Why the ATO is dropping credit cards for tax bills
The ATO will stop accepting credit card payments for tax bills from 1 December 2026. Commissioner Rob Heferen announced the decision on 1 October.
The announcement landed on the same day the Reserve Bank ban on credit card surcharges started. A surcharge is an extra fee added for paying by card. The Bank estimated the ban would save consumers about $1.6 billion, according to The Guardian.
The ATO links the two changes. It says keeping credit cards would cost it almost $200 million a year because it can no longer pass that cost to card users. It is like a shop that must absorb the card fee instead of adding it at the till. A new rule from 1 October 2026 stops it from asking taxpayers to pay the fee, as set out in its easier-to-read advice ATO.
The ATO also says it cannot fold card costs into what taxpayers pay because tax amounts are set by law in federal parliament. It says other payment methods will still be available after credit cards stop.
About 5% of small businesses pay tax bills by credit card. Australian Chamber of Commerce and Industry head Andrew McKellar said small business needs that option to manage cash flow. Business groups urged the ATO to reverse the decision, as reported by The Sydney Morning Herald. Small business groups said the ATO indicated it will not reverse.
Heferen defended the position in a staff email as criticism grew. ATO officials met with business representatives on 8 October about the decision.
Ministers have commented. Housing Minister Clare O'Neil said on 8 October the ATO needed to go back and talk to business and the government has real concerns about the proposal. Small Business Minister Anne Aly said on 7 October she wanted the ATO to talk with business operators to find a way forward. Assistant Minister Andrew Charlton said on 8 October the government had asked the ATO to keep consulting with small business to ensure flexibility on tax payments. Opposition Leader Angus Taylor urged Treasurer Jim Chalmers to intervene.
The broader context here is a familiar Canberra squeeze. Payments reform is popular in total. The $1.6 billion saving is clean and quotable. The $200 million cost to the budget, and the cash-flow problem for that 5%, is messier. No minister wants to own either side outright.
Looking at what this means for the next step, watch the language. Talk, consult, flexibility, way forward. None of that is a direction. None of that promises the card option survives. The government says it has concerns. The ATO says parliament sets the liability and the rule sets the fee. Both things can be true. Only one of them decides what happens on 1 December.
