The Australian government is currently in negotiations with the Australian Taxation Office (ATO) regarding a recent policy change that prevents taxpayers from using credit cards to settle tax liabilities. This development follows the implementation of a Reserve Bank of Australia (RBA) mandate on October 1, which effectively banned businesses from applying surcharges to credit card transactions.

The RBA’s policy, which the government has publicly supported, aims to save consumers an estimated $1.6 billion annually by removing the extra fees previously charged by merchants to cover payment processing costs. However, the ATO’s subsequent decision to stop accepting credit cards altogether has created friction for small business owners. Ministers argue that the ATO should provide more flexibility to help these operators manage their cash flow, particularly in light of the new surcharge restrictions. While the government takes credit for the consumer savings generated by the RBA’s move, they are now facing pressure from business groups who claim the ATO’s response to the new payment landscape is overly restrictive. The ATO, led by Commissioner Rob Heferen, has yet to formally announce a reversal of the policy, leaving the conflict between tax collection procedures and small business payment flexibility unresolved.