ATO Credit Card Ban Delayed

Australian businesses will retain the option of paying tax directly by credit card until 30 June 2027 after the government funded a delay to the Australian Taxation Office’s planned ban. Treasurer Jim Chalmers announced the intervention on Friday following objections from small businesses concerned about losing a cash-flow tool. The restriction had been scheduled to begin on 1 December, leaving affected firms two months to adjust their payment arrangements.

The dispute stems from the Reserve Bank of Australia’s ban on card surcharges, which took effect on 1 October. The ATO said absorbing processing fees would cost almost A$200mn annually and proposed withdrawing direct credit card acceptance. According to the government, negotiations with card companies failed to secure sufficiently low fees. Transitional funding will cover continued acceptance through the financial year, with the cost to be finalised in the government’s mid-year budget update.

Around 5% of small businesses and just over 2% of individuals paid by credit card in 2024–25, official figures show. For businesses using cards to bridge gaps between customer receipts and tax deadlines, the change would remove one source of payment flexibility. Business groups welcomed the reprieve but pressed for a lasting solution. Australian Chamber of Commerce and Industry chief Andrew McKellar described it as welcome breathing space, while opposition leader Angus Taylor called for the restriction to be scrapped.

The delay extends the transition without abandoning the planned change. After June 2027, credit card payments through third-party providers will remain available, alongside debit cards and bank transfers. The government has asked the ATO to consult on support for taxpayers experiencing hardship and alternatives for those unable to use other methods. The question is how those options compare on cost and convenience. Businesses reliant on direct card payments have longer to assess them, but the processing-fee dispute remains unresolved.