ATO Credit Card Payments Are Ending – Is Your Business Prepared?

An Important Change for Businesses Paying Tax by Credit Card

If your business currently uses a credit card to pay its tax obligations, an important change is on the way.

The Australian Taxation Office (ATO) has announced that it will stop accepting credit

card payments directly after 30 June 2027.

The change was originally scheduled to take effect after 30 November 2026. However, following feedback from the small business community, the ATO has extended the deadline to give taxpayers more time to prepare.

For businesses that rely on credit cards to manage their cash flow, this is a change worth planning for now.

Why Is the ATO Making This Change?

The decision follows changes to Australian card payment surcharge rules that took effect from 1 October 2026.

According to the ATO, the cost of accepting credit card payments is substantial.

ATO Commissioner Rob Heferen has indicated that merchant fees are estimated at almost $200 million annually, with costs expected to continue increasing.

With the ATO no longer able to pass these costs on through card surcharges, it has determined that continuing to accept credit cards directly is not financially sustainable.

What Does This Mean for Your Business?

Many businesses use credit cards to manage the timing of tax payments, particularly when cash flow is tight.

Paying a BAS or income tax liability by credit card can provide additional time before the funds actually leave the business's bank account.

From 1 July 2027, businesses that currently rely on this arrangement will need to consider alternative payment methods.

This is particularly important if your business regularly uses credit cards to fund:

• Quarterly or monthly BAS payments

• Income tax liabilities

• PAYG instalments

• Other amounts owing to the ATO

The earlier you review your arrangements, the easier it will be to avoid unexpected cash flow pressure.

What Payment Options Will Remain Available?

Although direct credit card payments will cease, the ATO has indicated that several alternative payment methods will remain available.

These include:

• BPAY – making payments directly through your financial institution

• Bank transfers – transferring funds electronically to the ATO

• Debit cards – making payments using available funds

• Australia Post – using supported payment facilities

• International money remitters – for eligible overseas payments

Businesses should also review any existing direct debit arrangements linked to credit cards.

If your ATO payment arrangement currently uses a credit card, you will need to update the payment details before the first affected instalment falls due.

Can You Still Pay Using a Credit Card?

Potentially, yes — but not directly through the ATO.

The ATO has indicated that taxpayers may continue to use credit cards through certain third-party payment providers.

However, these arrangements may involve additional fees and charges.

Businesses should also consider processing times to ensure payments reach the ATO by the relevant due date.

The important point is to compare the total cost of using a third-party provider against other available payment options.

Don't Overlook the Cash Flow Impact

For some businesses, the biggest issue won't be the loss of a payment method. It will be the loss of the additional time that credit card arrangements may have provided.

If your business regularly uses credit cards to meet tax obligations, it may be worth reviewing:

• How much you typically owe the ATO each month or quarter

• Whether sufficient funds are being set aside for tax

• The timing of customer receipts and supplier payments

• Whether your existing payment arrangements remain appropriate

• Whether cash flow forecasts need to be updated

A relatively small change in payment timing can have a significant impact on a business operating with limited working capital.

What If Your Business Can't Pay on Time?

If the change creates difficulties in meeting your tax obligations, it's important to seek advice early.

Depending on your circumstances, the ATO may be able to offer a payment arrangement to help manage outstanding liabilities.

However, payment plans generally don't remove the requirement to lodge returns and activity statements on time, and interest or other charges may still apply.

The best approach is to understand your position before a payment becomes overdue.

Plan Ahead Rather Than Waiting Until June 2027

The ATO's decision gives businesses time to prepare, but that time should be used wisely.

If your business currently relies on credit cards to manage tax payments, reviewing your arrangements now could help avoid unnecessary financial pressure later.

At Lockwood & Ward, we can help you review your tax payment arrangements, assess your cash flow and identify practical alternatives.

We can also assist with ATO payment plans where appropriate.

If you're concerned about how the ATO's credit card changes may affect your business, speak to our team. A little planning now could make a significant difference later.

Lockwood and Ward Pty LimitedABN 76 113 938 373Level 9, 50 Clarence Street, Sydney NSW 2000Tel: (02) 9299 7044www.lockwood.com.au