The Australian Taxation Office’s credit card payment ban has been delayed after the federal government agreed a year-long transition period with the agency following backlash from small businesses.
Treasurer Jim Chalmers will provide transitional funding to help the ATO manage the change and give affected taxpayers more time to adjust.
In a joint statement with Small Business Minister Anne Aly and Assistant Treasurer Daniel Mulino, Mr Chalmers said the Government had listened to concerns about the original timetable.
“Australian small businesses have said the ATO’s announced timeframe was inadequate and we have taken these concerns seriously and acted on them,” he said.
The transition will allow the ATO to engage further with small businesses and other taxpayers who currently use credit cards, while providing more detailed information about the change.
The Government has also asked the tax office to consult on ways to support people experiencing financial hardship and to identify alternative arrangements for businesses and individuals unable to pay through other methods.
The ban had been due to begin on November 30, after a separate ban on credit card surcharges took effect on October 1.
The ATO said it could not continue absorbing credit card processing costs, arguing that doing so would reduce the revenue available for government services.
“It is not tenable for the ATO to absorb the costs associated with accepting credit cards on an ongoing basis,” the agency said. “This would result in less revenue being collected by the ATO and, ultimately, less funding being available for all government services.”
The decision prompted opposition from small business owners, business groups and MPs, who warned that removing credit cards could place additional pressure on businesses that use them to manage cash flow.
Financial expert Christian Bayliss said credit cards could provide small businesses with short-term working capital and several weeks of interest-free credit, meaning the ban could add to the strain on businesses already experiencing financial difficulties.
The ATO plans to continue accepting payments through direct debit and BPAY from debit and cheque accounts, as well as cash and EFTPOS payments at Australia Post offices.
Credit card payments account for 2.3 per cent of all tax payments, according to the ATO.
