ATO credit card payment ban faces growing backlash
The ATO will stop accepting credit card payments after 30 November 2026.
The ATO says it is not appropriate to pass credit card merchant fees to the community. Credit card payments represented approximately 2.3% of all tax payments in 2024–25. However, more than 60% of those payments came from privately owned and wealthy groups, public companies and multinationals.
The ATO’s announcement is available in its official media release.
The decision has triggered strong criticism on 2 October:
- Deputy Opposition Leader Jane Hume called the change “unfair” and urged the government to reverse it.
- Independent MP Allegra Spender said she would write to the ATO, highlighting the effect on small-business cash flow.
- One Nation leader Pauline Hanson also called for the decision to be reversed.
- ACCI chief executive Andrew McKellar described the policy as “a staggering double standard” and “unacceptable”.
- The ATO acknowledged on social media that the change “could make managing your cash flow harder.”
The practical issue is straightforward. Businesses and owner-directors that used credit card payment timing, rewards or short-term credit to manage tax liabilities will need to move to another payment method before the first payment due after 30 November.
Available alternatives may include:
- BPAY.
- Direct debit from a bank account.
- Debit card payments.
- Payment plans linked to an acceptable account.
- Other payment methods listed by the ATO.
Do not wait until the final week. Review your payment plans now to avoid a failed instalment, arrears or a payment-plan default.
Reversing the decision would also create a cost problem. Tax liabilities are set by law. If the ATO absorbed card acceptance fees, millions of dollars in merchant costs would ultimately be borne by the community. This is why the debate is not simply about whether the ATO can keep accepting cards. It is also about who pays the underlying cost.
For more reporting on the political and small-business reaction, see SmartCompany and the ABC report.
Card surcharge workarounds create compliance risks
From 1 October 2026, card surcharges are banned across eftpos, Mastercard, Visa, American Express and UnionPay. PayPal’s no-surcharge rule begins on 5 October 2026.
The changes apply when a separate fee is added because a customer chooses to pay by card. The Reserve Bank of Australia explains the payment network changes.
Businesses still incur payment processing costs. However, they must now recover those costs through compliant pricing structures rather than a separate card surcharge.
Some businesses are responding by:
- Increasing headline prices.
- Rounding menu prices, such as changing a $4.80 coffee to $5.00.
- Offering discounts for cash or PayID payments.
- Reviewing payment service provider fees.
- Removing card acceptance where commercially practical.
These approaches require careful implementation. The ACCC warns that relabelling a card surcharge as a “service fee”, “booking fee” or “handling fee” may be misleading if the fee only applies to card payments.
A genuine service or booking fee may still be permitted where it applies independently of the customer’s payment method. Do not simply rename an existing card surcharge. Review your checkout settings, invoices, receipts, menus, terms and customer communications.
The RBA estimates that interchange reforms could save merchants approximately $910 million a year. ACCI disputes the scale and distribution of those savings, while the federal government says consumers could save $1.6 billion annually.
The business.gov.au guidance recommends reviewing pricing, payment providers, systems and customer information. Completing that review now will reduce the risk of incorrect charges and customer disputes.
Submit ATO consultation responses before today’s deadline
Several ATO draft positions released on 4 September close for public comment today, 2 October 2026.
The relevant materials include:
PCG 2026/D4: Software royalty arrangements
The draft Practical Compliance Guideline addresses the ATO’s compliance risk framework for software royalty arrangements.
This is relevant to digital businesses paying overseas software vendors, SaaS providers and technology groups. Review contracts, licensing rights, support services, hosting arrangements and payment flows before deciding whether withholding obligations apply.
The ATO’s international issues consultation page contains the relevant material.
TD 2026/D2: Wrapping and unwrapping crypto assets
The draft Taxation Determination considers the CGT consequences of wrapping and unwrapping crypto assets through smart contracts.
Businesses and investors affected by these arrangements should preserve transaction records, wallet histories, acquisition costs, disposal values and smart-contract documentation. Comments can be sent to CryptoPagComments@ato.gov.au.
Read the ATO draft determination.
SGD 2026/D1: Contractor labour payments and Payday Super
The draft determination explains how to identify the labour component of contractor payments for Payday Super purposes.
It applies to payments made on or after 1 July 2026. Non-labour components such as equipment, materials and GST are excluded. If the labour component is not clearly identifiable, a reasonable market value may be used.
Keep records showing how the labour portion was calculated. The draft states that comments are due today, with submissions directed to PaydaySuperPAG@ato.gov.au.
Review the official draft determination.
The ATO is also closing comments on its draft guidance covering Payday Super and contractor payments, so affected businesses should finalise any submissions and confirm their payroll and contractor record-keeping processes are ready for the 1 July 2026 start date.
