The federal government has overruled the tax office and delayed the controversial ban on paying taxes by credit card by more than six months. Treasurer Jim Chalmers announced on Friday that additional funding would halt the change until June, with the tax office continuing to accept card payments via third parties from July 2027.
The decision followed criticism of the Australian Taxation Office's (ATO) response to the Reserve Bank's ban on top-up payments on credit cards. The commissioner announced in October that payments by credit card to tax accounts would cease from 1 December. The commissioner had stated at the time that the ATO's acceptance of such payments would cost nearly A$200 million a year.
The ban was due to take effect on 30 November, but the government has provided funding for a one-year transition period. Chalmers said the extension would give the ATO time to consult with small businesses, and that it was important they intervened to allow the ATO to continue accepting credit card payments until the end of the financial year. The tax office will continue to accept other free and low-cost payment methods, such as debit cards and bank transfers, from July 2027.
The ATO had previously explained that it could not absorb the cost of card payments into the fees paid by taxpayers, as tax obligations are legislated by federal parliament. The government cannot direct the decisions of the tax commissioner, as the ATO is an independent body, but ministers have been pressing the agency to change its stance.
Some business owners, particularly smaller operators, use credit card payments as a cash flow tool. Estimates suggest that around 5 per cent of small businesses use credit cards to pay tax bills.
The opposition leader, Angus Taylor, called for the ban on credit cards to be scrapped entirely, rather than delayed. Taylor said that instead of messing with businesses today, they would be messing with them for at least nine months, and that the prime minister should sack the treasurer.
Andrew McKellar, head of the Australian Chamber of Commerce and Industry, said the delay provided a necessary reprieve for small businesses. He said it was encouraging to see reason prevailing in relation to the credit card ban, describing it as a victory for small businesses and a welcome delay, but noted that small businesses remain under significant pressure.
