Chalmers steps in: ATO credit card ban delayed after business uproar

Updated October 9, 2026 — 11:55am,first published 11:26amThe Australian Taxation Office’s controversial banning of credit card payments will no longer come into effect at the end of next month, after the government negotiated with the independent agency to delay the change.Treasurer Jim Chalmers will allocate additional funds to the agency to support a year-long transition period, after the ban – which was set to come into effect on November 30 – came under heavy criticism.Treasurer Jim Chalmers.Louie DouvisThe announcement comes after fierce pushback from the business community, opposition parties and some members of the Labor backbench that saw the ATO’s decision as damaging to the cash-flow management of small businesses.The government is not expected to cover the entire $200 million in fees the tax office cited would be charged to the taxpayer when it announced its ban on the use of credit cards.Appearing on morning television on Friday, Environment Minister Murray Watt said the ATO’s plan to ban credit card payments for tax bills so as not to burden all taxpayers with the associated costs was a completely “independent decision”.“When they made clear that they intended to proceed with this, we insisted on them having a good transition plan with the business community and to consult with the business community about that,” Watt told Seven’s Sunrise.Deputy Liberal leader Jane Hume during a doorstop at Parliament House in Canberra.Dominic Lorrimer“We expect them to do that consultation properly. I mean, I think we need to keep it in perspective that when it comes to payments to the ATO, it’s only a very small number of taxpayers who pay their tax payments by credit card, it’s about 5 per cent for small businesses and about 2 per cent for individuals.”Following the October 1 introduction of bans on credit card surcharges, the tax office surprised small business owners in announcing a November 30 cut-off date for credit card payments.The government produced mixed messaging on the topic on Thursday, when Housing Minister Clare O’Neil shared the government’s “real concerns” about the plan, countered by Assistant Minister Andrew Charlton who said the government supported the decision.The government offered a more unified message on Friday, with Watt joined by Foreign Minister Penny Wong, who encouraged the tax office to perform meaningful consultation on the ban, while Defence Industry Minister Pat Conroy said the ATO should “do their job and talk to small businesses”.Wong also reiterated the independence of the tax office, as deputy Liberal leader Jane Hume questioned who was in charge.“You can change this with a stroke of a pen. Small businesses are crying out for a change. They are asking for your help,” Hume told Sunrise. “You just have to have the will, and you can’t blame the ATO. They’re your agency. You’re the government. You should do this.”Several Labor MPs speaking to this masthead on the condition of anonymity shared their concerns over the way the government’s relationship with small business was being framed, but stressed the ATO had blindsided the government and was difficult to wrangle because of its independence.“It’s just alarming that were seeing this sort of behaviour from the ATO. It’s overreach, it’s hostile, they need to remember who they serve,” one senator said, questioning why the Reserve Bank had not foreshadowed such moves.Another said the ATO had likely made the right decision in finding value for the taxpayer, but had botched the transition and needed to “pull its head out of the sand”.“People probably don’t realise how completely, totally independent the tax office is of the government of the day, for good reasons, but yes, sometimes it is completely infuriating,” they said.Concern in the Labor ranks that the party is failing to meet small business owners appears to be growing, with one particularly strident MP laying the blame directly at the feet of cabinet.“I don’t think it’s acceptable for us to say it was the ATO’s decision not ours. If that’s the case, then there’s something seriously wrong with our government. If the ATO can dictate policy like this without government oversight and agreement, I don’t quite understand that government,” the MP said.“I just think there is no one in cabinet with any small business experience. We have a small business minister that knows nothing about small business. We need someone with some guts to stand up to the tax office. I think it’s very, very disappointing.”Speaking before the delay became apparent, Opposition Leader Angus Taylor said if the government did not act on the issue, the Coalition would put forth legislation to override the decision. Any such legislation would likely challenge the independence of the tax office and would likely fail to pass the House of Representatives where Labor holds a majority.“It’s pretty simple. It’s not going to be a complicated piece of legislation. The government, if they want to do it, can do it today, and they should,” Taylor said.Small Business Minister Anne Aly was the first government minister to raise concerns over the ATO’s move on Wednesday, urging the tax office to consult more widely about the ban’s implementation.Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.From our partners