Federal ministers are urging the Australian Taxation Office to reconsider its decision to stop taking credit card payments for tax bills. Business groups want the government to intervene; the tax office says it is standing by the change.
What's happening?
The ATO announced on 1 October that it will stop accepting credit cards for tax payments from 1 December, saying it cannot absorb merchant fees it estimates at almost $200 million a year. We covered the announcement here.
Since then, business groups have called for the decision to be overturned. The tax office met its small business stewardship group on Wednesday and, according to the Australian Chamber of Commerce and Industry, indicated it would not reverse course.
Ministers have given differing accounts of the government's position. Housing Minister Clare O'Neil said the government has “some real concerns about what the ATO is proposing to do here” and wants the tax office to keep talking with business. Small Business Minister Anne Aly said small businesses were “rightly shocked” and should have been consulted. Assistant Technology Minister Andrew Charlton said the government supports the ATO's decision, and Treasurer Jim Chalmers said the ATO is an independent authority that “made this decision on their own”.
Who it affects
For small businesses, the credit card option has worked as a cash-flow tool. ACCI chief executive Andrew McKellar described what he called a “clear double standard”: government expecting small business to absorb card costs while the tax office declines to. He called for “political leadership”. The Council of Small Business Organisations Australia said the decision “warrants a rethink”, arguing that if absorbing card costs is not sustainable for a government agency, it is hard to expect small businesses to manage it.
For its part, the ATO says the costs are real. Commissioner Rob Heferen said the office “would have preferred to continue accepting credit cards”, but card companies declined to offer a low enough rate, and absorbing the fees would mean less revenue for government services. The RBA estimates the surcharge ban itself will save card customers about $1.6 billion a year.
What it means for you
If you pay a tax bill by credit card, you will need another method such as BPAY or direct debit before 1 December. The ATO is writing to taxpayers whose payment plans or direct debits are linked to a credit card.
Crossbench MPs including independents Kate Chaney and Allegra Spender want the ATO to reconsider or allow a longer transition, and Opposition Leader Angus Taylor wants the decision scrapped. The ATO says it will keep consulting, so whether the pressure changes the outcome is not yet clear.
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