Government divided as ATO credit card ban sparks business backlash

Australia's tax office has decided to stop accepting credit card payments for tax bills starting December 1, a move that has split the government and alarmed small business operators who rely on the flexibility to manage cash flow when bills arrive.

The Australian Taxation Office announced the ban after the Reserve Bank of Australia prohibited credit card surcharges across the economy. The government initially celebrated the surcharge ban as a cost-of-living victory—Prime Minister Anthony Albanese and Attorney-General Michelle Rowland posted videos to social media saying Australians would save money with every card tap. But the political calculus shifted quickly. Small businesses, unable to absorb the lost surcharge revenue, simply raised prices on consumers instead. A coffee that cost the same still cost more. The promised savings evaporated.

Now the ATO's decision to eliminate credit card payments entirely has created a different problem. Small business groups and crossbench MPs say the move removes a crucial tool for managing cash flow when tax bills land unexpectedly. Businesses have roughly eight weeks to find alternatives. The tax office held meetings with business groups on September 30 to foreshadow the announcement, then again the following day to discuss implementation, but the timeline remains tight and the frustration real.

The government's own frontbench has sent contradictory signals about whether it supports the decision. Housing Minister Clare O'Neil said on Thursday that the government has "real concerns" about what the ATO is proposing and wants the tax office to "go back and talk to business" about finding a solution that works for everyone. Small Business Minister Anne Aly echoed that sentiment, saying she had spoken to small business owners who were "rightly shocked" and should have been consulted. But Assistant Technology Minister Andrew Charlton took the opposite position, saying the government backs the ATO's decision entirely. He argued that if surcharges cannot exist in the private sector, they should not exist in the public sector either. He also suggested that businesses already have alternatives—flexible repayment schedules available through the tax office—and that payment processing costs have fallen, so there is no reason for consumers to pay more.

Crossbench MPs have raised sharper concerns. Independent Kate Chaney called on the ATO to reconsider the ban or grant a longer grace period to adjust, noting that times are already tough for small business owners and that credit cards are one of the few ways they manage cash flow when a tax bill lands. Community Strong Australia MP Allegra Spender said the government must work with the ATO to find a workable solution, emphasizing that managing cash flow is difficult and businesses need the flexibility credit provides. Independent Dai Le said the government had failed to "read the room"—small businesses are already under strain from rising fuel and energy costs and do not want to raise prices for consumers, yet this decision adds one more blow to their survival.

The Australian Chamber of Commerce and Industry's chief executive, Andrew McKellar, called for a clear message from government in support of small business and expressed hope that the tax office would listen to concerns. The ATO has said it will continue to engage with stakeholders and seek opportunities to promote awareness through consistent communication, but the December 1 start date remains unchanged.

The Coalition has seized on the broader failure of the surcharge ban to deliver promised savings. Nationals senator Bridget McKenzie said the prime minister promised that removing the surcharge would make everyday items cheaper, but it has not—businesses absorbed the cost by raising prices instead. The government's attempt to tap into public frustration over payment fees has backfired, leaving small business operators caught between a tax office deadline and a government unable to speak with one voice about what comes next.