Nine days in October
The ATO walks away from the card
A day after the RBA's surcharge ban took effect, the Commissioner announced that credit cards would stop being accepted after 30 November. The reason given was almost $200 million a year in merchant fees the ATO could no longer recover and did not think appropriate to pass to the community.
The government walks it back
After a week of pressure from small business groups, accountants and the opposition, the Treasurer announced transitional funding so the ATO can keep accepting credit cards until 30 June 2027. The cost goes into the mid-year budget update.
A review, then a decision
The ATO says it will consult, look at options for taxpayers who cannot pay another way, and keep negotiating with the card schemes. Its own release already points people who want to keep using a card after that date to third-party payment providers.
Why the ATO ended up here
The ATO's original decision was not unreasonable. Until October it charged a surcharge of 0.92% on Mastercard and 0.96% on Visa, which covered its merchant costs, so a business paying tax by card paid for the privilege. The RBA's ban removed the right to charge that fee to anyone, government included. The ATO asked the card schemes for lower rates and did not get them. That left two choices: absorb $200 million a year, or stop taking the card. It chose the second, and said so plainly.
What was unreasonable was the process. Two months' notice, no consultation paper, no draft, a statement published the day after a major change in payments regulation that everyone had known about since March. The decision was defensible. The way it arrived gave every affected business a reason to call their MP, and they did.
The point nobody disputed. On 1 October every business in Australia that accepts cards lost the right to pass the cost to its customers and had to absorb it. On 2 October the ATO, facing the same cost, announced it would not absorb it. That is the double standard the business lobby ran with, and it was hard to answer.
The taxpayer's case
Follow the money and the 9 October decision looks different. Before October a business that paid a $3 million BAS on its card paid the ATO about $27,000 for the privilege and got 45 days of $3 million in return. That was a user-pays arrangement, and a reasonable one. From 9 October the business gets the same 45 days, keeps its rewards points, and pays nothing. The $27,000 is now a line in the Commonwealth's budget.
Put bluntly, the general taxpayer is now funding the card cycle of the businesses that choose to use it, and the Commissioner's own figures say most of that money, by value, is large and sophisticated. A sole trader who pays by BPAY on the due date is subsidising a multinational's working capital. Nobody designed it that way. It is what happens when a surcharge ban meets a government that does not want to be seen taking a payment option away from small business in a hard year.
Transitional funding is the kind of thing that becomes permanent by default. A government that has just told every merchant in the country to absorb card costs will struggle to carve itself out of the same rule in a year's time, and the card schemes have shown no appetite to cut government rates. The honest options for the review are narrow: keep paying, find a fee structure that is not a surcharge, or leave the card market and point payers to providers who are allowed to charge for the service. The ATO's own release already does the third.
The business case
None of that makes the extension bad news for business. It is good news, for three reasons that have nothing to do with the subsidy.
Eight months instead of two
A business that had built its quarterly cash plan around a card cycle was being asked to find the replacement working capital before the December BAS. It now has until the July cycle, and a review in between.
The same rule for everyone
Suppliers absorbed the cost of cards from 1 October with no exemption. The ATO has now, in effect, absorbed its own. Whatever the review decides, it is harder to defend a position where business must take the card and the government need not.
A consultation that was owed
The ATO has committed to consult before the next decision. That is the step that was skipped in October. Businesses that depend on the channel get to say so, and to say what the alternative needs to look like.
For a business paying a large liability by card the practical reading is simple. The channel is open, it is free, and it is temporary. Use it. Do not plan a 2027-28 cash position on it.
Both are right. That is the problem.
The taxpayer should not fund the working capital of businesses that can fund their own. Businesses should not be given eight weeks to replace a payment method the ATO had accepted for years. Both statements are true and the October extension satisfied the second by ignoring the first. The review has to find an answer that satisfies both, and the field of answers is small.
Our expectation is that the ATO leaves the card market in 2027, or restricts it to hardship cases, and that it says what it has already said: if you want to pay by credit card, use a provider. That is not a prediction we would bet the business on. It is the direction the ATO's own words point, and it is consistent with how the surcharge ban treats everyone else.
Where GlobalFinex B2B stands. We support businesses paying the ATO on a commercial card today, while the ATO's own channel is open, and we will keep doing so if credit cards are blocked again from July 2027. The ATO is paid in full on the due date through a channel it accepts. The business funds the payment on its card and the cash leaves on the statement date. The ATO's decision changes the ATO's terminal. It does not change the route, and the route is not dependent on it.
Watch this space. The consultation will run in the first half of 2027, the decision will land close to the end of the financial year, and if October is any guide it will arrive with less notice than anyone would like. We will update the regulation post as it does.
The facts of the extension, and the route that does not depend on the ATO's terminal.
The regulation post carries the dated facts and the cashflow arithmetic. The tax payments page sets out how card-funded settlement of tax works, what it is not, and where it matters most.
Sources: Commissioner of Taxation statement on credit cards, 2 October 2026. ATO media release, "ATO extends transition period for taxpayers using credit cards until 30 June 2027", 9 October 2026. Treasurer's announcement of transitional funding, 9 October 2026. Reserve Bank of Australia, Review of Merchant Card Payment Costs and Surcharging, Conclusions Paper, March 2026. ATO card payment fees as published before 1 October 2026. Worked figures are illustrative. This is opinion, not advice.