The cost the Tax Office won’t wear

The Australian Taxation Office will stop accepting credit cards as a payment method after 30 November 2026, so the last day a credit card works is Monday 30 November ¹. Only credit cards end: the ATO says other payment methods will remain available ². Its announcement is dated 1 October, the day the surcharge changes began, and the copy distributed through Medianet is stamped 00:01 that day ¹³.

If you heard the ATO stopped taking credit cards on 30 September, note the dates: an archived copy of its payment page, taken at 7:46am AEST on 30 September, still listed card fees ⁴; a copy taken at 8:13am AEST on 1 October reads “Card payment fees do not apply to payments” ⁵. The fee came off between those two copies; the credit card itself goes after 30 November.

Its reason is one sentence: as a government agency, the ATO “has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community” ¹. From the same day eftpos, Mastercard and Visa applied no-surcharge rules, and the RBA says the cost of accepting cards “can be reflected in a business’s overall pricing” ⁶. A tax bill has no shelf price to carry a card cost: that is this outlet’s reading, not the ATO’s, and the case against it is set out below.

01What the Tax Office charged

Until 30 September 2026 the ATO charged a fee on card payments, published in a table on its payment page: nothing on debit cards, and between 0.94 and 2.03 per cent on credit and international cards, depending on the card ⁴.

The ATO described the fee as “equal to the fee we incur from our bank,” not part of the ATO debt and not subject to GST ⁴. On its own description, this was a pass-through at cost, not a revenue line.

Since 1 October the page says “Card payment fees do not apply to payments,” and credit cards, which still work until the cut-off, carry no fee ². Who pays the bank’s charge in that window is not on the ATO’s record. The natural reading is that the ATO does, since its page described the old fee as what its bank charged it; that is inference. SmartCompany wrote that the ATO would keep accepting credit cards “surcharge-free, for the next eight weeks” ⁷. No ATO dollar figure for card costs appears in its release or on the pages this outlet read.

An earlier change sits behind it: the Commonwealth Ombudsman said in April 2025 that from 1 January 2025 the government stopped applying merchant fee surcharges on debit card payments to the ATO and Services Australia ⁸.

02Why it is leaving

The release opens “Following the Reserve Bank of Australia’s Review of Merchant Card Payment Costs and Surcharging” ¹. The reason it gives is one sentence, which begins “As a government agency, the ATO has decided” and continues:

Was the ATO free to stop? The RBA’s FAQ says businesses and other merchants “are generally able to choose which payment methods they accept,” including by withdrawing existing ones; it does not name government agencies ⁶. Whether the card networks’ rules bound the ATO is not settled on the record this outlet read: the RBA says its changes do not limit the networks applying no-surcharge rules to particular types of payments, including “government-related payments,” and that any exemption is “a decision for each card network, not the RBA” ⁶. The ATO’s release says nothing about network rules ¹. Visa’s public rulebook, in the edition of 18 April 2026 and so written before the ban, let government merchants under listed codes, including tax payments, collect a permitted surcharge separately; that was permission to collect a surcharge, not an exemption from a ban, and nothing this outlet found shows it survives 1 October ⁹.

A legal thread runs back to 2024. On 22 November 2024 three ministers said the government had received advice that “the collection by a Commonwealth entity of a payment surcharge is likely unlawful in certain circumstances without a legislative basis to permit it” ¹⁰. Four days later Angus Taylor told the House that the Opposition had been advised the analysis was supported by Australian Government Solicitor advice, which it had not seen ¹¹. The Commonwealth Entities (Payment Surcharges) Act 2024 then let the Minister set surcharging policies by legislative instrument ¹²; a title search of the Federal Register found no such instrument, which supports but does not prove that none exists ¹³.

The government’s explanation, as this outlet found it, comes from Industry Minister Tim Ayres. He told News24 on 1 October that credit card payments were being stopped “because the surcharge is paid by the taxpayer. It’s kind of perverse,” and, saying the ATO was “a large customer” and there was “a really strong public case for lowering the surcharge,” that “Credit card companies wouldn’t come to the party on that question” ¹⁴. Neither the ATO nor the card companies have said what, if anything, was negotiated.

03The charge of hypocrisy

ACCI, the Australian Chamber of Commerce and Industry, attacked the decision on 1 October. Its chief executive, Andrew McKellar, said in ACCI’s release it was “utter hypocrisy that the ATO, a government agency, refuses to absorb the costs of extending payment options to credit cards,” and that it was little wonder small businesses were angry when decisions like this were “deliberately hidden until the last moment” ¹⁵. That is ACCI’s characterisation: the ATO’s release was distributed at 00:01 on 1 October, and when the decision was made is not on the record ³.

At a Parliament House press conference the same day he called the move “a staggering act of hypocrisy” and “a staggering double standard,” and said the Tax Office was saying “they will not wear it” ¹⁶. ACCI’s release was headed “as rates and inflation climb” ¹⁵, and the Reserve Bank had raised the cash rate to 4.60 per cent two days earlier ¹⁷, the subject of THE INFLATION RORT’s ‘Four rises in 2026’.

McKellar also said, without giving a source, that “40 per cent of all payments that are made by credit card come from small business” ¹⁶. The ATO says more than 60 per cent of card payments came from privately owned and wealthy groups and public and multinational businesses, which leaves under 40 per cent for all other payers together ¹. Whether both can hold depends on how each is counted and whether the groups overlap; the ATO does not say whether its shares are by number or by value, and McKellar gave no source.

Shadow Treasurer Tim Wilson said: “There is one rule for Canberra and another rule for the corner store” ¹⁸. Opposition Leader Angus Taylor, according to the Sydney Morning Herald, said: “you couldn’t make it up” ¹⁹. One Nation leader Pauline Hanson said in a statement: “Businesses are expected to absorb these fees, while the ATO avoids them by withdrawing credit card payments” ²⁰. Independent MP Allegra Spender said on breakfast television that the ATO “should reverse this” ¹⁹.

From the government side, the Sydney Morning Herald reported that Ayres told News24 on 2 October: “The credit card companies are charging too much, and that is a charge, ultimately, on the taxpayers because the ATO has to pay it” ¹⁹. The 1 October release from Treasurer Jim Chalmers, Assistant Treasurer Daniel Mulino and Assistant Minister Andrew Leigh, announcing the end of surcharges, does not mention the ATO ²¹.

Businesses were pointed to their prices for the card cost. The Tax Office, which has no shelf price, is to stop taking credit cards instead.

04The case for the ATO

The strongest case for the ATO starts with its own words: as a government agency, it did not think it appropriate for the cost of credit card merchant fees to be transferred to the community ¹. Ayres makes the same argument, quoted above: the charge falls on taxpayers because the ATO has to pay it ¹⁹. The fee was never ATO revenue: by its own description it equalled what its bank charged it ⁴.

On this outlet’s reading, the ATO cannot fold a fee into a price the way a cafe can. SmartCompany’s David Adams wrote that without legislative change it would be difficult for the ATO to add a card cost to a taxpayer’s obligations; that is a journalist’s analysis, not a ruling ⁷. More than 60 per cent of card payments came from the privately owned and wealthy groups and big businesses described above ¹; absorbing the fee would have the community pay the card fees on their payments, which is analysis, not an ATO statement. An OzBargain post on 1 October, a community post and not a source of fact, framed the fee-free window as a chance to “harvest reward points” on tax payments ²².

The 2024 advice sits behind it ¹⁰, and NSW reported a similar finding: it said on 23 October 2024 that Crown Solicitor’s Office advice between February 2016 and December 2022 had flagged Service NSW’s merchant fees as unlawful ²³. Other payment methods remain, BPAY, EFT, direct debit, Government EasyPay for debit cards and Australia Post among them ²⁴, and the ATO says it “recognises that some taxpayers currently rely on credit card payments to manage their tax payments” and will continue to support those experiencing financial hardship ¹. COSBOA, the small business peak body, said: “We understand the ATO’s decision, but it must take a practical and flexible approach” ²⁵.

05How to pay after 30 November

What follows is the ATO’s published information and what third parties advertise, as at 2 October 2026; it is information, not advice.

The ATO says tax debts on a payment plan “continue to accrue GIC, which compounds daily” ²⁶; the rate is 11.51 per cent a year for October to December 2026, up from 11.43 per cent in July to September ²⁷.

After 30 November the ATO lists BPAY (biller code 75556) and online services, which it calls the quickest, EFT to its Reserve Bank account (BSB 093 003), direct debit, Government EasyPay for debit cards, Australia Post, mail and international transfer; it does not yet have PayID ²⁴²⁸. A direct debit from an Australian cheque or savings account takes at least 7 working days to activate ²⁴.

A payment plan linked to a credit card must be switched before the next instalment due after 30 November, or payments “will be unsuccessful and the status of your payment plan may move into arrears or default” ²⁹. A plan is not a substitute for a card: interest-free plans for activity statement debts need, among other tests, a turnover under $2 million and that the business “can’t obtain finance (such as a loan) through normal business channels” ³⁰; an ATO spokesperson says plans are “not ... a long-term cashflow management or business financing tool” ³¹.

Accountant Belinda Raso told ABC AM that many small businesses “get out a credit card, pay that GST bill, pay their BAS and then pay it off” ³²; CA ANZ’s Geraldine Magarey said businesses that rely on cards “will need to have funds available when payments are due” ³¹. For how rate rises fall on firms of different sizes, see THE INFLATION RORT’s ‘Are corporations untouched?’.

Third-party services take a card payment and pay the ATO for a fee. pay.com.au says it pays the ATO “by bank transfer” and requires an active ABN ³³³⁴; its fees guide lists, excluding GST, a free-plan fee of 1.00 per cent on Mastercard, 1.20 per cent on Visa and 2.10 per cent on American Express, with lower rates on monthly plans ³⁴, and its FAQ says the Mastercard fee rose 0.2 points from 1 October, which the guide does not yet show ³⁵. Sniip says it pays the ATO by BPAY from its trust account ³⁶, and its page lists ATO payments “tiered from 1.75% + GST” and says Visa, Mastercard and Diners are processed at a flat 1.5 per cent including GST ³⁶. These are the companies’ own claims and prices. Our arithmetic, labelled as ours: pay.com.au’s free-plan Visa fee of 1.20 per cent plus GST is 1.32 per cent, against the ATO’s old 0.98 per cent on domestic Visa credit ³⁴⁴.

Do these services sit inside the surcharge ban? Every “not a surcharge” statement above is the company’s own. AusPayNet, speaking for eftpos, Mastercard and Visa, defines a payment surcharge as a fee applied “because a consumer pays by card,” and NAB says a fee applied because a customer is paying by card is a surcharge, whatever it is called ³⁷³⁸. Neither names these services, no network or regulator has ruled on them, and the ACCC says the card networks or payment service providers, not the ACCC, enforce the no-surcharge rules ³⁹. It is an open question, and this outlet does not rule either way.

06The rest of government

What follows is page text as read on 2 October 2026, not a test of any payment screen, so “its page says” is all this outlet can report. The Department of Finance’s payments page still says card payments “may incur a surcharge,” with rates from 0.26 per cent to 1.59 per cent ⁴⁰; Home Affairs’ visa page, last updated 23 September 2024, still lists 1.40 per cent on Visa and Mastercard, including debit cards ⁴¹; the Services Australia child support card page shows a 0.00 per cent card processing fee ⁴²; and ASIC, AFSA and the Passport Office still accept Visa and Mastercard on the pages read, none mentioning a card surcharge or an exit from credit cards ⁴³⁴⁴⁴⁵.

State agencies, VicRoads and one council this outlet checked removed surcharges, not cards. Queensland Revenue Office says no card surcharge applies from 1 October 2026; it was 0.488 per cent on Visa and Mastercard until 30 September ⁴⁶⁴⁷. Queensland TMR, VicRoads and RevenueWA say card surcharges or merchant fees no longer apply from 1 October 2026 ⁴⁸⁴⁹⁵⁰, and Central Coast Council’s page says card surcharges no longer apply for eftpos, Mastercard and Visa ⁵¹. Councillor Jared Wright estimated the ban would cost that council about $400,000 in lost fees, a councillor’s estimate and not a council document ⁵². In NSW, Revenue NSW’s direct card merchant fees had been switched off by 23 October 2024 ²³.

The Mandarin wrote that the ATO decision “opens the door for state agencies and local governments to follow suit”; that is a forecast, and its author has advised Mastercard and eftpos ⁵³. In the government payment pages this outlet read, the ATO is the only payee found dropping credit cards.

07What we do not know yet

Who pays the ATO’s bank charge from 1 October to 30 November, what it costs, and what the ATO paid its bank in card fees in 2024-25 are not on the record. Nor is whether the 2.3 per cent and the 60 per cent are counted by number or by value, or how many small businesses depend on card tax payments. We do not know whether the card networks’ rules applied to the ATO, whether the 2024 Act’s authority would have let it keep surcharging, which of these drove the decision, or when it was made. Nor do we know what Ayres meant when he said the card companies “wouldn’t come to the party,” or whether the ATO asked its bank or the networks for a lower fee. The ATO’s BPAY page, last updated 4 March 2026, still says a bank can help make a BPAY payment from a credit card account, and the ATO has not said whether that continues after 30 November ²⁸.

The Senate Economics Legislation Committee sits for supplementary budget estimates on 28 and 29 October ⁵⁴; the program has not been published, so whether the ATO appears is not known. Right-of-reply questions to the ATO, the Treasurer’s office, the Finance Minister’s office, Ayres’s office, Visa, Mastercard, Australian Payments Plus, pay.com.au, Sniip and ACCI had not been sent when this article was published; any answers will be added as dated updates.

08Two dates

Two dates mark the change, and they are easy to confuse: on 1 October the card fee came off ATO payments, and after 30 November the credit card goes ².

Most businesses can no longer add the cost of accepting cards to a bill as a separate line, and the RBA’s line for them is that it can go into prices ⁶. The first article in this case, ‘A line off the receipt’, sets out the RBA’s expectation that shoppers at businesses that surcharged “will pay similar amounts as they are paying now” through the sticker price ⁵⁵. The ATO, which has no shelf price, said it would not be appropriate to transfer the cost to the community, and decided to stop taking the card after 30 November ¹.

For about eight weeks the fee is gone. After 30 November, so is the credit card.

If it’s a rort, we cover it.