Treasurer Jim Chalmers’ surprise intervention latest chapter in credit charge surcharge ban saga
The Albanese government has intervened to delay the Australian Taxation Office (ATO) ban on credit card tax payments, which was due to start on 30 November.
Treasurer Jim Chalmers (pictured) announced on Friday that additional funding will let the ATO keep accepting credit cards until the end of the financial year, following criticism from small business groups and the Coalition.
“This decision is about putting small business first,” Chalmers said in a statement. “Australian small businesses have said the ATO’s announced timeframe was inadequate and we have taken these concerns seriously and acted on them.”
He said the extension “will provide more time for the ATO to engage with small business and other taxpayers who currently rely on credit cards, provide more detailed information to those affected, and consult on targeted options to support impacted taxpayers”.
The cost will be finalised in the December 2026 mid-year budget update.
What is the card surcharge ban?
Since 1 October, businesses have been barred from adding a surcharge when customers pay with eftpos, Mastercard, Visa or American Express cards.
These payment companies are now allowed to enforce a “no surcharge” rule on businesses (card networks have always preferred to ban surcharges since they discourage card use).
Merchants still have to pay card fees, but they can now build them into their prices. The ATO cannot do this because tax liabilities are set in legislation, which is why it moved to stop accepting credit cards. Credit card payments made up 2.3 per cent of total ATO collections in the 2024-25 tax year.
MPA has also reported on how the card surcharge ban is hitting builders and housing supply.
‘An important acknowledgement’
The Council of Small Business Organisations Australia (COSBOA) called the decision to extend credit card payments to the ATO until June 2027 “an important acknowledgement of the significant impact removing this payment option would have on small businesses”.
COSBOA chair Matthew Addison said the move recognises the importance of credit cards as a cash flow management tool, with an estimated $2 billion in ATO payments made by credit card, but urged for greater consideration in reversing the ban.
“We are pleased the Government has recognised the impact this decision would have on businesses that rely on credit cards to manage their cash flow and meet their tax obligations.
“But this decision also highlights a much broader issue. If the cost of accepting credit card payments is significant enough for the ATO to reconsider its approach, the government must also recognise the costs being imposed on small businesses that accept those same payments from their customers.
“COSBOA has consistently warned that banning surcharges without first ensuring lower merchant fees are passed through to small businesses simply shifts those costs onto businesses already operating on tight margins."
Addison added that removing surcharges reduces transparency, because consumers can no longer see the cost of their chosen payment method. He said COSBOA would work with the government and the ATO to make sure practical, affordable alternative payment options are available to small businesses before June 2027.
