The surcharge ban, in effect since 1 October

From 1 October 2026, eftpos, Mastercard and Visa introduced no-surcharge rules covering credit, debit and prepaid cards. American Express and UnionPay have also removed surcharging, and PayPal's rule starts on 5 October. This followed the RBA's Review of Merchant Card Payment Costs and Surcharging, which concluded it was in the public interest to remove surcharging across the designated card networks.

It's worth being precise about what this is. The ban isn't new legislation — it's a payments reform implemented through the card networks' own rules. The ACCC has noted that it does not enforce card network rules, which is a different enforcement path to most consumer protections.

Businesses still pay card fees. They just can no longer pass the fee on as a separate surcharge line — they either absorb it or build it into their prices for all customers. Some relief is arriving through a lower fee cap: the consumer credit card interchange cap has fallen from 0.80% to 0.30%, though commercial credit cards remain at 0.80%. Treasurer Jim Chalmers has said the change will save consumers $1.6 billion in surcharges and businesses $910 million a year in fees, combined. The Council of Small Business Organisations Australia has pushed back, warning the change could pressure small businesses if the interchange reductions aren't passed through in full.

The ATO drops credit cards, from 1 December

The ATO announced on 1 October that it will stop accepting credit card payments from 1 December 2026, including American Express, Visa and Mastercard credit cards. As a government agency, it has decided it would not be appropriate to pass credit card merchant fees on to the community — in effect, now that surcharging is banned, it would rather stop taking credit cards than absorb the fee itself.

2.3%
Of ATO tax payments made by credit card
60%+
Of those from businesses & wealthy groups
30 Nov
Last day to pay by credit card fee-free

Source: ATO, 1 October 2026.

About 2.3% of tax payments were made by credit card in 2024–25, but more than 60% of those card payments came from privately owned and wealthy groups, public companies and multinational businesses — this isn't a niche payment method for a handful of individuals.

Now – 30 Nov
Taxpayers can still pay the ATO by credit card, fee-free, during this window.
1 Dec 2026
The ATO stops accepting credit card payments, including Amex, Visa and Mastercard credit cards.
Payment plans
The ATO is writing directly to taxpayers whose payment plan is linked to a credit card. Anyone with a direct debit arrangement on a credit card must switch payment method before their next instalment due after 30 November.
What remains
Direct deposit, direct debit from a debit card or bank account, BPAY, Government EasyPay, in person at Australia Post, by mail, or through an international money remitter.

Reaction has been mixed. Critics have accused the ATO of hypocrisy, and some have called it a blow to small businesses that rely on credit cards to manage tight cash flow around tax time.

A 55-day interest-free period has effectively functioned as short-term tax funding for some businesses. From December, that option is gone.

Why this closes a real funding gap

Some businesses have used credit cards as informal short-term funding for tax debt — a credit card's interest-free period can give up to 55 days of breathing room, sometimes with the added benefit of reward points. That option disappears on 1 December, right as the cash rate sits at 4.60% and credit generally has become more expensive across the board. See our earlier article, ATO tax debt is rising sharply — what it means for property-backed refinancing.

There's a second, less visible change that makes carrying ATO debt more expensive than it used to be. General interest charge (GIC) incurred on or after 1 July 2025 can no longer be claimed as a tax deduction. The GIC rate itself remains high: for the October–December 2026 quarter, the ATO's published GIC annual rate is 11.51%. Combined with the loss of deductibility, the after-tax cost of carrying overdue tax debt has increased noticeably over the past 18 months, independent of whichever payment method is used.

Options from December

None of these is automatically "the" answer — the right option depends on the size of the debt, the business's cash flow, and what security is available.

ATO payment plan

  • Often the right first step, particularly for smaller or shorter-term debts.
  • GIC still accrues and is non-deductible, so the debt grows in after-tax terms while on a plan.
  • No property or other asset is put at risk.

Business overdraft or line of credit

  • Useful for shorter-term cash flow timing where the business has existing banking relationships and headroom.
  • Typically smaller limits than a property-secured facility, and serviceability is reassessed as rates move.

Property-secured refinance

  • Suits larger tax debts where the business or its owners have sufficient equity in property and a clear plan to repay.
  • Can consolidate ATO debt into a single facility with more certainty over the term.
  • Puts the property used as security at risk if the loan isn't repaid — this is a genuine trade-off, not a detail to skim past.

A short checklist for brokers and accountants

  1. Identify any client currently paying the ATO, or servicing an ATO payment plan, by credit card.
  2. Flag the 30 November cut-off clearly — don't assume clients have seen the ATO's own correspondence.
  3. Work out whether the underlying debt is a genuine cash flow timing issue, or a sign of a deeper structural problem in the business.
  4. For larger debts, model the after-tax cost of GIC against the cost of a payment plan versus a property-secured refinance.
  5. Where property security is being considered, be upfront with the client about what's at risk if repayment doesn't go to plan.

The Funding Door view

Refinancing isn't the right answer for every business carrying ATO debt, and we'd rather say that plainly than pretend otherwise. An ATO payment plan is often the sensible first move, especially for smaller or shorter-term debt. A property-secured refinance tends to suit businesses with larger debts, sufficient equity, and a clear, credible plan to repay — and it's a decision that should be made with full awareness that property is the security on the line.

Have an ATO debt or refinancing scenario to work through?

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Funding Door Pty Ltd (ACN 638 679 964) provides finance for business and investment purposes only. This lending is not regulated credit, and consumer protections under the National Credit Code do not apply. This article is general in nature, does not constitute financial, credit, tax or legal advice, and does not take into account your individual objectives, financial situation or needs. Please seek independent professional advice, including from a registered tax agent, before acting. All lending is subject to credit assessment, valuation, due diligence and formal approval. Any property used as security for a loan is at risk if the loan is not repaid in accordance with its terms.