Ministers Push ATO to Reconsider Credit Card Ban

Published: 08 October 2026. The English Chronicle Desk. The English Chronicle Online.

Pressure is mounting on Australia’s tax office to reconsider its decision to stop accepting credit card payments for tax bills, as small business groups warn that the change could create new cashflow difficulties for thousands of operators.

Government ministers have urged the Australian Taxation Office to continue discussions with businesses after a growing backlash over the planned ban. The dispute has emerged after a separate decision to prohibit credit card surcharges, which had previously allowed businesses and other organisations to recover the processing costs associated with card payments.

The ATO has announced that it will stop accepting credit card payments for tax liabilities from 1 December. Tax commissioner Rob Heferen said the decision was necessary because the removal of card surcharges meant taxpayers could no longer be charged directly for the costs associated with processing their payments.

According to the tax office, continuing to accept credit cards under the new surcharge rules would cost the agency almost $200 million a year. Because tax liabilities are established under federal legislation, the ATO says it cannot simply add those processing costs to the amount taxpayers are required to pay.

The decision has particularly concerned small business owners who have used credit cards as a short-term cashflow management tool. For some operators, paying a tax bill by card can provide additional time to manage incoming revenue and outgoing expenses, even though credit card borrowing may carry significant costs.

Business representatives argue that removing the option could make financial management more difficult for companies already operating with tight margins.

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said small businesses needed access to the payment facility because of the importance of managing cashflow.

He called for a clear and consistent approach from the government and the tax office, arguing that business operators needed certainty about how they would manage their tax obligations under the new arrangements.

The ATO held further discussions with business representatives on Thursday as pressure continued to build around the proposed change.

The controversy follows the Reserve Bank’s decision to prohibit credit card surcharges from the beginning of October. The surcharge ban was designed to prevent consumers from being charged additional fees for using cards, with the central bank estimating that Australians could collectively save about $1.6 billion as a result.

Before the change, businesses could generally use surcharges to recover the fees they paid to financial institutions and payment processors when customers used credit cards. Once those charges were prohibited, the ATO argued that it would face a substantial additional cost if it continued accepting credit cards for tax payments.

The tax office has pointed to a transition period of two months, saying this gives taxpayers time to consider alternative payment arrangements. It has also highlighted payment options already available to taxpayers, including methods that are free or comparatively inexpensive.

However, business groups say the issue is not simply about the cost of making a payment. They argue that credit cards can serve as a financial management tool, particularly for smaller businesses whose income can fluctuate from month to month.

Estimates suggest that about 5% of small businesses use credit cards to pay their tax liabilities. While that represents a minority of businesses, industry representatives have argued that the effect could be significant for those operators who rely on the additional flexibility.

The political pressure intensified this week as government ministers called for further engagement with the business community.

Housing Minister Clare O’Neil said the ATO should return to discussions with business representatives about the decision. She acknowledged concerns within the government about the proposed changes and pointed to cashflow as one of the most persistent challenges facing small businesses.

O’Neil said some operators use credit cards to help manage their tax obligations and suggested that the government wanted the ATO to take those concerns seriously.

Small Business Minister Anne Aly also called for further discussions, saying the tax office should engage directly with business operators to find a workable path forward.

The comments have created an unusual position in which ministers are publicly urging the tax office to reconsider aspects of an administrative decision while also defending the broader principle behind the change.

Assistant Minister Andrew Charlton defended the decision on Thursday, arguing that the government needed consistency between the way government payments and private-sector payments were handled. At the same time, he acknowledged that businesses needed flexibility when managing tax payments.

Charlton pointed to payment plans offered through the tax system as an alternative to credit card payments. He said some of those arrangements carried relatively low interest rates compared with credit cards and could provide businesses with a different way to manage temporary cashflow pressures.

He also said the government had asked the ATO to maintain consultation with small businesses to ensure that adequate flexibility was available.

The opposition has used the dispute to put additional pressure on Treasurer Jim Chalmers. Opposition Leader Angus Taylor has called on the treasurer to intervene, arguing that the government should address concerns being raised by small businesses.

Taylor also criticised the prominent role being played by Charlton in defending the government’s position, referring to him as a “de facto treasurer” and questioning why Chalmers had not been more visible in the debate.

The political dispute comes at a sensitive time for Australian small businesses, many of which continue to face pressure from operating costs, financing expenses and uncertain consumer demand. For businesses with limited cash reserves, the timing of tax payments can be an important part of financial planning.

The disagreement also highlights the broader tension between the government’s efforts to reduce payment costs and the practical financial tools businesses use to manage their obligations. While the surcharge ban is intended to prevent consumers from absorbing additional card-processing charges, the ATO’s decision demonstrates how the same policy can create different consequences for organisations that previously relied on credit card payments for cashflow management.

The tax office maintains that alternative payment methods and payment plans are available and that the December deadline provides businesses with time to adjust. Business representatives, however, are seeking greater certainty and are urging policymakers to recognise the specific circumstances of smaller operators.

The government has not announced that the ATO’s decision will definitely be reversed. Instead, ministers have stressed the importance of continued consultation between the tax office and the business community.

With further discussions now under way, small business operators will be watching closely to see whether the government can develop an alternative arrangement before the December deadline.

The outcome could determine whether thousands of businesses lose access to a payment method they have used to manage short-term cashflow, or whether a compromise can be reached that allows the government to control processing costs while preserving greater flexibility for taxpayers.

For now, the ATO’s planned 1 December deadline remains the central point of concern, while government ministers and business representatives continue negotiations over how Australia’s tax payment system should operate under the new credit card surcharge rules.