TITLE: ATO Credit Card Ban, Family Tax Benefit Recoveries and Payday Super: What Australian Businesses Need to Know
ATO refuses to reverse its credit card payment ban
The ATO has confirmed that it will stop accepting direct credit card payments after 30 November 2026. From 1 December 2026, businesses and individuals will need to use another payment method.
The decision follows the RBA’s removal of card surcharging from 1 October 2026. The RBA confirmed that eftpos, Mastercard and Visa introduced no-surcharge rules for credit, debit and prepaid card transactions from that date.
The ATO held a crisis meeting with business groups on 7 October after strong criticism from the Australian Chamber of Commerce and Industry, COSBOA, the Australian Retail Council and Master Builders. According to the ABC’s report on the meeting, the ATO did not agree to reverse its decision.
Taxation Commissioner Rob Heferen said merchant fees were estimated at almost $200 million a year. He said absorbing the cost was “not tenable” because it would reduce revenue available for government services.
Business groups argue that this creates a double standard. Australian businesses must generally absorb card acceptance costs in their overall prices, while the ATO has chosen to withdraw the payment option instead.
The ATO says:
- Credit card payments represent only 2.3% of payments made to the ATO.
- More than 60% of credit card payments by value come from privately owned and wealthy groups, public entities and multinational businesses.
- About 5% of small businesses use credit cards to pay tax.
Other organisations have also announced similar changes, including StrataPay, some private schools, local councils and rental payment platforms.
The ATO’s official statement confirms the transition period. You can continue using a credit card directly with the ATO until 30 November, but you should not leave the change until the final day.
Switch your payment process before 1 December
Review your payment arrangements now. This is particularly important if your business uses a credit card to manage BAS, GST, income tax or other ATO obligations.
Available alternatives include:
- BPAY
- Direct debit
- EFT or bank transfer
- Debit card payments
- Australia Post payment services
- An ATO payment plan where you cannot pay the full amount on time
If you have an existing payment plan linked to a credit card, contact the ATO and change the payment method before the next instalment. Doing this early will reduce the risk of a failed payment, default or unnecessary recovery action.
The RBA’s card surcharge FAQ explains that businesses can still offer discounts for particular payment methods. However, they should review payment displays with their payment service provider and follow applicable Australian consumer law requirements.
Automated debt recovery will be tightened for vulnerable taxpayers
The government is changing an automated debt-recovery process that applied tax refunds to Family Tax Benefit overpayments without first assessing whether the recipient was experiencing financial hardship.
The issue affects several agencies, including:
- The ATO
- Services Australia
- The Department of Social Services
An internal review found a jurisdictional error because affected recipients were not told that they could appeal on hardship grounds. The concern is that an automated system recovered debts without properly considering individual circumstances, repayment arrangements or hardship protections.
The Administrative Review Tribunal previously identified a systemic issue with automated offsets of tax refunds against family assistance debts. The Tribunal’s notice raised concerns about the way the process operated and whether relevant circumstances were being considered.
New objective exclusion criteria are being developed. These criteria are expected to prevent recovery from vulnerable individuals who meet recognised hardship conditions. The agencies have also published interim guidance and contact channels.
However, there is currently no confirmed date for the underlying system changes.
If your tax refund has been used to repay a Family Tax Benefit debt, do not assume that the automated decision cannot be reviewed. The ATO has acknowledged the systemic issue and provides a process for affected taxpayers to request reconsideration.
You should:
- Check the notice explaining how your refund was applied.
- Contact the ATO if the offset caused serious financial hardship.
- Contact Services Australia about the underlying Family Tax Benefit debt.
- Provide evidence of essential living costs, repayment arrangements or an agreed repayment pause.
- Keep copies of all notices, call records and supporting documents.
The ATO’s guidance on tax support and financial difficulty explains the available contact and support options.
Expect greater transparency from 10 December
From 10 December 2026, new automated decision-making transparency rules will require relevant Australian government agencies and other covered entities to disclose qualifying automated decision-making practices in their privacy policies.
The rules apply where a computer program makes, or substantially contributes to, a decision that may significantly affect an individual’s rights or interests and uses personal information.
Agencies will need to explain the types of:
- Personal information used
- Decisions made solely by automated systems
- Decisions where automated processing substantially supports a human decision
This deadline is especially relevant to organisations reviewing automated eligibility, debt, enforcement and service systems.
Payday Super creates a new payment-control test for employers
Payday Super began on 1 July 2026. Ten weeks into the new regime, employers should be checking whether payroll and clearing-house processes are consistently meeting the new timing requirements.
For ordinary contributions, super must reach the employee’s nominated fund within 7 business days of payday. For a new employee or the first contribution to a particular fund, the initial contribution may have up to 20 business days.
The contribution must be calculated on qualifying earnings at the current 12% super guarantee rate.
