Remember the 30 November cut-off for the ATO credit card ban? Scrap that. On Friday, Treasurer Jim Chalmers pushed it back to the end of the financial year, 30 June 2027. That’s after a week of heat from business groups, independents and even a couple of his own ministers.
So what’s changed?
Two things. The deadline, and who pays.
In the meantime, Canberra’s picking up the card fees. So it’s taxpayers, not small businesses, wearing that cost for now. Exactly how much it’ll come to gets locked in at the mid-year budget update in December.
Chalmers says the extra time lets the ATO consult properly and “get it right”.
Why was there a ban at all?
Blame the surcharge ban that started on 1 October. Shops can’t add a card fee anymore. Neither can government agencies.
That left the tax office with a bill of almost $200 million a year in merchant fees. Card users used to cover it through the surcharge. Suddenly they didn’t.
The ATO did go back to the card companies asking for a better deal. They wouldn’t budge far enough.
And it can’t do what a cafe does. A cafe can just add 50 cents to the flat white. The amount of tax you owe is set by
law, so the ATO can’t put its prices up.
Who actually pays tax by card?
Hardly anyone, really. Credit cards bring in just 2.3 per cent of what the ATO collects.
Only about 5 per cent of small businesses used one to pay their tax in 2024-25. For individuals it was just over 2 per cent.
Over 60 per cent of card payments, by dollar value, actually came from the big end of town: wealthy private groups plus
public and multinational companies.
A week of pressure
The ATO told business groups about the ban on 30 September. That gave people roughly eight weeks’ notice, and it didn’t go down well.
“Credit cards are one way businesses manage cashflow when a tax bill lands,” independent MP Kate Chaney said earlier this week.
Small Business Minister Anne Aly said businesses were “rightly shocked”. Over in Housing, Clare O’Neil spoke of “real concerns” inside government. Independent Dai Le reckoned the government had failed to “read the room”.
How people reacted to the backdown
Business groups are relieved, mostly. “Much-needed breathing space for small business” was how the Australian Chamber of Commerce and Industry’s Andrew McKellar put it. He still wants proper consultation before anything changes.
Angus Taylor isn’t satisfied. The Opposition Leader wants it binned altogether. He accused the government of “screwing business”.
The Greens see it differently again. Their leader, David Shoebridge, says taxpayers are now subsidising the banks. His fix? “Prohibit the banks” from passing these charges on to businesses.
What it means for you
If you pay tax by credit card, nothing changes before 30 June 2027. Keep paying the way you do now.
But it’s probably smart to have a backup ready. The ban hasn’t been scrapped, only delayed. The ATO also takes debit cards, BPAY, direct deposit and payments through Australia Post.
Worried about cash flow? Have a chat with the ATO or your tax agent early. Payment plans are on offer where they fit.
Where to from here
The ATO now has to go back to small business and work out a plan that actually works. The bill for covering the fees lands in December’s budget update.
Come July, the cards still get cut off, unless Canberra flips again. Small business has bought itself nine months. The argument isn’t over.