Australian small business owners need to pay attention to upcoming changes to how they pay their tax bills. The Australian Taxation Office (ATO) had announced plans to stop accepting direct credit card payments from taxpayers from late November 2026. However, following concerns from businesses, the Australian Government announced on 9 October 2026 that the ATO would continue accepting credit card payments until 30 June 2027.

The extension gives businesses more time to adjust their payment arrangements, but it does not mean the issue has disappeared. From 1 July 2027, the ATO is expected to continue accepting credit card payments through third-party providers, alongside other payment methods such as bank transfers and debit cards.

The change comes as Australia’s new card surcharge rules have also taken effect, creating additional considerations for businesses managing payment processing costs and cash flow.

John Saade, CEO of Latitude Accountants, understands why changes to tax payment arrangements matter to small business owners. When businesses are already balancing wages, supplier invoices, operating expenses and tax obligations, even a change to how payments are made can affect their financial planning.

Understanding the revised timeline and available alternatives can help business owners avoid unnecessary disruption.

What Are the ATO Credit Card Payment Changes?

The ATO’s planned change was connected to broader reforms to Australia’s card payment system.

From 1 October 2026, businesses generally can no longer add a separate surcharge when customers pay using Visa, Mastercard, eftpos, American Express and other participating card networks covered by the new rules.

The ATO had planned to stop accepting direct credit card payments for tax liabilities from late November 2026 because it could no longer pass its card processing costs on to taxpayers through a surcharge.

However, the Australian Government announced a transition period on 9 October 2026 after concerns were raised by small businesses and other taxpayers.

According to the Australian Government’s announcement, the ATO will continue accepting credit card transactions until 30 June 2027 while it consults on alternative arrangements and support for affected taxpayers.

The important dates are:

• 1 October 2026: New card payment surcharge rules take effect.
• Until 30 June 2027: The ATO continues accepting credit card payments during the transition period.
• From 1 July 2027: Direct ATO credit card acceptance is expected to be phased out, with credit card payments remaining available through third-party providers and other payment options.

Business owners should monitor official ATO updates because further details about the transition and available payment arrangements may be announced.

Why Does This Matter to Small Business Owners?

Credit cards can provide businesses with short-term flexibility when managing expenses and tax obligations.

Some owners use a credit card to pay a tax bill and then repay the balance when customer invoices are collected or other business income arrives. For businesses with uneven cash flow, this can help manage the timing of payments.

If direct credit card payments to the ATO become unavailable, those businesses may need to adjust how they manage tax liabilities.

Potential implications include:

• Changes to cash-flow timing: Owners may need to arrange funds earlier to meet payment deadlines.
• Different payment processing costs: Third-party payment providers may charge fees for credit card transactions.
• Reduced payment flexibility: Businesses relying on credit card billing cycles may need another way to manage short-term cash requirements.
• More financial planning: Tax liabilities may need to be included more carefully in weekly and monthly cash-flow forecasts.

The effect will vary by business. The government reported that around 5% of small businesses used credit cards to pay the ATO in the 2024–25 financial year, meaning the change directly affects a minority of small businesses, but it could be significant for those that rely on the method.

How the New Card Surcharge Rules Affect Businesses

The ATO payment changes are related to, but separate from, the broader card surcharge reforms.

Under the new rules, businesses generally cannot add a separate fee simply because a customer pays using a covered credit, debit or prepaid card. This means a business that previously charged a 1% card surcharge must review its payment process and pricing.

However, businesses still incur costs for accepting card payments. These costs may include merchant service fees, terminal rental and transaction processing fees.

The Australian Competition and Consumer Commission (ACCC) explains that businesses can incorporate legitimate payment processing costs into their overall prices, provided they do not mislead customers about pricing or the reasons for price increases.

For small businesses, this creates several practical considerations:

• Review merchant service fees and payment provider agreements.
• Compare available payment plans and transaction costs.
• Update point-of-sale systems and online checkout settings.
• Ensure advertised prices and customer communications comply with the new rules.
• Review overall pricing to understand whether payment costs are affecting profit margins.

Businesses should not assume that the surcharge ban eliminates their card processing expenses. Instead, they need to understand the full cost of accepting payments and manage those costs appropriately.

What Payment Options Will Businesses Have After June 2027?

Although direct ATO credit card acceptance is expected to end after the transition period, businesses will still have payment options.

Bank Transfer

Electronic bank transfers can allow businesses to pay tax liabilities directly without using a credit card. Owners should allow enough time for payments to be processed and ensure they use the correct payment reference details.

Debit Card

Debit card payments can provide a convenient alternative for businesses that have sufficient funds available in their bank account. Unlike a credit card, a debit card generally draws on existing funds rather than providing a borrowing facility.

Third-Party Credit Card Providers

The government has stated that taxpayers will continue to be able to pay the ATO using credit cards through third-party providers after 30 June 2027.

However, businesses should compare fees, processing arrangements and terms before using a provider. A third-party option may involve costs that differ from direct ATO payment arrangements.

Business owners should confirm the available methods and any applicable charges through official ATO information before making a payment.

How Can Small Businesses Prepare Now?

The transition period gives business owners time to review their processes rather than waiting until the final deadline.

1. Review How You Currently Pay Tax

Identify whether your business uses a credit card for GST, PAYG instalments, income tax or other ATO liabilities.

If credit card payments are part of your cash-flow strategy, estimate how much money you may need to have available if you switch to bank transfer or debit card payments.

2. Build Tax Payments Into Your Cash-Flow Forecast

Set aside funds for upcoming tax obligations rather than treating tax money as available operating cash.

A cash-flow forecast can help you identify periods when tax payments coincide with wages, supplier invoices, rent or other significant expenses.

3. Compare Alternative Payment Methods

Review the costs and timing associated with bank transfers, debit cards and third-party payment providers.

If you are considering a third-party credit card service, check its fees, payment processing times and conditions. Do not assume the arrangement will be free or that it will offer the same terms as direct ATO payments.

4. Avoid Relying on Credit Cards to Cover Ongoing Shortfalls

Credit cards can provide temporary flexibility, but they are not a substitute for a sustainable cash-flow plan.

If a business regularly uses credit to meet tax obligations because there is not enough cash available, review the underlying cause. It may be necessary to improve invoice collection, adjust spending, review pricing or seek professional advice.

5. Speak With Your Accountant Early

An accountant can help you understand your tax obligations, plan payment dates and assess how the changes may affect your business finances.

If you are concerned about meeting a tax deadline, seek advice early and contact the ATO to discuss your circumstances. Do not assume that the payment method changes automatically extend a tax deadline or payment arrangement.

Frequently Asked Questions About ATO Credit Card Payment Changes

Is the ATO stopping credit card payments in November 2026?

The ATO had announced plans to stop accepting direct credit card payments from late November 2026. However, the Australian Government announced on 9 October 2026 that the ATO would continue accepting credit card payments until 30 June 2027.

Can businesses still pay the ATO with a credit card in 2027?

During the transition period, direct credit card payments will continue to be accepted until 30 June 2027. After that date, the government says credit card payments will remain available through third-party providers, alongside other payment methods. Businesses should check current ATO guidance before paying.

Will the ATO charge a credit card surcharge?

The change to card surcharges means businesses generally cannot add a separate surcharge for covered card payments. The ATO’s decision to phase out direct credit card acceptance is a separate issue involving its payment processing costs.

What happens if my business cannot pay its tax bill on time?

Contact the ATO as early as possible to discuss your circumstances and available options. Eligibility for a payment arrangement depends on the circumstances, and interest or other consequences may still apply. An accountant can help you review your cash flow and understand your obligations.

Should small businesses stop using credit cards for tax payments now?

Not necessarily. The transition period runs until 30 June 2027, so businesses should review their current arrangements and compare alternatives before making changes. Any decision should consider processing fees, repayment terms and the business’s ability to pay the credit card balance.

Plan Ahead With Latitude Accountants

Changes to ATO payment arrangements can affect how small businesses manage their cash flow, particularly when credit cards are used to bridge the timing between expenses and incoming revenue.

With the transition period extending to 30 June 2027, business owners have time to review their payment methods, plan for tax liabilities and understand the costs associated with alternative arrangements.

Latitude Accountants supports Australian small business owners with accounting, tax planning and business advisory services. Our team can help you understand your financial position and plan for upcoming obligations with greater confidence.

Book a Free Business Discovery Call with Latitude Accountants.

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📧 info@latitudeaccountants.com.au

Disclaimer

This article is for general information only and does not constitute financial, legal or tax advice. ATO payment arrangements and card payment rules may change. Confirm current requirements with the ATO and seek advice tailored to your business circumstances before making financial decisions.