Craig Jurgenson – fictional Silicon Valley chief executive in the HBO satire Veep.

They claim to be the future of work, life and leisure, these highly valued tech companies. Inventing playful names for computer programs or apps that do something we didn't know we couldn't live without.

Often they are successful because consumers really do find the new way is better and cheaper and don't give two figs about whatever old rules and regulations are being broken. Apart from disrupting business models, some of these new companies are turning the concept of employment upside down and inside out. If you earn money through their app, are you an employee or a contractor or a serf – or your own boss?

Fortunately we can have a close look at what it is like to earn money through the UberX app by driving strangers around in your own car, thanks to documents leaked to Fairfax Media. Uber also operates a taxi service and more expensive Black service.

But it is the ride-sharing service called UberX that is considered cool, futuristic, clean and convenient, whereas consumers describe taxis as grimy, never available and driven by oafs who listen to too much talkback radio. UberX is becoming popular and more mainstream.

However, it is still illegal to drive a taxi without a proper licence or accreditation in every state in Australia. So while consumers are enjoying this disruption, state governments do not like it because they miss out on millions of dollars in taxi licence fees, the federal government misses out on taxes, and the taxi industry loses customers to private drivers.

Australian state governments have collectively issued nearly $2 million dollars' worth of fines to UberX drivers for providing illegal taxi services. A spokeswoman for Uber said "many of the fines which have been issued have not been paid because the driver partners are challenging their validity".

Queensland has been most aggressive issuing 1536 penalties in the past year with a total value of $1.7 million. Uber retaliates by blocking undercover regulators posing as passengers to book cabs to catch drivers. In Victoria about 80 drivers have been caught, with 12 cases still before the courts. About $135,000 in fines have been paid, although authorities don't know if the fines were paid by the drivers themselves or Uber, which has promised to cover any fines.

New South Wales is prosecuting 24 drivers and has issued 10 drivers with fines totalling $28,500. "UberX drivers continue to be investigated for unlawful conduct," a Transport Department spokesman said. Reviews into taxi regulation are currently under way around the country.

Uber is the biggest app-based ride-sharing service in the world and is valued at $US50 billion. But despite this valuation and aggressively pushing a laissez-faire agenda denigrating taxation and regulations, it faces multiple battles around the world. The key sticking points are whether its drivers are employees and if they should have taxi licences. Last week thousands of French taxi drivers went berserk protesting against the impact of Uber on their jobs. A week earlier, California's labour authority ruled ride-sharing drivers were employees.

But back to Australia. To start with, there are not many jobs for which breaking state laws is part of the work. But when you drive people around, are you even working for Uber? Definitely not, according to the legal contract all drivers must sign.

"This agreement is between two co-equal, independent business enterprises that are separately owned and operated. The parties intend this agreement to create the relationship of principal and independent contractor and not that of employer and employee," the document states.

That's right: in Uber's ideal regulation-free economy a driver working 20 hours a week is "co-equal" to a multi-billion-dollar company. You are free to drive as little or as much as you like, providing your car is less than 10 years old. A rating system ensures the dirtiest cars and worst drivers don't get any work, just as the free market intended.

And the contract isn't even with Uber, it is with Rasier Operations BV, which is "in the business of providing lead generation" to drivers (translation: telling drivers where the passengers are). Rasier has a license to get the information from Uber's software.

Meanwhile, what to do with all of your income? At the moment passengers store their credit card details on the app and their fare is automatically debited by Amsterdam-based Rasier. The money is sent from Holland back to the Australian driver's bank account every week with an email noting the "fee for Uber services" is "out of scope of Dutch VAT [value-added tax]". Conveniently, it is also out of reach of the Australian tax office.

This is the biggest quandary for UberX drivers – whether to register as a business and declare all of that income and pay GST. Uber isn't helping to clarify things. It specifically tells drivers they do not need an ABN or to register for one unless they earn more than $75,000 a year. But the ATO's advice for ridesharing drivers is that all drivers will have to start charging GST from August 1 and should have an ABN anyway.

A spokeswoman said Uber believed the ATO's advice was "a flawed interpretation of the GST law" and it may challenge the ruling and would inform drivers within time. Uber has engaged lobbyists Newgate Communications to push its position in Canberra.

According to pay slips seen by Fairfax Media, UberX drivers pocket 80 per cent of the fares and make about $21 an hour. Your angry taxi drivers take home about $9 an hour because they receive only 55 per cent of the fares.

Uber fares, however, have recently been cut in Melbourne by 15 per cent and 10 per cent in Sydney with just a few hours' notice to drivers. So while you are not an employee, you get no control over how much you charge. But on the other hand, everyone avoids regulated taxi costs such as a $24,000 annual license fee and taxi insurance. Drivers also take all the responsibility for all the annoying little operating costs such as fuel, income tax, superannuation, car maintenance, registration costs, insurance and having a mobile phone with a big enough data plan to operate the app while driving.

One Sydney driver told Fairfax Media that ride-sharing had moved from niche to mainstream during the six months he worked.

"Some nights I would do 20 people or so and I would have so much fun. I didn't get sad that I was missing out on my own social life because I was socialising with people," he says.

But driving other people around stopped being fun when riders started treating him like a taxi driver. The strange thing was, they were in his car acting like he didn't exist.

Asked whether he felt like an employee or a contractor, he said: "There is no relationship [between drivers and Uber]." There is "virtually no way" to get in touch with the company except by email.

Working in the black economy also means things can get difficult if something goes wrong. Uber requires all drivers have insurance, but ride hailing for profit is not legal in any state or territory and care insurance excludes illegal activities, according to the general manager of communications at the Insurance Council of Australia, Campbell Fuller.

"If you are considering signing up to offer services under one of these schemes, contact your insurer and check what your motor vehicle policy covers. In most cases insurers won't cover ride-hailing services," Fuller says.

He says insurers could decline a claim if they discover the driver was taking money for rides. NRMA offers insurance to Uber drivers, and Youi started offering taxi insurance about six months ago but does not differentiate between commercial taxis and private drivers, defining both as "ferrying people from point A to point B for a fare".

Uber's spokeswoman in Australia, Katie Curran, said drivers were "backed by a commercial auto liability insurance policy up to $US5 million per accident that covers the driver's liability for property damage or bodily injury caused by the driver".

Fairfax Media has confirmed with one driver whose car was damaged while driving that Uber made up the difference when his own insurance didn't cover the total cost of repairs.

Meanwhile, realising that many drivers didn't have the accounting skills to handle their gross earnings, former Uber driver Greg Chalker started PartnerPeople, which takes a driver's Dutch Uber/Rasier money, deducts all the responsible stuff, and hands back the rest. He says a driver who earns $879 from Uber pockets $620 once PartnerPeople subtract income tax, super and workcover insurance. From that $620 the driver still has to cover car operating costs.

But once you have taken responsibility for everything, you are free to earn as much money as you can. Whether this model of employment is a minor disruption or a long-term trend will become clearer in coming months as test cases work through the Australian court system.