The ATO credit card ban has been pushed back. Federal Treasurer Jim Chalmers announced on Friday 9 October 2026 that the government will temporarily cover the cost of card surcharges so the Australian Taxation Office can keep accepting credit card payments until 30 June, following a fierce backlash from small business groups. Just a week earlier, the tax office had said it would stop taking credit cards from December.

The reprieve gives businesses months of breathing space, but it does not settle the bigger argument over who should pay card fees. Here is what happened, what the delay means and how business owners can prepare.

Why the ATO planned an ATO credit card ban

The decision flowed from the Reserve Bank of Australia’s reforms scrapping card surcharges from 1 October. The RBA said the change was in the public interest and would save customers about $1.6 billion a year. Merchants can no longer pass card fees on through a surcharge, and the ATO argued that it could not simply absorb those costs either.

In a statement on 2 October, Taxation Commissioner Rob Heferen said the ATO would have preferred to keep accepting credit cards, but card companies declined to offer a rate low enough. He estimated merchant fees at almost $200 million a year and rising, and warned that absorbing them would mean less revenue for government services.

The ATO also said credit cards make up only 2.3 per cent of the payments it receives. According to the tax office, more than 60 per cent of credit card payments by value come from privately owned and wealthy groups, public companies and multinationals, while about 5 per cent of all small businesses use a card to pay tax.

Small business backlash over the credit card decision

Business groups reacted angrily. The Australian Chamber of Commerce and Industry (ACCI) accused the government of a double standard, saying small businesses were being told to absorb the surcharge ban while the tax office applied a different set of rules to itself. The Council of Small Business Organisations Australia said the move warranted a rethink, and the Australian Retail Council warned that removing the option would disrupt cash flow at an already difficult time.

Owners said they use credit cards as a short-term cash flow tool when a tax bill lands. Some feared they would have to find cash quickly or fall into arrears with the ATO, which can lead to enforcement action. Independent MP Kate Chaney said around eight weeks’ notice made things harder. Other organisations, including StrataPay, some private schools, local councils and rental payment platforms, also signalled they would stop accepting credit cards.

After a snap meeting with the ATO on 7 October, ABC News reported that business groups said the tax office had not indicated it would reverse course. Government ministers, including Housing Minister Clare O’Neil and Small Business Minister Anne Aly, urged the ATO to keep talking with small businesses.

What the government announced on 9 October

Chalmers said the funding would let the ATO accept credit cards until 30 June, giving it more time to consult with business and get the policy right. He said the ATO had initially settled on a two-month transition, which the government had insisted on, and that this was now being substantially extended. The cost of the delay will be finalised in the mid-year budget update, known as MYEFO, due in December.

The government said the ATO had explored a number of options, including negotiating lower fees with card companies, but had been unsuccessful. Chalmers said the government knew the ATO was grappling with the issue before its late-September decision, although he did not know the specific timing. The full details are in ABC News reporting on the delay.

Reaction to the delay

The response was mixed, with each group focusing on a different part of the problem:

• Business groups: ACCI chief executive Andrew McKellar welcomed the extension as much-needed breathing space and said there must now be genuine consultation with business.
• Opposition: Opposition Leader Angus Taylor demanded that the ban be scrapped altogether and argued that no one should be thankful to the treasurer for a delay.
• Greens: Leader David Shoebridge said the delay offered some relief but that the banks win again, with taxpayers subsidising a very profitable part of their business. He wants banks prohibited from putting these charges on businesses.

What the delay means for your business

Under the announcement, credit card payments to the ATO are expected to remain available until 30 June 2027. Businesses should confirm the final dates on the ATO website as the details are worked out. A delay is not a repeal, so it is sensible to plan for a future without the option.

• Review your cash flow forecast: Map out when tax payments fall due before and after 30 June, and identify any gaps you previously covered with a card.
• Talk to your tax agent or accountant: Ask about alternatives, including payment plans. If you cannot pay on time, contact the ATO early rather than letting a debt slide.
• Check your other payments: Several organisations that take card payments are reviewing their approach, so check whether the suppliers, strata managers or councils you pay by card are changing.
• Revisit your pricing and merchant fees: With surcharges banned, ask your payments provider for a clear breakdown of fees and compare options.

This is general information only and not financial or tax advice, so speak to a registered tax professional about your situation.

What happens next

The next few months will test whether the ATO can find a lasting solution. Consultation with small business is due to begin, the cost of the delay will appear in December’s MYEFO, and the Opposition has vowed to push for the ban to be scrapped. The RBA’s surcharge ban itself remains in place, so the broader debate over who carries card costs is far from over. For more on how businesses are coping with rising costs, see our latest business news.

Frequently asked questions

Can I still pay the ATO by credit card?

Yes, for now. The government says the ATO will keep accepting credit cards until 30 June. Check the ATO website for confirmation of the final date and any changes.

Why did the ATO want to stop accepting credit cards?

The ATO said merchant fees cost almost $200 million a year and that it could not keep absorbing them after the RBA banned surcharges, because that would reduce revenue for public services.

Does the delay change the RBA’s surcharge ban?

No. The surcharge ban took effect on 1 October. The government is only covering the ATO’s card costs during the extended transition.

How many small businesses use credit cards to pay tax?

The ATO says about 5 per cent of small businesses do. Business groups argue that for those that do, the option is critical for managing cash flow.

Image: European Commission / Wikimedia Commons / CC BY 4.0 (cropped and resized)