ATO Credit Card Payments Are Staying: What Business Owners Need to Know
Updated: 4 days ago
If you regularly pay your tax obligations by credit card, there's been an important update from the Australian Taxation Office.
The ATO had planned to stop accepting credit cards for tax payments after 30 November 2026.
That decision has now been delayed, with credit card payments continuing until 30 June 2027. The Federal Government has stepped in to fund the cost of accepting credit cards during this additional transition period.
For business owners who use a credit card to manage the timing of tax payments or take advantage of card rewards, that's welcome news.
But what actually changed, and what should you be thinking about between now and June?
What Was Originally Changing?
The ATO announced that it would stop accepting credit card payments for tax obligations after 30 November 2026.
The decision followed broader changes to card surcharging in Australia.
The issue for the ATO was cost. According to the Tax Commissioner, merchant fees associated with accepting credit card payments were estimated at almost $200 million annually. The ATO determined that absorbing those costs on an ongoing basis wasn't appropriate.
While only around 5% of small businesses used credit cards to pay their tax obligations in 2024-25, the proposed change attracted significant concern from businesses that use cards as part of their cash flow management.
What's Changed?
The planned removal of credit card payments has now been pushed back.
The ATO has confirmed that it will continue accepting credit card payments for tax obligations until 30 June 2027.
The Federal Government will fund the additional cost during the extended transition period, giving the ATO more time to consult with businesses about how the changes should be implemented.
For the time being, this means businesses that currently use a credit card to pay the ATO can continue doing so.
Why Does This Matter for Business Owners?
For some businesses, paying tax by credit card is simply a matter of convenience.
For others, there's a bigger cash flow consideration.
Tax obligations don't always fall at convenient times. BAS, PAYG and other tax payments can coincide with payroll, supplier payments and other significant business expenses.
Using a credit card can provide additional flexibility around the timing of those payments.
There's also another reason some business owners choose to pay this way: credit card rewards and points.
If your business uses a rewards card, paying a large tax obligation by credit card may contribute to your card's rewards balance, subject to the particular card provider's rules.
That doesn't automatically mean paying tax by credit card is the best option. Any rewards need to be considered alongside the costs and conditions associated with the card itself.
Credit Cards Aren't a Substitute for Cash Flow Planning
While the extension provides some breathing room, there is an important distinction to make.
Using a credit card to manage when cash leaves the business can be a useful cash flow tool.
Using a credit card because the business doesn't have enough cash available to meet its tax obligations can be a sign that something else needs attention.
If tax liabilities are consistently creating financial pressure, it's worth looking more closely at:
How much is being set aside for tax
Upcoming BAS and PAYG obligations
Debtor collection times
Business cash reserves
Profitability
Working capital requirements
Existing business debt
The goal should be to understand your tax obligations well before they're due rather than relying on short-term funding when payment time arrives.
Should You Pay the ATO With a Credit Card?
There's no single answer that applies to every business.
For some business owners, using a credit card can make sense as part of their broader cash flow strategy.
For others, BPAY, direct deposit or other payment methods may be more appropriate. The ATO says taxpayers will continue to have access to alternatives including debit card, BPAY, direct deposit, Australia Post and international money remitters.
Before using a credit card purely for the points, consider the bigger picture.
Ask yourself:
What will using the card actually cost?
What is the value of the points or rewards you'll receive?
Can the balance be repaid within your usual repayment timeframe?
Is the card being used strategically or because cash is tight?
What impact will the payment have on available credit for other business expenses?
The rewards can be attractive, particularly on larger tax payments, but they shouldn't be considered in isolation.
What Happens After 30 June 2027?
This is the part business owners need to keep an eye on.
The current extension runs until 30 June 2027. The ATO has previously said the cost of accepting credit cards indefinitely isn't sustainable, while the Government has said the extension provides additional time for consultation.
So, rather than assuming credit cards will remain available permanently, businesses that rely on them for tax payments should use this period to consider how their cash flow would operate if the payment option changes.
This is particularly important if paying tax by credit card has become a regular part of how you manage working capital.
Use the Extension to Review Your Cash Flow
The ATO's decision gives business owners additional time.
But it also presents a good opportunity to take a closer look at how tax obligations fit into your broader cash flow planning.
If a quarterly BAS or tax payment regularly puts pressure on the business, the answer may not simply be finding a different way to pay it.
It may be worth reviewing how much you're setting aside, when cash is coming into the business and what other commitments fall due at the same time.
Better visibility can make tax payments much easier to manage, regardless of whether you're paying by credit card, BPAY or direct deposit.
Frequently Asked Questions
Can I still pay the ATO with a credit card?
Yes. The ATO has confirmed that it will continue accepting credit card payments for tax obligations until 30 June 2027.
Was the ATO going to stop accepting credit cards?
Yes. The ATO had announced that credit cards would no longer be accepted after 30 November 2026. That change has since been delayed.
Why was the ATO planning to stop accepting credit cards?
The ATO said the merchant fees associated with accepting credit cards were estimated at almost $200 million annually and that absorbing these costs on an ongoing basis wasn't sustainable.
How else can I pay the ATO?
The ATO says alternative options include debit card, BPAY, direct deposit, Australia Post and international money remitters.
What happens after 30 June 2027?
The current extension allows credit card payments until 30 June 2027. I wouldn't state in the blog that credit cards will definitely stop after that date unless the ATO confirms the final arrangements.
