ATO’s ban on credit card payments pushed back to 2027
It’s been a big fortnight for anyone who pays their tax bill on a credit card. In the space of two weeks the ATO announced it would stop taking credit cards, copped a wave of backlash and then hit pause. Here’s where things have landed.
What actually happened?
Following the card surcharge ban that began on the 1st of October for all business and service providers offering card payments, the ATO announced it would stop accepting credit card payments from December. This is due to the fact that they are no longer able to pass credit card fees onto taxpayers.
The ATO has argued that absorbing credit cards fees would cost around $200 million a year and that only 5% of small businesses actually pay their tax by credit card anyway. They conveniently omitted the number of individuals, medium and large businesses and other entities that pay their tax bill via credit card.
Plenty of business owners and individuals alike use a card to bridge the gap when a big tax bill lands, so eight weeks notice didn’t allow much time to rethink cash flow and come up with an entirely new strategy.
What happened next?
On October 9th, shortly following the shock announcement and a wave of backlash from individual taxpayers and businesses alike, Treasurer Jim Chalmers announced the government will cover the cost of credit card fees so the ATO can keep accepting credit cards until 30 June 2027.
The extra time is intended for the ATO to consult properly with small businesses before implementing major changes like this one, and hopefully reconsider.
Now what?
For now, nothing changes. But remember, it’s a delay, not a cancellation.
If you’ve historically relied on using your credit card for to pay your tax, it’s worth planning ahead. Here are 4 things you can do to be prepared if the credit card ban is reinstated in 2027.
- Look at your cash flow pattern: If you’re regularly reaching for the card at BAS time, that’s a sign your tax money and operating money are too mixed together.
- Set up a separate (hidden )tax account: Moving GST and PAYG amounts aside each week or month makes due dates far less painful. Making it hidden removes temptation to spend it!
- Know your options: The ATO offers payment plans for eligible businesses, which can be a better fit than a high-interest credit card debt.
- Watch the interest: The ATO’s general interest charge on late payments is currently above 11% a year, so leaving a debt unpaid isn’t cheap either.
With a little forward planning, the end of credit card payments (if it does land) doesn’t need to be a headache. Our team can help you build a simple cash flow plan around your BAS and tax dates. Get in touch with one of our expert Gold Coast or Brisbane accountants today.
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The material and contents provided in this publication are general and informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
