Treasurer Jim Chalmers has confirmed a planned ban on credit card payments to the Australian Taxation Office will be delayed following backlash from small businesses.
The tax office surprised Australians by dropping the news on October 1 that it would no longer accept the payment method, sharing the change on the same day that a ban on card surcharges came into effect.
On Friday, the Albanese government announced extra funding for the ATO to push back the deadline from its initial date to ban the card payments of November 30.
Chalmers said the funding would give the tax office ‘more time’ to speak to businesses and ‘get it right’.
‘Australian small businesses have said the ATO’s announced time frame was inadequate and we have taken these concerns seriously and acted on them,’ he said.
‘We try not to interfere with the RBA or the ATO, but it’s really important that we have stepped in today.
‘Labor will always back small businesses because we know how important they are to our economy.’
The ATO announced it was halting credit card payments for tax bills from December as a result of the Reserve Bank’s decision to stop surcharges.
Treasurer Jim Chalmers has confirmed a planned ban on credit card payments to the Australian Taxation Office will be delayed following backlash from small businesses
Commissioner Rob Heferen said merchant fees were expected to cost the tax office almost $200million annually, which it could not absorb as it would result in less funds available for government services.
‘Meeting the cost of surcharges through additional public funding for the ATO would have the same ultimate outcome,’ he said.
But Chalmers bowed to pressure and handed the tax office extra funding to delay the credit card ban until June 30, 2027.
The cost of the funding boost will be finalised in the mid-year budget update in December.
Chalmers blamed credit card companies for not offering low enough fees to allow the ATO to keep accepting card payments.
‘The ATO will continue to engage with card companies on this matter,’ he said.
He added that, after June 30, the ATO will continue to accept credit card payments via third parties as well as debit cards and bank transfers.
Before Chalmers’ intervention, the head of Australian Chamber of Commerce and Industry chief executive Andrew McKellar had also called for a ‘clear message from government’ in support of small business.
The ATO said it was halting credit card payments for tax bills from December after the Reserve Bank’s decision to stop surcharges. Commissioner Rob Heferen (pictured) said merchant fees were expected to cost the tax office almost $200million annually, which it could not absorb
Independent MP Kate Chaney had called on the ATO to reconsider or grant businesses a longer grace period to adjust on Thursday.
‘Credit cards are one way businesses manage cash flow when a tax bill lands. Removing that option with around eight weeks’ notice makes things harder,’ she said.
Meanwhile, Shadow Treasurer Tim Wilson said Labor was at fault for the ATO decision because they triggered the surcharge ban.
‘They didn’t think through the consequences of it, and there’s a massive double standard,’ he told News24.
‘The Prime Minister (Anthony Albanese), clearly he likes to humiliate his treasurer, but the Prime Minister has clearly forced Jim Chalmer’s hand again because he wouldn’t listen to the community and the consequences of decisions.’
The tax office said only five per cent of small businesses used credit cards to pay tax in 2024-25.
The Reserve Bank of Australia, which oversaw the reforms, said 85 per cent of small merchants did not impose surcharges before the ban was put in place and would not be impacted by the change.
More to come.
