Some small businesses are paying tax bills with credit cards. What will happen when they can’t?

Luke Chan/Getty From December 1 , Australians will no longer be able to pay their tax bills directly to the Australian Taxation Office (ATO) using credit cards.

It appears to be a classic case of unintended consequences.

New rules – which came into force at the start of this month – prohibit businesses from using surcharges to pass on card payment fees.

But the costs of accepting card payments haven’t vanished, and someone has to foot the bill.

That’s a unique problem for the tax office.

A restaurant might be able to recover these costs by increasing its menu prices overall.

But the tax office can’t force everyone to pay a little more tax to cover the cost of some people paying by credit card.

Rather than absorb the cost of processing credit cards, estimated at almost A$200 million annually , the ATO has decided to stop accepting them altogether.

Business groups have strongly opposed the decision, arguing it could worsen financial pressures on smaller businesses.

The backlash has put the federal government under pressure to intervene, and Labor has now reportedly asked the ATO to conduct further consultation with small businesses to “make sure that flexibility is provided”.

Read more: Card surcharges are banned from October 1.

What’s changing at the checkout? Who actually uses credit cards to pay tax? The ATO says credit card payments were used for 2.3% of all tax payments collected in 2024–25.

Within this figure, more than 60% of credit card payments by value came from wealthy private groups, public companies and multinationals.

There’s an important distinction to make here.