ATO credit card ban delayed to June 2027: a reprieve, not a reversal

The extra time is welcome, but the change has only been delayed. Businesses that rely on credit cards to manage their tax payments should use the next nine months to plan an alternative.

What changed

The ATO will now delay its ban on credit card payments by 12 months, until 30 June 2027, after strong criticism from parts of the business community. The government will provide extra funding to cover card fees for the year ahead.

Treasurer Jim Chalmers said the government would provide transitional funding so the ATO can keep accepting credit card transactions until the end of the financial year, with the costs to be finalised in the mid-year budget update (MYEFO). He said the extra time will let the ATO consult small businesses and other taxpayers who rely on credit cards, give them more information, and consider targeted options to support them.

Source: Treasurer's announcement and ATO estimates, as reported 9 October 2026.

Why the ATO wanted to stop accepting credit cards

The decision follows the payment surcharge ban that began on 1 October. Since then, businesses have had to either absorb card fees or raise their prices. The ATO argued neither option was workable, and on the day the surcharge ban started, it announced it would stop accepting credit card payments after 30 November.

The ATO estimated that absorbing card fees would cost taxpayers about $200 million a year. It also noted that only 5% of small businesses pay their tax bill by credit card.

Why businesses pushed back

The proposal drew criticism from business groups, crossbench MPs and several government ministers.

The Housing Industry Association was among the critics. It argued that the ban wouldn't change how much tax businesses owe, but would remove a tool some businesses use to manage the timing of payments and their cash flow. HIA called for the decision to be reversed before it took effect, warning it would make cash flow harder to manage at a time when many builders already face significant cost pressures.

The Coalition had also promised to introduce legislation on Monday to reverse the ATO's ban.

Delayed, not cancelled

The government's announcement buys time, but it doesn't change where things are heading. Treasurer Jim Chalmers, Small Business Minister Anne Aly and Assistant Treasurer Daniel Mulino confirmed that the extra support will delay the decision until the end of the financial year, but not prevent it.

Ministers have also said that after 30 June 2027, small businesses are expected to be able to keep paying by credit card through a third-party arrangement, alongside debit cards and bank transfers. The details, including how it will work and what it will cost, are still to be confirmed. Consultation over the coming months may also lead to targeted support for affected taxpayers, so it's worth watching for updates.

How to use the extra time

For businesses that use credit cards to manage tax payments, the next nine months are an opportunity to plan rather than react.

1. Understand your tax cash flow. Map out when BAS, PAYG and income tax payments fall due over the next 12–18 months, and how your cash flow lines up with those dates.
2. Build a tax reserve. Setting aside GST and PAYG withholding in a separate account as you collect them is one of the simplest ways to avoid a shortfall when payments fall due.
3. Know your alternatives. Depending on the size of the obligation and your circumstances, options may include:
   • ATO payment plans: often the right first step for manageable debts, especially if you engage with the ATO early.
   • Business overdrafts or working capital facilities: these can help smooth the timing of tax payments for businesses with strong cash flow.
   • Property-secured finance: for larger tax debts, a loan secured against property can consolidate the debt into a structured repayment plan. It puts the property at risk, so it's best suited to businesses with strong equity and a clear repayment strategy.
4. Factor in the cost of tax debt. General interest charge (GIC) incurred on or after 1 July 2025 is no longer tax-deductible. That makes carrying overdue tax debt more expensive after tax than it used to be.
5. Talk to your accountant early. The right approach depends on your business structure, cash flow and how large and long-lasting your tax obligations are.

The Funding Door view

The delay gives small businesses welcome breathing room, but the best use of it is planning. Businesses that understand their tax cash flow, build reserves and know their funding options before they need them are far better placed than those who wait until a payment falls due.

For more on managing tax debt, see our earlier articles: The ATO's plan to drop credit cards and ATO tax debt is rising sharply.