Australia’s federal government will pay for the Australian Taxation Office (ATO) to keep accepting credit card payments until June 30, 2027, the end of the financial year. The ATO had planned to stop after November 30, in response to the card surcharge ban that took effect on October 1. Treasurer Jim Chalmers, Small Business Minister Anne Aly, and Assistant Treasurer Daniel Mulino announced the transitional funding on Friday, October 9. Its cost will be finalized in the Mid-Year Economic and Fiscal Outlook (MYEFO), due in December.
“Australian small businesses have said the ATO’s announced timeframe was inadequate and we have taken these concerns seriously and acted on them,” the ministers’ joint release says. The ATO is an independent authority, and the government cannot direct its commissioner, Rob Heferen. Chalmers told him of the decision early on Friday morning, The Conversation reported. He said it was “really important that we have stepped in today to make it possible for the ATO to continue to take credit card payments until the end of the financial year,” according to The Guardian.
Card companies did not offer the ATO low enough fees
Since October 1, Australian merchants may no longer add a surcharge to eftpos, Mastercard , or Visa card payments, under a Reserve Bank of Australia (RBA) reform that also lowered the cap on interchange for domestic consumer credit cards from 0.8% to 0.3%. Before the ban, the ATO’s card processing costs were passed on to the taxpayers who paid by card, The Guardian reported. Because tax liabilities are legislated by Parliament, the ATO said it could not build those costs into the charges taxpayers pay. Absorbing them would cost it almost A$200 million a year.
The release says the ATO explored a range of options, including asking credit card companies, which it does not name, for lower fees. “The credit card companies did not offer sufficiently low fees to enable the ATO to continue to accept credit cards,” it says, adding that the ATO will keep engaging with them. Chalmers said the government knew the ATO was “grappling” with the issue before the tax office made its decision in late September, ABC News reported.
A cut-off announced with two months’ notice
The ATO announced on October 1, the day the surcharge ban took effect, that it would no longer accept credit cards for tax bills after November 30, the Australian Associated Press reported. About 2.3% of tax payments were made by credit card in 2024–25, mostly by privately owned wealthy groups and by public and multinational businesses, according to ATO data cited by SBS News. Some small businesses use a credit card to bridge the gap between a tax bill falling due and paying it. Business groups saw a double standard, SBS News reported: they have to accept cards and absorb the fees or raise prices, while the tax office withdrew the option altogether.
Labor ministers had taken different positions before the decision. Housing Minister Clare O’Neil said on October 8 that the government had “real concerns” about the ATO’s plan, ABC News reported, while assistant minister Andrew Charlton backed it, saying the 98% of taxpayers who choose not to pay by credit card should not subsidize those who do, according to SmartCompany. Other agencies, including the Australian Border Force and the Department of Foreign Affairs and Trade, say they will keep accepting credit cards, according to SBS News.
Business groups want a lasting arrangement
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said the announcement “provides some much-needed breathing space for small business” and called for “genuine consultation.” He had argued that even 5% of Australia’s 4.9 million active small businesses would mean about a quarter of a million firms. Small business ombudsman Lynda McAlary-Smith called the extension “valuable breathing room.” Master Builders Australia chief executive Denita Wawn and opposition leader Angus Taylor want the ban scrapped altogether.