ATO to end credit card payments from December 2026 after surcharge ban, commissioner says

Commissioner of Taxation Rob Heferen has written to all ATO staff explaining why the revenue agency will no longer accept credit card payments from December 2026, following the Australian government's ban on payment card surcharges, which takes effect on November 30, 2026.

"This wasn’t a decision we took lightly," Heferen said in an internal note issued last Friday, a copy of which was obtained by The Mandarin. "Given the scale of the merchant fees involved, we cannot continue to absorb those costs after November 30."

The ban on surcharges means businesses and government agencies can no longer pass on the cost of processing credit card payments to customers. The ATO had previously allowed taxpayers to pay tax bills by credit card, with the merchant fees either passed on or absorbed by the tax office. Under the new rules, the ATO would have to cover those fees itself, which it says is financially unsustainable.

The tax office will continue to accept other payment methods, including direct debit, BPAY, and debit cards. The change takes effect from December 1, 2026, affecting all credit card payments made to the ATO.

The decision has been framed as a pragmatic response to a regulatory change rather than a policy shift on taxpayer convenience.

Analysis

Why This Matters

Taxpayers currently using credit cards to pay tax bills will need to switch to alternative payment methods from December 1, 2026.
The ATO's decision highlights the downstream financial impact of the government's surcharge ban on agencies that previously relied on passing on those costs.
Other government agencies and large merchants may face similar dilemmas and could follow the ATO's lead.

Background

The federal government announced a ban on payment card surcharges earlier this year, ending the practice of charging customers extra for using credit or debit cards. The ban is intended to reduce costs for consumers but shifts the burden of merchant fees onto businesses and government bodies. The ATO is one of the largest receivers of credit card payments in the country, processing billions of dollars in tax revenue annually. Merchant fees for credit cards typically range from 0.5% to 1.5% of the transaction value, representing a significant ongoing cost.

Key Perspectives

ATO (Commissioner Rob Heferen): The tax office argues the decision is necessary because absorbing credit card merchant fees after the surcharge ban would impose an unsustainable financial burden on the agency, diverting funds from core operations. Taxpayers and tax professionals: Some taxpayers have relied on credit cards for cash flow or reward points. The change may force them to alter payment habits or face delays in paying tax. Critics/skeptics: Concerns include whether the ATO has adequately communicated the change to taxpayers and whether alternative payment channels are robust enough to handle the shift in volume. There is also broader debate about whether the surcharge ban's cost-shifting effects were fully anticipated by policymakers.

What to Watch

Whether other federal or state government agencies announce similar restrictions on credit card payments in response to the surcharge ban.
How smoothly the transition to alternative payment methods proceeds and whether any payment processing delays emerge.
Possible pushback from taxpayer advocacy groups or industry bodies representing tax professionals.

Analysis

Why This Matters

Background

Key Perspectives

What to Watch

Sources