If you've been using a credit card to pay your tax bill, an important change is on the way.
The Australian Taxation Office (ATO) will stop accepting credit card payments for tax and BAS liabilities from 30 June 2027. For all individuals and businesses, including taxpayers currently on ATO payment plans, that means now is the time to review how future tax payments will be made. Understanding what is changing, which alternatives remain available and how to manage the transition can help you avoid missed payments and penalties, cash flow pressure or compliance issues.
The decision follows the Reserve Bank of Australia's Review of Merchant Card Payment Costs and Surcharging.
When taxpayers pay the ATO by credit card, merchant fees apply. As a government agency, the ATO has determined that it is not appropriate for those costs to be effectively borne by the broader community. As a result, credit cards will no longer be accepted as a payment method after 30 June 2027.
According to the ATO, credit card payments make up a relatively small proportion of overall tax payments. In the 2024-25 financial year, approximately 2.3% of tax payments were made using a credit card, with more than 60% of those payments coming from privately owned and wealthy groups, as well as public and multinational businesses.
The change will affect any individual or business that currently relies on a credit card for tax obligations, including those with credit card details linked to an existing ATO payment plan.
For some taxpayers, this has been a convenient way to manage larger tax bills, smooth cash flow fluctuations or use rewards programs. With that option being removed, it is worth assessing whether another method will suit your cash flow and banking setup.
Businesses and individuals with an ATO payment plan linked to a credit card should take particular note of the upcoming deadline.
The ATO has advised that taxpayers with direct debit arrangements connected to a credit card should check their current payment arrangement, confirm any instalments due after 30 June 2027, and update their payment method before the next payment falls due. If a card-based arrangement is not updated in time, another payment method may be needed.
To help manage the transition, the ATO is contacting affected taxpayers directly with information about the change and the steps required to update their arrangements.
Reviewing your setup well before the deadline can reduce the risk of missed payments or penalties with an existing payment plan.
While credit cards are being phased out, taxpayers will still have access to several other payment methods, including:
Direct deposit
Debit card
BPAY
Online bank transfers
Choosing the right option will depend on your cash flow, banking preferences and broader financial position.
The ATO acknowledges that some taxpayers may find the transition challenging, particularly those who have used credit cards to manage tax payments over time.
If you're concerned about meeting upcoming tax obligations, it's important to seek assistance early. The ATO has confirmed it will continue to support taxpayers experiencing financial hardship or other circumstances that make it difficult to meet their obligations.
Your advisor can help you explore suitable payment strategies and identify cash flow improvements that may make future tax payments easier to manage.
Although the change does not take effect until 30 June 2027, there is value in planning ahead.
If you currently use a credit card to pay tax liabilities, consider:
Reviewing how you will fund future tax payments
Checking whether any ATO payment plans are linked to a credit card
Updating payment arrangements before the deadline
Discussing cash flow and tax planning strategies with your advisor
Taking proactive steps now can help ensure a smooth transition and avoid unnecessary stress when the new rules come into effect. For more information, visit the ATO website, or speak with your trusted advisor about how this change may affect your personal or business finances.