If you’ve been paying your tax, BAS, or instalments with a credit card or you have a direct debit arrangement linked to one this one’s for you.
The Australian Taxation Office has announced that it will stop accepting credit cards as a payment method after 30 November 2026. The decision follows the Reserve Bank of Australia’s broader review of merchant card payment costs and the removal of card surcharging across all designated card networks (EFTPOS, Mastercard, Visa) that came into effect from 1 October 2026.
Here’s what’s happening and what Australian taxpayers and business owners need to do about it.
Why the ATO is making this change
In its official statement, the ATO explained that, as a government agency, it has decided it would not be appropriate for the cost of credit card merchant fees to be transferred to the community.
Under the surcharging ban that came into effect on 1 October 2026, businesses can no longer pass card payment fees onto their customers as a separate surcharge. Those merchant costs don’t disappear they’re now absorbed by the business or built into pricing. For the ATO, that would effectively mean every Australian taxpayer (not just those paying by credit card) would be footing the bill for merchant fees. The decision avoids that outcome.
Who’s affected
In practical terms, this change affects a relatively small group of taxpayers.
The ATO noted that around 2.3 per cent of tax payments were made via credit card in 2024-25. More than 60 per cent of those credit card payments were made by privately owned and wealthy groups and public and multinational businesses, rather than individuals or small businesses.
That said, if you fall into any of the following groups, you’ll need to take action:
- You have a direct debit arrangement linked to a credit card
- You pay your BAS or quarterly instalments via credit card
- You use credit card for one-off income tax payments
- You’ve been using credit card payments to manage cash flow timing
What to do now
The ATO has said it is writing directly to taxpayers who currently have a payment plan linked to a credit card to explain the changes and the steps they need to take.
If you have a direct debit arrangement linked to a credit card, you’ll need to update your payment method before your next instalment due after 30 November 2026 to stay compliant with your payment plan.
Alternative payment methods available to Australian taxpayers include:
- Direct deposit
- Direct debit from a debit card
- Direct debit from an Australian cheque or savings account
- Government EasyPay
- Payment in person at Australia Post
- Payment by mail
- International money remitter (for overseas taxpayers)
Most Australian business owners already use direct debit from a bank account to pay BAS and PAYG instalments, so for them the change will be minor. For those who’ve been relying on credit cards specifically to manage short-term cash flow timing a common strategy the change will require some planning.
The cash flow implications for small businesses
For small businesses using credit card payments to the ATO as a short-term cash flow lever, the removal of the option is worth thinking about now rather than scrambling in late November.
Credit card payments effectively gave businesses an extra 30–55 days to pay (depending on the billing cycle). Without that option, businesses need to either:
- Have cash available at the actual tax due date
- Enter into a formal ATO payment plan if they can’t pay in full
- Use a line of credit or business overdraft to bridge timing
The first option is the cleanest if the business has the cash flow. The second is better than defaulting. The third needs careful consideration because the cost of credit on a line of credit may differ materially from the cost of credit card interest.
Business owners who’ve been relying on credit cards for ATO payments should run through their cash flow forecast for December and January now, and decide which alternative works best before the change takes effect.
Context: the bigger picture
This ATO change is one part of a broader shift in Australia’s payment landscape. The RBA review that led to the surcharging ban was aimed at saving Australian consumers an estimated $1.2 billion a year in surcharge costs.
For an in-depth look at what the surcharge removal means for Australian businesses more broadly including how to adjust pricing and absorb card acceptance costs see our earlier post on getting ready for surcharge removal.
Need help adjusting your tax payment setup?
If you have a BAS or income tax payment plan linked to a credit card, or you’re not sure which alternative payment method suits your business cash flow best, our team can help.
Outback Accounting works with Australian businesses on BAS lodgement, tax planning, and cash flow forecasting including structuring tax payments in a way that doesn’t disrupt the rest of the business.
Get in touch with our team to review your payment setup before the 30 November 2026 cutoff.
