Assistant Treasurer Daniel Mulino has conceded he and Treasurer Jim Chalmers knew in July that the Australian Taxation Office was considering banning credit card payments for tax bills, more than two months earlier than the government had previously admitted. The ban has since been pushed back to July 2027 after Labor funded the ATO to delay it, following a backlash from small business.
Mulino made the admission on ABC TV’s Insiders on Sunday, Guardian Australia reported. Chalmers had told parliament last week that he was made aware of the decision in late September, about a week before it became public.
For anyone running a trade business through a card to smooth out a bad month, the timeline matters. It’s the difference between a government that got blindsided and one that watched it coming for a quarter.
”Their call, their design”
Mulino said he knew the tax office was weighing three options after the Reserve Bank announced in March 2026 that it would ban merchant fees on credit card transactions from 1 October.
“In July, what we did was to insist that there be a transition period and also we took action with the ATO to arrange that that was possible,” the assistant treasurer said.
The transition the tax office first landed on ran just two months, over what Mulino called “the busiest period of tax submissions”. He put the design back on the ATO: “that was their call, their design. We worked with them to make sure that they were able to fund that.”
On why the ban was on the table at all, Mulino was blunt about the budget maths. “Accepting credit card payments going on indefinitely would have very serious fiscal ramifications for the budget,” he said.
He said the ATO’s own preference had been to ban the payments, and that he and Chalmers told the agency to keep negotiating with the card companies for lower fees. Those talks produced “an improved offer, is my understanding, and those discussions in fact continue”, he said.
What it does to a subbie’s cash flow
Strip the politics out and this is a cash-flow story. Paying a quarterly BAS or a PAYG instalment on a credit card doesn’t make the bill smaller, but it does move the pain. The money leaves the ATO’s column on the due date and doesn’t leave yours until the card statement falls due, which buys a few weeks of breathing room for an operator still chasing a progress claim from a builder who pays at 45 days.
That lever disappears when the ban lands. From July 2027, a sole trader who has been using a card to bridge the gap between a tax due date and a client payment needs another plan: BPAY or direct debit out of the business account on the day, or a payment arrangement with the ATO set up before the bill is overdue. The ATO publishes the payment options and the rules for payment plans, and they’re worth reading now rather than the week a BAS is due.
The extra twelve months is the practical win here. It covers a full financial year of BAS cycles, which is enough time to renegotiate payment terms with head contractors, build a tax reserve account, or talk to an accountant about moving to monthly instalments instead of quarterly lumps.
”Deficient policymaking”, business group says
The business lobby is not letting the July date go. ACCI chief executive Andrew McKellar said the admission that the government knew about the tax office’s preference for a ban back in July was concerning.
“This looks like a completely deficient policymaking process that took small business for granted. It cannot be repeated.”
McKellar said on Sunday.
Chalmers has also faced pressure from the opposition and from inside Labor’s own ranks, with some figures privately conceding the government mishandled the ban, Guardian Australia reported. Prime Minister Anthony Albanese was accused of rolling the treasurer after implying he had personally stepped in to delay the ATO’s decision following a direct appeal from small businesses. Both men denied any rift, with Albanese saying he was “proud” of the treasurer’s work.
Trusts are the next fight
The same program put Mulino under pressure on the government’s proposal for a minimum 30% tax on discretionary trusts, a structure plenty of family trade businesses use to hold the business and split income.
Asked repeatedly whether some businesses could end up paying an effective rate above 60%, Mulino wouldn’t rule out that some small businesses using trusts could pay above the top marginal rate of 45%.
“What we’ve done throughout this process is to provide a transition period,” he told the ABC. “There are lengthy transition periods to allow different structures to adjust.”
He said carve-outs had been provided for fixed trusts and charitable trusts, and declined to discuss arrangements for particular companies.
What to watch
Two dates now sit on the calendar for anyone paying tax out of a trade business. July 2027 is when the card option is scheduled to end, unless the ATO’s continuing talks with the card companies produce a fee low enough to keep it alive. The trust proposal is the bigger structural one, and the detail of those transition periods and carve-outs is where a family trade business will find out what it actually costs. If you run through a trust, that’s a conversation to have with your accountant before the legislation is drafted, not after.
Frequently asked questions
When will the ATO stop accepting credit card payments for tax bills?
The ban is now scheduled for July 2027, after the government funded the ATO to delay an earlier, shorter transition period that would have landed during a busy tax period.
Why does the ATO want to ban credit card payments for tax?
Assistant Treasurer Daniel Mulino said letting credit card payments continue indefinitely would have serious fiscal consequences for the budget, after the Reserve Bank announced a ban on merchant card fees from October 2026.
What should a tradie use instead of a credit card to pay the ATO?
The ATO’s other payment options include BPAY, direct debit from a business account, or a payment arrangement set up before the bill is overdue.
Sourced from Guardian Australia, ABC Insiders. Original article.
