Pay Interest to ATO, Not Banks: Government Defends Credit Card Tax Payment Ban

Labor has backed a decision by the Australian Taxation Office (ATO) to stop accepting credit card payments for tax bills, urging small businesses to arrange interest-bearing payment plans with the tax office instead.

The move comes as the government pursues changes to eliminate card surcharges for shoppers, placing the fees back onto business owners.

In response, the ATO stated it should not have to absorb processing fees when businesses pay liabilities with credit cards, meaning owners will need alternative payment avenues if they lack immediate cash flow.

Assistant Minister Andrew Charlton told ABC Radio National Breakfast he supported the ATO’s decision.

“The reason for that decision is that the government has said that if we’re going to stop businesses from applying these surcharges, it’s appropriate to be consistent and for government agencies to not have these surcharges as well,” he said.

Charlton said the ATO did not want the 98 percent of taxpayers who do not pay by credit card to subsidise those who do.

“For that reason, they’ve said that from November they won’t be accepting the cards as a way to pay tax,” he said.

Charlton, a former small business owner, said he understood businesses needed flexibility, and urged them to set up payment plans with the ATO rather than relying on credit cards.

“The tax office offers payment plans for small businesses and the good thing about those payment plans is… the interest rate on those plans is much lower than the interest rate on credit cards,” he said.

Opposition Leader Angus Taylor has accused the government of an inconsistent approach, after Housing Minister Clare O’Neil voiced “real concerns” over the ATO’s announcement.

“We’ve had the housing minister in one place, a small business minister somewhere else, and the de facto treasurer has been saying he’s been defending the ATO,” Taylor told a media conference.

“The hypocrisy of this government knows no bounds because they don’t understand enterprise.”

Call to Reverse Decision

The Housing Industry Association (HIA) is calling on the ATO and the government to reverse the decision, warning it presents another financial hurdle for businesses already feeling the brunt of a tough economy.

HIA Chief Executive of Industry and Policy Simon Croft said builders were struggling to absorb costs, taxes, and compliance obligations.

“Residential builders and small businesses more broadly continue to navigate a challenging operating environment, with increased construction costs, wages, insurance, finance, and regulatory costs all significantly higher than they were just a few years ago,” Croft said.

“Recent and upcoming changes include increases in minimum award wage rates, the introduction of payday superannuation, restrictions on credit card surcharges, higher fuel costs, increases in insurance premiums, and additional costs flowing through from levies and charges applied across the supply chain.”

The HIA says small- and medium-sized businesses are building most of Australia’s new homes amid a dire housing shortage.

“Every effort should be made to support the businesses responsible for delivering those homes, not impose further costs and complexities on their business,” Croft said.