ATO Bans Credit Card Tax Payments From November 30, 2026

The Australian Taxation Office will stop accepting credit card payments after November 30, 2026, following the Reserve Bank’s October 1 ban on card surcharges. The decision has sparked outrage from small business groups and opposition politicians, who argue the tax office is avoiding costs that businesses must absorb. Credit cards accounted for 2.3 per cent of ATO payments in 2024-25.

Why the ATO is pulling the plug on credit cards

The RBA banned all card surcharges on October 1 to save consumers $1.6 billion a year. The ATO previously charged surcharges on credit card payments to cover merchant fees. Now that surcharges are illegal, the tax office says absorbing those costs would “not be appropriate” and would force it to pass expenses to the community. Instead, it chose to stop accepting credit cards entirely after an eight-week transition period.

The cash flow squeeze for small businesses

Small business owners used credit cards to smooth tax payments during cash flow crunches, particularly around BAS and PAYG deadlines. Taxpayers with ATO payment plans linked to credit cards must switch payment methods before their first instalment due after November 30, or their plan may fall into arrears or default. The ATO is writing to affected taxpayers, but accountants warn businesses should act now rather than wait for letters.

Businesses left absorbing costs the tax office avoids

Unlike the ATO, merchants cannot stop accepting cards because customers demand them. Instead, businesses face three choices: increase prices, absorb the cost, or offer cash discounts. Chartered accountant Raj Kuckreja said businesses “cannot necessarily just increase prices immediately” without risking customer retention. Australian Chamber of Commerce and Industry chief executive Andrew McKellar called the decision “utter hypocrisy,” arguing small businesses are being left to carry costs the tax office refuses to bear.

Opposition and crossbench push for reversal

Deputy Opposition Leader Jane Hume appeared on Sunrise on Friday calling the ban “unfair” and urging the government to rethink the plan. She noted that taxpayers use credit cards “legitimately so that they can smooth out their tax payments over time.” Independent MP Allegra Spender said she would write to the ATO asking it to reverse the decision, citing her experience running a small business and the difficulty of managing cash flow. Senator Pauline Hanson called the move a “double tap” on small business, forcing them to absorb surcharge costs while the tax office avoids them.

What businesses can do now

Accountants recommend businesses set up dedicated tax accounts to set aside GST and PAYG regularly, removing BAS-time stress. Businesses can legally offer cash discounts without triggering the surcharge ban, meaning they may price cards higher than cash. The general interest charge on ATO debts is no longer tax-deductible since July 1, 2025, making it critical to avoid carrying tax debt. Taxpayers with payment plans linked to credit cards should change their payment method well before November 30 to avoid default.

Final Thoughts

The ATO’s credit card ban creates a genuine cash flow problem for small businesses already squeezed by rising costs. With the opposition, crossbench, and business groups demanding reversal, the government faces pressure to find a compromise before November 30. Businesses should act now to switch payment methods rather than risk default.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.