The Australian Taxation Office’s credit card payment ban has been delayed after the federal government agreed to fund a year-long transition period following intense opposition from small businesses and politicians.
The ban had been due to take effect on November 30. Treasurer Jim Chalmers will provide additional money to the ATO, although the government is not expected to cover the full $200 million in fees the agency said would otherwise fall on taxpayers.
The decision followed criticism that ending credit card payments would make it harder for small businesses to manage their cash flow. Opposition parties and some Labor MPs also accused the government of failing to stand up to its own agency.
Environment Minister Murray Watt said the move had been an independent decision by the tax office, but insisted it must consult properly with the business community during the transition.
“When they made clear that they intended to proceed with this, we insisted on them having a good transition plan with the business community and to consult with the business community about that,” Mr Watt told Seven’s Sunrise.
He said credit card payments accounted for about 5 per cent of payments made by small businesses and 2 per cent of those made by individuals.
The government’s response had appeared divided earlier in the week. Housing Minister Clare O’Neil expressed “real concerns” about the plan, while Assistant Minister Andrew Charlton said the government supported the ATO’s decision.
On Friday, Foreign Minister Penny Wong backed calls for meaningful consultation, while Defence Industry Minister Pat Conroy said the tax office should “do their job and talk to small businesses”.
Ms Wong also emphasised the ATO’s independence, a position that drew criticism from Liberal deputy leader Jane Hume.
“You can change this with a stroke of a pen. Small businesses are crying out for a change. They are asking for your help,” Ms Hume said. “You just have to have the will, and you can’t blame the ATO. They’re your agency. You’re the government. You should do this.”
Several Labor MPs privately voiced concern that the dispute was damaging the party’s relationship with small businesses. One senator described the ATO’s approach as “overreach” and “hostile”, while another said the agency may have reached the right decision for taxpayers but had mishandled the transition.
Another Labor MP questioned whether the government could disclaim responsibility for the decision, saying: “I don’t think it’s acceptable for us to say it was the ATO’s decision not ours. If that’s the case, then there’s something seriously wrong with our government.”
Opposition Leader Angus Taylor had threatened to introduce legislation overriding the decision if ministers failed to act. Such a move would probably have struggled in the House of Representatives, where Labor holds a majority, and could have raised questions about the independence of the tax office.
Small Business Minister Anne Aly was the first government minister to raise concerns about the ban, calling on the ATO to consult more widely about how it would be implemented.
