The ATO Has Given You Until 30 June 2027 to Stop Paying Tax by Credit Card. Spend the Extra Months Fixing the Funding Gap, Not Postponing It
The ATO Has Given You Until 30 June 2027 to Stop Paying Tax by Credit Card. Spend the Extra Months Fixing the Funding Gap, Not Postponing It
The reprieve announced on 9 October buys seven more months, not a reversal. There is also a genuinely fee-free window sitting inside it — and a smaller points opportunity than the internet currently believes.
Two announcements, seven days apart — and the second is why most finance teams stopped paying attention.
On 2 October the Commissioner of Taxation said the ATO would stop accepting credit card payments from 30 November 2026. The reasoning was straightforward: the ban on card surcharging commenced on 1 October, the ATO's merchant fees run at almost $200 million a year and are rising, and because tax liabilities are set by legislation the ATO cannot build a card cost into its prices the way a business can. It asked the card companies for a lower rate. They declined.
Then on 9 October, following discussions with government and the provision of transitional funding, the ATO extended the transition to 30 June 2027.
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30 Jun 2027
New end of the transition — extended on 9 October from 30 November 2026
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~$200m
Annual merchant fees the ATO says it would otherwise absorb, and expects to rise
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~5%
Small businesses that paid tax by credit card in 2024–25; just over 2% of individuals
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2.3%
Share of ATO collections paid by credit card — over 60% of it from larger private and public groups
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Read those two middle numbers together and the policy makes sense. Card payments are a small share of collections, the cost of accepting them is large and growing, and most of the value comes from organisations with ready access to other methods. That is not a decision likely to be reversed. The extension is a runway with a date on the end of it.
If the card was a float, you have a funding gap — size it now
About 5% of small businesses paid tax this way, and for many of them the card was doing a cash-flow job, not a convenience one: the BAS fell due before the receipts arrived, and a card turned a hard deadline into a soft one. That is a legitimate use of a card — and it ends on a known date, which makes it the easiest cash-flow problem of the year to plan for.
Four steps, and they fit in one meeting:
1. Measure the float you have actually been using. Pull every ATO payment made by card in the last 24 months: amount, date, and how many days passed before the card balance was cleared. The average of that last column is your real float, in days. Multiply by your typical quarterly liability and you have the facility you are about to lose, in dollars.
2. Name which liability it funds. Net GST, PAYG withholding and PAYG instalments behave differently. PAYG withholding is money you already deducted from employees — if that is what the card has been bridging, the gap is more than a timing problem, and a replacement facility only defers it.
3. Replace the float deliberately, before June. The honest options are a shorter debtor cycle, a working capital facility priced and approved in advance, or holding GST and withholding aside as collected rather than treating them as operating cash. Pick one and implement it while the card is still there as a fallback.
4. Decide now what happens if step 3 doesn't work. An ATO payment plan is a real option and is better used early than late. One thing to put in front of your board, though: general interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible, under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025. For a taxable entity, the after-tax cost of deferral is now the full headline rate, which changes the comparison against a commercial facility. (Income-tax-exempt charities were never claiming the deduction, so for them nothing moved.)
The window almost nobody has noticed — and what it's actually worth
Here is the part that has been largely missed, and it is worth a short detour even for organisations that have never used a card for tax.
Before the surcharge ban, the ATO charged a card payment fee: as at May 2026 the published rates were around 0.92% for Mastercard credit, 0.96% for Visa credit, 1.45% for American Express, and about 2.01% for international Visa and Mastercard. Since the ban took effect on 1 October, that fee no longer applies. So for the first time, and only until the ATO stops accepting cards, paying a tax liability by credit card is free of a card payment fee. (The ATO's payment details page, updated 9 October, states that card payment fees do not apply — confirm the current position before you rely on it.)
The real prize is the float, not the points. On a card with a standard interest-free period, paying a liability on its due date and clearing the card at the next statement date gives you up to roughly 55 days of funding at no cost. On a $60,000 quarterly BAS that is a meaningful, entirely legitimate working capital benefit, repeatable three more times before June, and it costs nothing provided the balance is cleared in full.
The points prize is narrower than the enthusiast sites imply. At the time of writing, most major issuers award no points at all on direct ATO payments — ANZ, CommBank's personal cards, HSBC, Macquarie and NAB's personal cards among them. What does earn, broadly: most American Express Membership Rewards cards at around one point per dollar, Amex's direct-earn cards at about half a Qantas or Velocity point per dollar, and a handful of business cards with caps — CommBank's Business Awards range and NAB's Qantas Business Signature Visa, for instance, each with annual or monthly earn limits. Check your own card's terms rather than the general rule.
Three conditions before anyone treats this as free money:
Clear the balance in full, every time. Carried-balance interest will exceed the value of the points comfortably, and then you are financing tax on a credit card at credit card rates — which is the behaviour this whole policy change exists to discourage.
Confirm the transaction type in writing. Ask your issuer whether an ATO payment is treated as a purchase or a cash advance. A cash advance accrues interest from day one with no interest-free period, which eliminates the entire benefit above.
Write down who owns the points. If the card is in a director's or an employee's name and the organisation reimburses the payment, the rewards accrue to an individual while the entity carries the liability and the risk. For a not-for-profit board or a company with minority shareholders, that can be a related-party benefit, and is at least a governance question, that belongs in a written policy and, at a minimum, in the minutes — not an informal perk. This is the part I would settle before the first payment, not after.
What to build instead, and where AI helps
The durable answer is unglamorous: a rolling tax payment calendar that sits next to the cash forecast rather than inside someone's memory. One row per liability, with its due date, the amount, the funding source and the person accountable — looking twelve months forward, not one quarter.
This is a good use of AI and a poor use of judgement-free automation. Assembling the calendar from activity statements, payroll data and instalment notices, keeping it current as dates shift, and flagging any month where forecast cash falls below the scheduled payment is pattern work a tool does well. Deciding which liability gets paid first in a tight month is not. We build these as part of a reporting pack and the useful content is always the same two columns — funding source and accountable person — because those are the columns that make the calendar a decision tool rather than a list of dates. Who owns the decision is the same question I put to boards about where reserves sit, in this piece on treasury policy.
Alternatives after June 2027 remain straightforward: debit card, BPAY, direct deposit, Australia Post and international money remitters. Third-party providers will still accept a credit card and settle with the ATO for you — but published comparisons put their fees at roughly 1–2%, which can easily exceed the value of the points. Weigh the fees and processing times, and check a provider's credentials before handing over information or money.
Do you know how many days of float your card has been quietly providing?
Most organisations find out in July 2027, which is the expensive way. PFL provides senior-level outsourced finance, management reporting, and AI automation for Australian NFP, NDIS, and SME organisations — including a rolling tax payment calendar with a funding source against every date.
Talk to PFL →- Australian Taxation Office — Commissioner statement: credit cards (2 October 2026)
- Australian Taxation Office — ATO extends transition period for taxpayers using credit cards until 30 June 2027 (9 October 2026)
- Reserve Bank of Australia — Review of Retail Payments Regulation, Conclusions Paper: frequently asked questions
- Australian Competition and Consumer Commission — Card surcharges
- Australian Taxation Office — How to pay: other payment details
- Australian Taxation Office — Deductions for ATO interest charges
- Australian Taxation Office — Denying deductions for ATO interest charges
- Point Hacks — Credit cards that earn points on ATO payments
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