ATO Backflips on Credit Card Ban Following Business Backlash

The Australian Taxation Office (ATO) has reversed its decision to stop accepting credit card payments for tax obligations from 1 December 2026, following significant criticism from small business groups. The original announcement sparked concerns among business owners who regularly use credit cards to manage cash flow and meet their BAS, income tax and other taxation liabilities. Following pressure from industry representatives, the ATO has confirmed that credit card payments will continue to be accepted until 30 June 2027, providing businesses with additional time to prepare for any changes.

The proposed ban was particularly concerning for small businesses that rely on credit cards to manage the timing of their tax payments, particularly during periods of reduced cash flow. Many businesses also use credit cards to access interest-free periods or earn reward points when paying tax liabilities. The ATO’s decision follows broader changes to Australia’s card payment system, including reforms to merchant surcharges. While the extension provides temporary relief, the ATO is continuing to consult with industry representatives about the removal of credit cards as a payment option from 1 July 2027.

For business owners, the announcement serves as a timely reminder of the importance of planning for tax obligations before they fall due. Businesses that currently rely on credit cards to meet their tax commitments should consider alternative payment arrangements and review their cash flow forecasts ahead of the proposed changes. At Initiative, we encourage clients experiencing difficulties meeting their tax obligations to contact us early so that appropriate payment options can be explored before outstanding liabilities become a larger issue.

Author

Kim Jay