Does the Uber Decision Reshape Payroll Tax Risk for Health and Medical Practices?
If you’re a medical practice owner or practice manager, you’ve probably heard there is a new payroll tax case getting some attention, the New South Wales Court of Appeal’s recent decision in Chief Commissioner of State Revenue v Uber Australia Pty Ltd. While the headlines in the group chat might feel unsettling, you’re not alone in wondering, does this affect our industry?
At You Legal, we know that the complexity of payroll tax law, especially when it is combined with medical and health services, can leave even the most organised practice managers and practice owners feeling anxious.
The good news? With the right guidance, your practice can stay compliant, protect practitioner relationships, and avoid unnecessary stress. This article aims to calm your nerves on this recent decision.
What happened in the uber case?
The question in this case was whether Uber should be paying payroll tax on amounts it paid to drivers. Uber argued that its drivers were independent contractors, not employees. Their written contract reflected that characterisation. But the Court of Appeal took a closer look at the substance of the relationship, not just the wording in the contracts.
The Court noted several key parts of the relationship:
Uber sets the fares
Uber allocates rides through its platform
Uber processes payments from passengers
Drivers have limited ability to negotiate terms of service
Together, these factors meant the uber drivers weren’t truly independent, regardless of what the contract said. The Court decided that payments were made “for or in relation to the performance of work” under NSW Payroll Tax legislation, making them “relevant contracts”. Consequently, Uber became liable for payroll tax as the Court said that the nature of their relationship with the drivers wasn’t truly independent.
Should you be worried as a medical practice owner?
This is a significant conversation that certain industries have been having for several years, particularly in the medical field. Trying to figure out if and how your contracts are truly ‘independent’ is difficult to navigate.
It’s worth saying that in this case, the Court did not rule that all contractor arrangements automatically attract payroll tax. What mattered was the combination of Uber’s control and the financial structure of the relationship in day-to-day work. That part can be lost in some online discussions, which may make the decision sound more definitive and worrying.
Will this decision apply directly to your medical practice? The answer, as lawyers often say, it depends. If what is in your contract reflects the workings of your business day-to-day, and your contract is an accurate characterisation of a truly independent practitioner arrangement, then you’re less likely to face any issues. However, at You Legal, we know how complex the law is and always recommend getting a legal expert's advice to keep your business compliant and give you peace of mind.
Familiar lessons for healthcare
This case may remind you of the Thomas & Naaz case (Thomas), which is often talked about in relation to payroll tax and medical practices. In that case, a GP practice was found liable to pay almost $2 million in back payroll tax because, despite having written agreements in place and calling its doctors “contractors.”
In this case, the arrangements were held as “relevant contracts” as the clinic:
collected patient fees
managed appointments
effectively controlled how the doctors worked (among other reasons)
The Uber case reinforces the same message: what you call the arrangement matters less than how it actually works day-to-day.
What this means for your practice
Many medical and allied health practices rely on contractor-style models; or you may call it something else. Some practices call their contractors “tenant doctor”, and other practices have service entity structures with independent practitioners.
These are common, and they often make sense for both practitioners and practice owners. The Australian Taxation Office may accept these models as truly independent for income tax purposes.
What these cases have shown is that State or Territory Revenue authorities, who administer payroll tax, have different requirements, and again, may have different rulings for different industries, or even different sub-sections of industries.
What may vary between Revenue Offices positions can include:
Who controls the schedule of work?
Who works out the pricing for patient consultations?
How do patient payments flow? Do they go to the practitioner directly, or through the practice first?
Who sets the hours or sessions and fees? Can practitioners freely decide?
How is the practice presented to patients? Is it marketed as a collective clinic or as individual professionals sharing space?
If the answers suggest your practice has a high level of control over your doctors, or financial flow is majorly dealt with by your business, then it can lead to an increased chance of payroll tax applying.
Differences across states
One of the most confusing aspects for practice owners is that payroll tax is a state-based system. That means rules and exemptions can differ significantly depending on where you operate, becoming more difficult if you have practices in several states.
Here is a rough idea of what is happening at the time of writing:
New South Wales: Currently applying strict interpretations, as seen by Uber;
Queensland, South Australia, and Victoria: Have introduced exemptions for certain General Practice bulk-billing arrangements, so specialist and allied health practices are excluded from the Rulings at the time of writing.
If your practice operates in more than one state, this becomes even trickier. Compliance in one state doesn’t automatically mean compliance everywhere, and grouping for payroll tax between states is a specialist area of tax law. However, experienced medical compliance experts, such as You Legal, can help manage the confusion and help you sleep better in doing so.
Common misconceptions
Through our work at You Legal, we often hear misconceptions that can leave practices exposed, such as;
“Using a service trust keeps us safe.” Not always.
“Our contracts say, ‘independent contractor,’ so we’re covered.” - Unfortunately, no. Courts look at what actually happens in practice, not just what the paperwork says, shown in the Uber and Thomas cases.
“The law is impossible to follow.” - It can feel that way, but cases like Uber are slowly clarifying the boundaries. With expert advice, it becomes manageable.
Practical steps you can take
If this all sounds overwhelming, take a breath. There are clear, practical actions you can take to reduce risk:
Review your contracts: Firstly, have them in writing for clarity. Secondly, make sure they align with how your practice truly operates.
Check financial flow: Pay attention to how patient fees are collected and distributed, this matters more in some jurisdictions than others.
Check your internal policies: Do your systems and rules reflect the independence your contracts claim to give practitioners?
Stay updated: Exemptions and rulings change. Keeping up to date is vital. (You Legal’s articles, newsletters and webinars can help with that).
Get legal advice early: Addressing payroll tax concerns proactively is far easier (and cheaper) than responding to an audit and being found liable for back payroll tax, as well as interest and fines.
At You Legal, we regularly help practices with payroll tax reviews and drafting or updating service agreements to reflect how medical and allied health practices are operating.
Having a legal team that specialises in health and medical law in your corner means you can focus on patient care, not tax law.
What happens if you don’t act?
The risks of ignoring payroll tax obligations can be significant, including issues like;
Backdated liabilities - Revenue offices can look back years.
Penalties and interest - These can add up quickly, especially for larger practices (Thomas was a scary example of that).
Disruption to practitioner relationships - Financial strain and sudden changes to models can create tension with independent practitioners.
The Uber case has made one thing very clear: state revenue authorities will prioritise substance over form. Practices can’t rely on contracts alone to stay compliant; you have to ensure you everyday operations are accurate to what your contracts say.
How You Legal can support you
You don’t need to navigate this alone. At You Legal, we specialise in guiding medical and allied health practices through the legal and regulatory challenges that come with running a business. Our team has deep experience in payroll tax matters with medical and allied health practices, and we understand how stressful this issue feels for practice owners and managers.
We can help you by:
Conducting a payroll tax risk review of your current arrangements and making recommendations about the future.
Creating or updating your practitioner agreements so they align with the operational reality of your medical practice.
Providing legal advice tailored to your state’s current laws and exemptions, based on your area of practice.
Our goal is simple: to take the stress away from you and give you confidence that your practice is compliant, protected, and positioned for the future.
Final thoughts
The Uber decision does not mean every medical or allied health contractor arrangement is doomed, nor does it mean that you as a practice owner need to panic. But it does mean that every practice should take a closer look at how you engage practitioners.
This is not something you need to figure out on your own. At You Legal, we’re here to support you with clear advice, practical solutions, and a genuine understanding of the pressures you face.
Our team at You Legal has extensive experience helping medical and allied health practices navigate payroll tax risks. We can assist with payroll tax reviews, drafting and updating practitioner agreements, and advising on state-based exemptions and rulings.
If you’d like clarity and confidence about how the Uber decision could affect your practice, contact our team today. We’ll connect you with the right legal professional to assess your situation and put the right protections in place.