Paying the ATO by Card Stays Fee-Free Until 30 June 2027, Then It Costs Extra

The Australian Taxation Office will keep accepting credit cards for tax payments until 30 June 2027, seven months past the 30 November cut-off it announced on 1 October. The ATO confirmed the change on 9 October, with the government paying for the transition. Until then, the ATO charges no card payment fee. From 1 July 2027, putting a tax bill on a credit card will mean going through a third-party payment provider, and those providers set their own fees.

The change follows the Reserve Bank's Review of Merchant Card Payment Costs and Surcharging. The ATO said that, as a government agency, it would not be appropriate to pass the cost of merchant fees on to the community, so it is dropping credit cards instead. Card payments are a small corner of the tax system. About 2.3% of tax payments were made by credit card in 2024–25, and more than 60% of those card payments came from privately owned and wealthy groups and from public and multinational businesses.

What the card is doing for you

For a small business that pays its BAS by card, the card is doing one of three jobs, or a mix of them. It buys a few weeks of float between the BAS due date and the card statement. It earns rewards points. Or it covers a bill the bank account cannot. Each job has a different replacement, and a different cost once the free option goes.

Take a $20,000 quarterly BAS. Through pay.com.au, a Visa or Mastercard payment to the ATO costs 1.00% to 1.20% plus GST, depending on the plan. On its free plan, that is $264 every time the bill goes on the card.

The other route is to leave the bill unpaid and set up an ATO payment plan. That costs the general interest charge (GIC), which is 11.51% a year for October to December 2026, compounding daily. On $20,000, that works out to about $190 for each month the full amount stays outstanding. GIC incurred since 1 July 2025 is also no longer tax deductible. Six weeks on a payment plan costs about the same as one provider fee, and the interest comes out of after-tax money.

Three BAS payments left

Quarterly BAS on the standard calendar is due on 28 October, 28 February, 28 April and 28 July. The March quarter, due 28 April 2027, is the last one that falls before the cut-off. The June quarter, due 28 July, lands after it. That leaves three quarterly payments to test a new method while the card is still there as a backstop.

What to do with the time

Start by working out which job your card has been doing. Pull the last four card statements that carried a BAS payment. If each one was cleared inside the interest-free period, the card was float. If the balance rolled over, it was covering a shortfall at credit card interest rates.

If it was float, replace it with a tax account. Move the GST collected and the PAYG withheld into a separate account each week as customers pay, so the BAS is paid from cash already set aside. Starting with the BAS due 28 October gives you three cycles to build the buffer before the card stops being an option.

If it was points, price them honestly. Today the points come free with the payment. From July 2027, putting the same payment through pay.com.au costs 1.00% to 1.20% plus GST, so the points need to be worth more than that to come out ahead.

If it was a shortfall, act before the due date rather than after it. GIC compounds daily on any amount overdue and you cannot deduct it, so compare its cost with any other way of bridging the gap, such as a business overdraft, on an after-tax basis with your tax agent. And if you have an ATO payment plan paid by direct debit from a credit card, it will need a new payment method before the first instalment due after 30 June 2027.

This article is general information only and is not financial advice.