A controversial ban on credit card payments on tax bills will be delayed by more than six months, after the federal government overruled the tax office and announced new stopgap funding. Treasurer Jim Chalmers announced on Friday extra funding on Friday, after days of criticism and calls from small business to halt the ban. The tax office will continue to accept credit card payments via third parties as well as other free and low-fee payment methods like debit card and bank transfers from July 2027.
The decision followed criticism of the ATO’s response to the Reserve Bank’s moves to ban credit card surcharges, something the federal government sought to take credit for. The tax commissioner, Rob Heferen, announced moves in early October to stop accepting credit card payments for tax bills from 1 December. He said continuing to accept card payments would cost the ATO almost $200m a year, as those costs can no longer be passed on to card users.
But some business owners, particularly smaller operators, use credit card payments as a cashflow tool, managing their liabilities by using credit when required. Estimates suggest about 5% of small businesses use credit card payments for tax bills. Because tax liabilities are legislated by federal parliament, the ATO said it could not build card payment costs into charges paid by taxpayers.
Government ministers had sought to pressure the ATO into changing its position this week, amid strong criticism from the Coalition and business lobby groups. The ATO is an independent authority and the government cannot direct the tax commissioner’s decisions. What they are looking for is for one clear, consistent approach and solution from government.”
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