Breaking: ATO credit card ban delay as government backs down after business backlash

Federal government to fund surcharge costs to delay ATO credit card payment ban after backlashTopic:Federal GovernmentPosted Fri 9 Oct 2026 at 11:59amFri 9 Oct 2026 at 11:59am, updated Fri 9 Oct 2026 at 12:26pmFri 9 Oct 2026 at 12:26pmJim Chalmers is poised to announce taxpayers will foot the bill to delay the ATO credit card ban for up to a year. (ABC News: Ian Cutmore)In short: The Australian Taxation Office will delay the implementation of its controversial credit card ban for up to a year. Treasurer Jim Chalmers has announced the government will cover the cost of the delay.What's next?The tax office had justified the move by saying it would cost $200 million a year to absorb the fees.A ban on credit card payments to the Australian Taxation Office (ATO) will be delayed until the end of the financial year, with the federal government agreeing to temporarily cover the cost of surcharges after pressure from businesses.Treasurer Jim Chalmers said the funding would allow the ATO "more time" to consult with businesses and "get it right"."We take very seriously that the ATO and the government have received in relation to implementing this surcharge ban," he said."We try not to interfere with the RBA or the ATO, but it's really important that we have stepped in today".The ATO announced last week it would stop accepting credit card payments for tax bills from December in response to the Reserve Bank's ban on surcharges.The tax office had argued it would cost taxpayers about $200 million a year to absorb the fees and noted only 5 per cent of small businesses used a credit card to pay their tax bill.But the decision sparked widespread backlash from small businesses, with several Albanese government ministers also raising concerns about the impact of the ATO's ban.The government said the ATO had explored a number of options, including engaging with credit card companies to negotiate lower fees, but was unsuccessful.Yesterday, Housing Minister Clare O'Neil defended the Reserve Bank's decision to scrap the credit card fees, but argued the government had "real concerns" about what the ATO was proposing."The government does have some real concerns about what the ATO is proposing to do here," she said."We really want the ATO to go back and talk to business about what they have decided to do here and think about how they can find a solution that works for everyone."Members of the crossbench also raised concerns about the change, with independent Kate Chaney calling on the ATO to reconsider or grant businesses a longer grace period to adjust."Credit cards are one way businesses manage cash flow when a tax bill lands. Removing that option with around eight weeks' notice makes things harder," she said.Australian Chamber of Commerce and Industry chief executive Andrew McKellar had also called for a "clear message from government" in support of small business."It's now time, I think, for the political leadership in government to stand up and really say to the tax office, 'This is not how it works,'" Mr McKellar said yesterday.The treasurer said costs for the extension would be finalised in the mid-year budget update, or MYEFO, due in December.