The ATO stops taking credit cards on 30 November. What that does to your cash, and what a buyer reads into it

After 30 November 2026 the Australian Taxation Office will not accept a credit card as a way to pay tax. It announced the change on 1 October, the day the Reserve Bank's ban on card surcharges took effect, and the two are connected.

It has been reported as a fight between small business and the tax office, and it is one. For an owner thinking about selling in the next couple of years it is also something more practical: a change in when cash leaves the account, and in what a buyer's accountant can see.

What actually changes

Until 1 October the ATO passed its card fee on to whoever paid by card. The surcharge ban ended that, which left the ATO to absorb the merchant fee or stop taking the cards. It chose to stop.

The change is to credit cards. BPAY, bank transfer, direct debit and debit card are all still on the ATO's list of ways to pay.

The part with a deadline in it is the payment plan. The ATO's notice says that if a plan is linked to a credit card, "payments after 30 November 2026 will be unsuccessful, and the status of your payment plan may move into arrears or default". It is writing to the people affected. Do not wait for the letter.

Both sides of it

The ATO's case. Its media release says it "would not be appropriate for the cost of credit card merchant fees to be transferred to the community". It says about 2.3 per cent of tax payments were made by credit card in 2024-25, and that more than 60 per cent of card payments came from privately owned and wealthy groups and from public and multinational businesses. The ABC reported the Commissioner, Rob Heferen, putting the merchant fees at almost $200 million a year and calling it not tenable for the ATO to absorb them. It also reported the ATO as saying about 5 per cent of small businesses pay their tax by card.

The business case. From the same date, a cafe or a tradie who takes cards has to carry the merchant fee inside their prices, because it can no longer be added at the till. The Australian Chamber of Commerce and Industry called the ATO's decision a clear double standard. The Council of Small Business Organisations Australia said it warrants a rethink. The Opposition Leader called on the Government to instruct the ATO to reverse it. Business groups met the ATO on 7 October and the ATO did not change its position.

Each side is describing something real. The ATO is right that card payers are a small minority and that somebody pays the fee. The business groups are right that a government agency has declined a cost every merchant in the country has just been told to absorb. Neither argument changes what happens on 1 December.

What the card was really doing

One of three things, and it is worth knowing which one applied to you.

Collecting points. The cash was in the bank, the BAS went on the card, and the card was paid in full a few weeks later. Nothing is lost here but the points.

Buying time. The gap between the BAS due date and the card statement date covered a slow month or a late paying customer. Legitimate, and common.

Paying the BAS at all. The card was the only way the BAS was paid on time, and the balance was not cleared. That is borrowing to pay tax, at about the dearest rate a business can borrow at.

The third group is the one this change reaches, and an owner in it has often never called it by its name. It is the same thing Payday Super showed up in July: a business leaning on a timing gap without recognising it as finance.

What a buyer reads into it

A buyer's accountant asks for the bank statements, the ATO account and the business credit card statements, and lays them beside each other.

The pattern on the card. A BAS on a card that is cleared each month reads as cash management. A card balance that steps up by roughly one BAS a quarter reads as tax funded by debt. On the ATO's side those two businesses look identical. On the card statement they do not.

The bank balance after November. From December the BAS comes out of the bank account on the due date. For a quarterly lodger the BAS due on 28 October is the last that can go on a card, and the one due on 28 February is the first that cannot. If the balance falls by about one BAS and stays there, or the BAS starts running late, a buyer sees it, and a buyer prices working capital.

A plan that defaulted over a payment method. This is the avoidable one. A current, disclosed arrangement is a number. A defaulted one is a different conversation, and defaulting because nobody changed a card to a bank account is a poor way to arrive in it.

Whatever replaces the card. An overdraft or a line of credit taken out to do the card's job is a facility with security behind it, and it is discharged at settlement like any other. That is not a problem. It is an item to disclose, and it is easier to explain when it was put in place deliberately.

There are payment services that take your card and pay the ATO by bank transfer for a percentage. They exist. They do not change any of the above: it is still tax paid with borrowed money, now with a fee on top.

What to do before 30 November

• Find every ATO payment that touches a card. BAS, PAYG instalments and any payment plan direct debit. Change the payment plan first.
• Work out the cash the next two BAS need, on the due date, from the bank account. Not on average. On the day.
• If that number is uncomfortable, treat it as information. Take it to your accountant now. The ATO has said support is available where changing the payment method is difficult, and it deals better with a call made early than one made after a missed payment.
• If a sale is on the horizon, arrange any facility deliberately and keep the paperwork, so you are the one who explains it.

The honest version

The card was never the issue. A business that could only pay its BAS on a card was short of working capital before 1 October, and it is short of it now.

All the change does is move the date on which that becomes visible. If you would rather know where the business stands before a buyer does, this is a good month to look.