculated by reference to the driving service (e.g. duration and time of trip), less Uber’s service fee, which itself is just a percentage proportion of the fare (see judgment at [41]). There is, thus, a direct relationship between the performance of work and what was payable by Uber to drivers, along with what Uber itself was entitled to retain. The fact that Uber has an obligation to drivers to account for the amounts received (less the service fee) does not change the nature of the payments as being in relation to the performance of work.

Thus the primary judge erred in concluding that the payments in question were not “in relation to the performance of work”. Grounds 1-4 of the Chief Commissioner’s grounds of appeal are made good.

As indicated earlier in these reasons, at the hearing before the primary judge, Uber made the formal submission that an amount is not “paid or payable”, in the sense used in s 35(1) of the Payroll Tax Act, by a deemed employer when the deemed employee is entitled to receive funds from a third party and the deemed employer simply collects those funds on behalf of the deemed employee and remits those funds to the deemed employee. Uber accepts that (as the Chief Commissioner argues) this construction is inconsistent with the decisions in Optical Superstore Appeal (at [64]-[65]) and Thomas & Naaz (at [64]). Uber submits that those two decisions are to that extent plainly wrong.

Uber notes that, where the requirements of s 35(1) are met, it deems “amounts paid or payable” to be “wages paid or payable”. Uber refers to the definition in s 3(1) of the word “paid”, in relation to wages, as including “provided, conferred and assigned”, with the words “pay” and “payable” having corresponding meanings. Uber says that the specific inclusion in the definition of “provided”, “conferred” and “assigned” illustrates that the central concept of the words “paid” and “payable” is that of a pecuniary benefit imparted by the payer on the payee as a quid pro quo, (pointing out that even a voluntary assignment involves imparting economic value on the assignee). Uber says that there is no such imparting of economic value on a driver merely by Uber complying with its obligation to remit to the driver funds that have been earned by the driver from riders and merely collected on behalf of the driver by Uber.

Uber argues that s 35 ought not be construed such that Div 7 “entirely outflanks” the role of the Payroll Tax Act as a tax on payroll; and that it would be entirely at odds with the basal operation of the Payroll Tax Act to treat as an amount of payroll (on which payroll tax should be imposed) any amount that passes from a deemed employer to a deemed employee even where it is not provided, conferred or assigned by the employer to the employee as a quid pro quo for the work done by the employee for the employer.

Uber says that where an employee has earned money from a third party (i.e., the rider) by contracting with that third party and performing services for her or him and the employee directs the third party to pay that money to the employee’s employer pursuant to an arrangement whereby the employer will act as the employee’s agent and remit the moneys so collected to the employee, the remitting of that amount by the employer to the employee is not part of the employer’s payroll, and is not “paid” or “payable” by the employer in the sense used in s 35(1).

As to the 2024 amendment to the legislation referred to by the Chief Commissioner in his submissions (see below), Uber says that that amendment was made to address the “pressure” on general practitioners from “uncertain payroll tax obligations” because the Government “prefer[red] GPs to spend more time with their patients than with their accountants” (referring to New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 18 June 2024 at 4). Uber says that the amendment was directed to addressing uncertainty, rather than being a change made in light of a judicial interpretation endorsed by Parliament and so does not assist in construing the statute before the time of that amendment. In any event, Uber says that all it demonstrates is that Parliament chose a “GP-specific” statutory pathway to ameliorate the payroll tax impost with respect to bulk-billing GPs. Uber notes that the new legislation does not require that the relevant “wages” which are “paid or payable” be “paid or payable by the employer”.

As to the exception relating to GPs, Uber submits that the amendment in response to Thomas & Naaz does not indicate that Parliament thought that the case was rightly or wrongly decided but, rather, that it was politically expedient to provide clarity for GPs in response to a perceived problem. Uber says that the use of the words “paid or payable” in the exception does not indicate an endorsement of the construction in Thomas & Naaz but, rather, is simply to ensure that, however wide that concept is in s 35(1), the exception is equally wide. Uber says that the exception uses the same words because they are intended to have the same meaning, whatever that meaning might be.

The Chief Commissioner submits (and we accept) that Leeming JA, in Thomas & Naaz, not only endorsed the reasoning in Optical Superstore Appeal (at [64]) (to the effect that the fact that payments were beneficially owned by the payees did not prevent them being payments within the meaning of s 35(1) – see at [63]) but also made clear that this did not depend on the precise legal nature of the payment (i.e., whether the payments in question were received as agent of the doctors such that the medical practice made the payments pursuant to an obligation to account). Thus, the Chief Commissioner submits that the primary judge’s finding that Uber’s payments were not within s 35 because Uber was acting as a payment collection agent was inconsistent with Thomas & Naaz and Optical Superstore Appeal.

The Chief Commissioner contends that this Court should not depart from the decisions in Optical Superstore Appeal and Thomas & Naaz, noting that those decisions involve the interpretation of uniform national legislation. The Chief Commissioner argues that the reasoning in Optical Superstore Appeal at [55]-[69] is compelling, namely that ordinary expectations of what constitutes wages are of limited relevance because the contractor provisions (Div 7) create their own conception of what constitutes “wages” (at [63]), the statute does not ask whether the flow of money was beneficially owned by the recipient (at [64]), and the ordinary meaning of payment readily embraced cases where the recipient of the money was beneficially entitled to it ([66]).

Further, the Chief Commissioner says that the correctness of Thomas & Naaz is confirmed by subsequent amendments to the Payroll Tax Act. The Chief Commissioner notes that, following the decision in Thomas & Naaz in March 2023, the Revenue Legislation Amendment Act 2024 (NSW) was enacted, which came into force in June 2024. That legislation inserted provisions into Sch 2, Part 3, Div 2A of the Payroll Tax Act creating a rebate on payroll tax which is payable in respect of “relevant general practitioner wages”, defined as wages paid to a general practitioner for the provision of services through a medical centre, where that practitioner provides a specified proportion of services under a bulk-billing arrangement (cll 10B and 10C). The Chief Commissioner says that those amendments were plainly a response to Thomas & Naaz; and he emphasises that there was no amendment to s 35 itself. Reference is made to the New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 18 June 2024 at 4 and the reference to “uncertainty” stemming from court decisions. The Chief Commissioner says that the temporal proximity between the decision and the legislation, as well as the fact that both concerned general practitioners who provided services through a medical centre, means that there is an inference that this was a legislative response to the decision.

The Chief Commissioner draws two matters of significance from this legislative reform: first, that it reversed the outcome in Thomas & Naaz (with a “GP-specific statutory pathway”), which the Chief Commissioner argues confirms that Parliament did not consider that the underlying construction given to the Payroll Tax Act by the Court of Appeal was wrong (rather, it was necessary to create a bespoke exemption to achieve the desired outcome); and, second, that the exemption used the words “paid or payable” without disturbing the Court’s findings as to the meaning of those words, which the Chief Commissioner submits is implicit confirmation of the correctness of the Court’s construction given to the Payroll Tax Act in Thomas & Naaz.

As to the reliance placed by Uber on the definition of “paid” as including “provided”, “conferred” or “assigned”, the Chief Commissioner argues that this does not import the concept of a quid pro quo (since money may be “provided” or “conferred” without there being any quid pro quo and that property may be assigned voluntarily). The Chief Commissioner suggests that the inclusion of those words is no more than a definition to make clear that the definition of “paid” is broad and captures a wide range of legal arrangements by which that transaction may be affected.

Insofar as Uber’s submission calls in aid the statutory purpose of Div 7 of the Payroll Tax Act, the Chief Commissioner says that it proceeds from the premise that the Payroll Tax Act seeks to impose a tax on “payroll” and therefore does not apply to Uber because amounts remitted by Uber are not properly described as part of the employer’s “payroll”. The Chief Commissioner criticises this submission as commencing from an unarticulated premise as to what constitutes “payroll”, without regard to the relevant statutory provisions.

In Optical Superstore Appeal, the issue was whether payments made to optometrists by the trustee which operated an optical dispensary business were amounts “paid or payable” within the meaning of s 35(1). The payments were made in circumstances where: the optometrists performed eye tests for the public in stores, all fees charged by the optometrists were required to be paid to the trustee’s bank account, and the optometrists were paid on a monthly basis referable to the number of hours they worked (and payment “was considered to be a return of moneys belonging to the optometrist”). The payments to optometrists were in circumstances where the optometrists already beneficially owned those funds ([61]). At [66] the Court (McLeish, T Forrest and Emerton JJA) said that “it cannot be imputed to the legislature that it did not intend to treat as wages amounts paid to a person beneficially entitled to receive those amounts”.

Addressing the submission that the payments to optometrists were not amounts “paid or payable” within the meaning of the equivalent of s 35(1) of the Victorian Act in circumstances where the optometrists were already beneficially entitled to those funds, their Honours said:

In Thomas & Naaz, where the operator of medical centres paid to doctors (who provided medical services at those centres) a percentage of the funds received from Medicare in respect of the patient’s liability for medical services (retaining the balance as a service fee), Leeming JA, speaking for the Court, agreed with the reasoning of the Victorian Court of Appeal in Optical Superstore Appeal ([64]). His Honour observed that while the bulk of the amounts received by the operator of the medical centre were beneficially owned by the medical practitioners, this did not prevent them from being payments within the meaning of s 35(1) (see at [63]). True it is that the observations of Leeming JA on this issue were obiter. However, they are entitled to no little weight.

Uber did little to engage with the reasoning employed in these cases. Uber’s argument that the inclusive definition of “paid” refers to “provided, conferred and assigned” does not advance matters. Those words do not require that such a transfer of money is in exchange for something else: note Optical Superstore Appeal at [30]. And as the Victorian Court of Appeal said, the “ordinary meaning of ‘payment’ readily embraces a payment of money to a person beneficially entitled to that money” (ibid at [67]).

Uber argued (AT 106-107) that at least Thomas & Naaz could be distinguished because it was not apparent that the applicant in that case was merely a payment collection agent for the doctors. The Court there noted that the precise legal nature of what occurred was unclear, but it nevertheless proceeded to consider the position as if the doctors were beneficially entitled to the funds paid to the applicant (see at [7] and [61]-[64]). The claimed distinction is not made out. In any case the claim that Uber is a mere collection agent is unpersuasive. It has a significant role in organising rides and in setting fares. Notably, Uber rides are organised through the Uber app, created and operated by it (or associated entities), by drivers selected by it. As between Uber and the driver, Uber calculates the “recommendation” fare for a ride, and it has the right to change the fare calculation, where continued use of Uber services by the driver after the change is taken to be the driver’s consent (see the example clauses quoted by the primary judge at [174]-[176]). As between Uber and the rider, Uber has a discretion to establish, remove or revise charges.

To overturn applicable intermediate appellate authority Uber needed to establish that there was compelling reason to depart from it (Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21 at [25]-[26]; Moriarty v Nye (2024) 114 NSWLR 560; [2024] NSWCCA 116 at [156]-[159]; Lendlease Corporation Ltd v Pallas [2025] HCA 19; (2025) 99 ALJR 834 at [109]). It has established no such case. On the contrary, the reasoning employed in the two decisions is persuasive.

It is unnecessary to address the Chief Commissioner’s arguments that the Parliament implicitly affirmed the construction adopted in Thomas & Naaz by amending the Payroll Tax Act so as to exclude general practitioners.

We reject Ground 6 of Uber’s Amended Cross-Appeal.

The final issue relates to the determination by the primary judge that, had Uber been unsuccessful, premium interest would have been remitted ([186]); and the order ultimately made to that effect. Prior to the hearing at first instance, the Chief Commissioner had agreed to remit 50% of both the market and premium components up to the time of the assessments (but not after), provided Uber met an agreed payment plan. At the hearing the only issue concerning interest was whether the balance of the premium interest (before and after the assessments) should be remitted pursuant to s 25 of the Taxation Administration Act. The primary judge determined the entirety of any amount of the premium component of interest should be remitted.

The Chief Commissioner points out that the observation by the primary judge (at [186]) that interest was not payable because Uber had succeeded with respect to the entirety of the challenged assessments was strictly incorrect as some amounts paid to drivers remained taxable pursuant to the orders of 20 September 2024. However, the nub of the challenge to the order for the remission of premium interest is the contention by the Chief Commissioner that, in exercising the discretion to remit the premium component of interest, the primary judge made a number of House v The King errors (referring to House v The King (1936) 55 CLR 499 at 504-5; [1936] HCA 40 (House v The King)).

Before turning to the asserted House v The King errors, it is relevant to examine the statutory context in which the discretion to remit interest arises, and to address an issue that arose as to the nature of the error that the Chief Commissioner was required to establish on appeal from an exercise of the discretion by the Court below.

Pursuant to ss 21 and 22 of the Taxation Administration Act, interest (comprising the market and premium components) is payable on the amount of any unpaid tax if a tax default occurs. The market component is set by reference to a particular market interest rate. The premium component is set at 8% per annum. The tax default arises at the time of failure to declare and pay the relevant tax (not when the assessment is issued in respect of that tax). The Chief Commissioner has a discretion to remit interest pursuant to s 25 of the Taxation Administration Act.

The current version of s 25 provides that the Chief Commissioner “may remit interest”, and authorises the Chief Commissioner to issue guidelines relating to remitter, providing that if such guidelines are issued the “interest must be remitted only in accordance with the guidelines”. The Chief Commissioner did not suggest there were any applicable guidelines (AT 92.20). The previous version of the section (up until 31 January 2024) provided that “[t]he Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit the market rate component or the premium component of interest, or both, by any amount”. The parties proceeded before the primary judge on the basis that it was the current version of s 25(1) which was applicable, and it was not argued that anything turned on the difference in the provisions.

It appears to be common ground between the parties that, when exercised by the Chief Commissioner, the discretionary power conferred by s 25 of the Taxation Administration Act is confined only “by Peko-Wallsend and related principles”, this being a reference to Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-41; [1986] HCA 40 (Peko-Wallsend) (see AT 94.41-44). Thus the scope of the discretion is unconfined save as to what expressly or impliedly is required to be taken into account or forbidden to be taken into account in light of the subject matter, scope and purpose of the Act (e.g. R v Australian Broadcasting Tribunal; Ex parte 2 HD Pty Ltd (1979) 144 CLR 45 at 49-50; [1979] HCA 62). The discretion must also, of course, be exercised in a legally reasonable way (Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18).

It is accepted by both parties that, in the exercise of the discretionary power to remit interest under s 25 of the Taxation Administration Act, the primary judge stood in the shoes of the Chief Commissioner, exercising that discretion afresh (see Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (2011) 245 CLR 446; [2011] HCA 41 at [18]-[22] (Tasty Chicks); Qantas Airways Ltd v Chief Commissioner of State Revenue [2015] NSWSC 826; (2015) 99 ATR 364 at [50]; see also AT 95.1-8). In so doing, the Court has the same broad discretionary power as the Chief Commissioner did subject to the requirement that the power is to be exercised judicially, that is, fairly and reasonably (note Australian Building and Construction Commissioner v Pattinson (2022) 274 CLR 450; [2022] HCA 13 at [40]; Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473; [1963] HCA 54 (Klein); see also Downer First Instance at [182] and [186]). Insofar as the taxpayer wishes to rely in proceedings on particular facts they assert to be relevant to the exercise of the discretion then the onus of proof lies on the taxpayer (note Taxation Administration Act, s 100(3)).

In this matter the primary judge referred at [186] to the decision of the Appeal Panel of the Administrative Decision Tribunal in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19; (2004) 56 ATR 82 (Incise) at [62]. In that matter the Appeal Panel explained that the market rate component of the interest rate applied is intended to compensate the Chief Commissioner, on behalf of the State, for having been deprived of the benefit of payment of the tax when due (at [60]). It then, aptly, explained:

The penal nature of the premium interest component has been accepted in later decisions (e.g. Southern Cross Community Healthcare Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317; (2021) 113 ATR 601 at [443] (Emmett AJA); Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249 at [101], [102] (Golden Age) at [101]-[102] (Richmond J)).

In Incise the Appeal Panel then listed four “criteria” which the Chief Commissioner had nominated as relevant (at [62]). The Panel accepted that, with one modification, those factors were “relevant and appropriate” (at [63]). They have regularly been referred to since, subject to noting the caveat that they are not exhaustive (e.g. Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107; (2021) 112 ATR 777 at [179] (Payne JA); Chief Commissioner of State Revenue v E Group Security Pty Ltd (No 2) [2022] NSWCA 259; (2022) 115 ATR 448 at [105]-[106]).

In Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773; (2018) 108 ATR 63, at [82]-[86], Emmett AJA took account of the fact that the taxpayer had declined to pay an amount assessed by the Chief Commissioner even after the Commissioner had indicated that if this was done the premium component of interest would be remitted. That point illustrates the potential relevance of the particular facts of the case, and whether the taxpayer acted reasonably.

In Golden Age Richmond J, by reference to earlier authority, said that “whether the taxpayer took reasonable care is also relevant to the remission of the premium component”, which factor he then elucidated (at [106]).

Drawing these threads together, the following factors may be relevant to a decision under s 25 whether or not to remit some or all of the interest otherwise liable to be paid, namely whether:

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.

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.

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.

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]).

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 House v 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]).

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).

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 House v The King error (see for example Chief Commissioner of State Revenue v Elanor Operations Pty Ltd [2022] NSWCA 222 at [3], [27] (Elanor)).

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 House v The King with respect to “material” considerations and “extraneous or irrelevant” matters from that used in Peko-Wallsend.

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]).

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]).

The Chief Commissioner argues that, for three reasons, House v 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 House v 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)).

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.

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.

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 Act 1995 (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]).

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 Rajendran v 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]).

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.

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.

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.

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:

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”.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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]).

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.

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.

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.

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.

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.

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.

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

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.

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