The ATO's planned ban on credit card payments, originally set to take effect on 30 November, will be postponed to 30 June 2027 after the federal government allocated extra funding to the tax office, SmartCompany reported. The ATO had planned to stop accepting credit card payments from 30 November, citing projected card acceptance fees of close to $200 million each year that it said it could not absorb.
Treasurer Jim Chalmers, Small Business Minister Anne Aly and Assistant Treasurer Daniel Mulino jointly addressed the matter and confirmed the delay. The dollar amount of the government's additional funding for the ATO will be settled in December's mid-year budget update. Credit card payments make up 2.3% of total tax payments to the ATO, though small businesses accounted for only 5% of credit card tax payments in FY25, according to the ATO.
The ATO's plan to stop accepting credit card payments arose from the federal government's broader card surcharge ban, which would have prevented the ATO from passing on to payers the merchant fees it incurs on credit card transactions. ATO commissioner Rob Heferen said the near-$200 million annual merchant fee cost could not be absorbed because it would leave less funding available for government services, and that directing additional public funding to the ATO to meet surcharge costs would produce the same outcome. Small businesses cited the use of credit cards as a tool for managing uneven cashflow, and some business groups expressed concern at the short notice originally given for the change.
Treasurer Chalmers, speaking to reporters in Brisbane, said the extra time would allow the ATO to consult more with small business and get the matter right. Chalmers pointed to credit card companies for not reducing fees sufficiently to let the ATO keep accepting card payments, and noted the ATO would keep talking with those companies.
Chalmers stated that lower interchange fees flowing from the broader reform package were expected to deliver $900 million a year in savings for businesses. Ministers said a two-month adjustment window for businesses was insufficient.
Australian Chamber of Commerce and Industry CEO Andrew McKellar said the delay gave small businesses needed breathing room but did not protect them from rising costs and tightening margins. Shadow treasurer Tim Wilson described the outcome as a taxpayer-funded bailout for the ATO while small businesses faced the consequences of the broader surcharge reforms. The coalition, through Wilson, said it would legislate to scrap the ban entirely rather than merely delay it.
The ATO said it would continue consultations on supporting taxpayers experiencing financial hardship and identifying alternative arrangements for businesses unable to use other payment methods. Chalmers, Aly and Mulino said in a joint statement that transitional funding would allow the ATO to spend more time engaging with small businesses and other taxpayers who currently depend on credit cards, give those affected more detailed information, and examine targeted support options.
Small businesses and individuals who currently pay tax by credit card can continue to do so via the ATO until 30 June 2027, giving them more time to move to alternative payment methods such as debit cards or bank transfers. After that date, credit card payments to the ATO will only be possible through third-party providers, not directly.
Reporting: SmartCompany, AAP
Written by Pick & Scroll News from the reporting and documents linked above.
