ATO extends the ban on credit card tax payments: What does it mean for accountants?
What happened in the credit card space?
The Reserve Bank of Australia (RBA), after reviewing merchant card payments and surcharging, initially decided to stop surcharging credit cards from October 1 2026.
Following this new rule, the ATO planned to stop accepting credit card payments for tax bills from 30th November 2026. But the government has delayed the decision to 30th June 2027.
Why did the ATO do that?
The RBA removed the ability to surcharge customers for covered card payments because it felt surcharging had become confusing, poorly disclosed, and didn’t achieve its purpose of encouraging people to use lower-cost payment methods.
The ATO is a government agency, and it recognised that some taxpayers use credit cards to manage their tax payments. Using credit cards can attract card processing charges that may be passed on to the whole community, even though only a smaller group of taxpayers uses them.
Does it mean that taxpayers can’t pay by credit card at all?
No
Until 30th June 2027, taxpayers can keep paying the ATO by credit card; after that, the ATO plans to stop accepting direct credit card payments, but taxpayers can still pay by credit card through third-party payment providers. These providers may charge fees.
Key points to note:
- To assist taxpayers, the ATO is writing directly to those who currently have a payment plan linked to a credit card to explain the changes and the steps they need to take.
- 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 to ensure compliance with their payment plan.
- The vast majority of taxpayers are not paying their tax with a credit card. Approximately 2.3% of tax payments were made with credit cards in 2024–25, with more than 60% of card payments being made by privately owned and wealthy groups and public and multinational businesses.
For accountants, bookkeepers, and businesses
- Talk to your clients about the revised rules and the timeline
- Help your clients review the payment arrangements
- Plan the cash flow ahead
- Keep tracking the ATO updates and understand the cost arrangement before 30th June 2027.
