ATO credit card tax payment ban sparks small business backlash

The Australian Tax Office confirmed it will stop accepting credit card payments for tax bills from 1 December. Tax commissioner Rob Heferen announced the ban last week, following a recent Reserve Bank prohibition on card surcharges. The ATO will continue to accept credit card payments until November 30 as a transition period.

Business community response

Small business groups and government ministers have criticised the ban, citing cash flow concerns and demanding consultation. Housing Minister Clare O’Neil said the federal government has real concerns about the decision and called for a solution. She stated the ATO needed to go back and talk to business about its decision, noting that cash flow is the biggest concern for small business and that credit cards are a way people manage that issue.

Business groups have expressed anger and frustration. The Australian Chamber of Commerce and Industry boss, Andrew McKellar, said small business needs the facility to manage cash flow. Tax Invest Accounting Director Belinda Raso called the ban a massive blow to businesses. Raso, along with the ACCI, planned to prompt action from the ATO to reverse the decision. Estimates suggest about 5% of small businesses use credit card payments for tax bills.

Business groups and ACCI members met with the ATO on Wednesday for a snap crisis meeting regarding the ban. The ATO was not willing to budge during the meeting. Labor ministers have been dealing with the fallout.

Government position and alternatives

While supporting the ATO’s decision, ministers acknowledge the need for flexibility and point to low-interest payment plans as an alternative. Assistant Digital Economy Minister Andrew Charlton said the government remains in support of the ATO's decision. He defended the ban, saying it provided consistency between private sector and government payments but stressed business operators needed flexibility on tax payments.

Charlton said the ATO is seeking to provide flexibility through payment plans with relatively low interest rates compared to credit cards. The government has asked the ATO to continue to consult with small business to ensure flexibility is provided. On Wednesday, small business minister Anne Aly said she wanted the ATO to talk with business operators to find a way forward.

Political fallout

Opposition leaders have criticised the treasurer’s absence, framing the assistant minister as the de facto decision-maker on tax policy. Opposition leader Angus Taylor urged treasurer Jim Chalmers to intervene, referring to Charlton as the de facto treasurer. Taylor questioned the treasurer's absence on the issue.

The ATO will continue accepting credit card payments until November 30 to allow businesses time to adjust.