The Australian government said Friday it will cover credit-card surcharge costs so taxpayers can continue paying the Australian Taxation Office by card beyond a planned December cutoff, after small-business groups warned that banning plastic payments would jam cash flow ahead of quarterly activity statements.
Treasurer Jim Chalmers told reporters the Commonwealth would fund the transition while the ATO and banks work on lower-cost digital options. The move follows a Reserve Bank rule that ended merchant surcharges on card payments from 1 October, which left the tax office saying it would stop accepting cards for tax bills from 1 December because it could no longer pass fees to payers.
A week of conflicting signals
The policy U-turn caps days of public disagreement inside the Labor government. Home Affairs Minister Clare O'Neil said on television that Labor had "real concerns" about cutting off card payments for tax debts, while Assistant Minister Andrew Charlton told ABC Radio the government supported the ATO's original decision. Defence Industry Minister Pat Conroy on Friday framed the issue as consumer transparency — shoppers should see one price whether they pay cash or card — while urging the ATO to consult small firms on implementation.
Opposition finance spokespeople seized on the mixed messages. Shadow Treasurer Tim Wilson said there was "open warfare" in the government while Prime Minister Anthony Albanese was overseas and Chalmers was in Japan for financial meetings.
Why small business pushed back
Accountants and industry groups said many family companies rely on cards to bridge timing gaps between GST collections and ATO due dates, especially when quarterly instalments cluster at year-end. Paying by direct debit or BPAY avoids surcharges but requires liquidity some operators do not have on the day a notice arrives.
The Institute of Public Accountants and the Council of Small Business Organisations Australia argued that a hard December ban would force costly overdrafts or late-payment penalties. The ATO had maintained that absorbing card fees without surcharges would cost the budget millions of dollars annually unless Parliament appropriated replacement funds — the step Chalmers now says he will take.
What changes on the ground
Officials said details of how long the Commonwealth will subsidise fees, and which card types qualify, will be published after talks with the major banks and payment networks. The ATO website still lists card payments as available for most tax accounts; accountants were told to warn clients that surcharges may appear temporarily even where the government reimburses them.
Chalmers linked the decision to broader consumer reforms that ban hidden checkout fees at retailers, arguing tax payments should not become an exception that punishes businesses for using the same cards they use at the supermarket. He did not set a permanent end date for card acceptance, saying the ATO must present a sustainable funding model by mid-2027.