The ATO will take credit cards until 30 June 2027. After that, on current plans, a credit card pays tax only through a third party

What changes, and when

The ATO’s first notice, on 1 October, was short. It said that As a government agency, the ATO has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community. The Commissioner of Taxation, Rob Heferen, followed on 2 October with the reasoning for the decision and the two-month transition to 30 November. A week later the government stepped in. A joint release from the Treasurer, Jim Chalmers, the Minister for Small Business, Anne Aly, and the Assistant Treasurer, Daniel Mulino, said The Government will provide transitional funding so the ATO can continue accepting credit card transactions until the end of the financial year, with costs to be finalised in MYEFO.

Until 30 June 2027 card payments cost the payer nothing extra. The ATO’s payment details page, updated 9 October, says Card payment fees do not apply to payments. After that date the release says the ATO will take credit cards through third parties. The ATO’s own release names no provider and no fee, and encourages taxpayers considering them to carefully consider relevant fees, charges and processing timeframes.

If a payment plan runs off a credit card

This is the detail most likely to catch a small business out. The 1 October notice said Taxpayers with a direct debit arrangement linked to a credit card will need to update their payment method before their next instalment due after 30 November 2026. The ATO’s payment options page, updated 9 October, now puts 30 June 2027 on direct debits from a credit card as well, so on the ATO’s current pages the plan deadline has moved with everything else.

One ATO page has not fully caught up. The small business newsroom item on the change, last updated 15 October, carries a banner saying cards are accepted until 30 June 2027, but its body still says that for a plan linked to a credit card Payments after 30 November 2026 will be unsuccessful, and the status of your payment plan may move into arrears or default. On our reading the banner and the payment options page, both giving 30 June 2027, govern. The same page says We’ll write to you if you need to change your payment method. A plan in arrears is expensive enough that a phone call to confirm costs less than trusting either reading.

Why the ATO said no

The Commissioner’s statement is plain about the money. The fees are almost $200 million annually and expected to continue increasing over time, and absorbing them would mean less revenue and less funding for government services. The ATO tried to negotiate: To try and reduce the cost we approached credit card companies, however they declined to offer a sufficiently low rate. Mulino told News24’s First Edition on 13 October that the ATO and the Reserve Bank had been talking to the card companies since May, and that those talks continue.

The statement also gives the reason the ATO could not do what most businesses have done since 1 October: Because tax liabilities are legislated, the ATO cannot build card payment costs into prices.

Who pays tax on a credit card

Not many, by the ATO’s count, but by value the payments lean to wealthy private groups and large businesses. Credit card payments were 2.3 per cent of total ATO collections. Around 5 per cent of small businesses and just over 2 per cent of individual taxpayers paid tax by credit card in 2024–25. And more than 60% of credit card payments by value were made by privately owned and wealthy groups, and public and multinational businesses.

The printer’s version of the same problem

We covered the surcharge ban for print businesses in August: surcharging ended on 1 October, and the Reserve Bank paired it with a cut in the interchange cap on consumer credit cards to 0.3 per cent. The cap on commercial credit cards did not move. The RBA’s Policy 3 is Retaining the interchange cap on domestic-issued commercial credit card transactions acquired in Australia at 0.8 per cent of transaction value. A trade printer paid on company cards loses its surcharge and gets no matching cut in fees.

Every business that took cards and surcharged them faced the same two options on 1 October: absorb the fee, or price it in. The ATO cannot price it in, so it chose a third: stop taking the card. At least one print business has made that call. Rodney Frost, chief executive of Lamson Paragon, told the trade title Print21: We have stopped accepting all credit card payments.

Our view. The ATO and a printer that turns cards away are making the same decision with very different consequences. A customer told no by a printer can take the job elsewhere; a taxpayer cannot take the tax bill to a competitor. That is why the ATO could refuse and still collect.

There is a second parallel, and here we are reading the figures rather than quoting them. The ATO has not published which kinds of card its payers use. But its own figures put most of its card takings by value with privately owned and wealthy groups, and public and multinational businesses. As we read the RBA’s categories, payers like those may well be on commercial cards: commercial credit cards under the RBA’s caps, whose cap it left at 0.8 per cent, or American Express, in a commercial credit segment the RBA says is one where American Express is the dominant issuer. If that holds, much of the ATO’s fee bill sits on cards the reform did not make cheaper, which is the trade printer’s position at government scale. We cannot test it without the ATO’s split by card type, which we have not asked for; it is the number that would settle it.

Cash flow, and Payday Super

The Visual Media Association, the print industry’s peak body, has not posted a statement on the ATO decision on its own website that we could find. Its chief executive, Kellie Northwood, was quoted by Print21 on 9 October: Payday Super brings another payment forward, and the ATO decision potentially removes another cash-flow lever.

The Payday Super part is on the record. Since 1 July 2026, according to the ATO, Super guarantee contributions must be received by your employees’ super funds within 7 business days after paying your employees, where before they were due 28 days after the end of each quarter. A printer that has been using a card to carry a quarterly BAS for a few weeks while invoices come in loses the fee-free version of that float on 1 July 2027, a year after the super float went.

What to do now, and what to watch

Three things are worth doing before 30 June 2027. Check whether any ATO payment plan or recurring direct debit is set up on a credit card, and move it or confirm it with the ATO. Work out how much of your tax you actually pay on a card, because from 1 July 2027, unless the promised arrangements cover you, that amount will cost a third-party fee or need another source of cash. And if a card has been how you bridge a slow-paying customer, that is a conversation for your accountant now, not in June.

Two things are still open. The government has asked the ATO to consult on how best to support those experiencing financial hardship and identify alternative arrangements for businesses and individuals that are unable to pay via other methods. Mulino said on 13 October that the government will come up with arrangements beyond 30 June next year that allow for situations where there is hardship or where there is a need for flexibility, and of their timing, I’m hoping it’s a matter of weeks, not months. And the cost of the extension is to be finalised in MYEFO. We will report what the consultation and MYEFO settle.