The Australian government has reversed a planned ban on credit card payments for tax bills, allowing taxpayers to continue using cards until June 2027 with the government subsidizing the surcharges previously applied by the Australian Taxation Office (ATO). This move creates a temporary opportunity for taxpayers, including many business owners and individuals, to earn reward points on their tax payments without incurring additional costs.

More than 2.5 million taxpayers are now able to pay their tax liabilities with credit cards and collect frequent flyer or other loyalty points. The ATO had initially intended to stop accepting credit card payments from December, following the Reserve Bank of Australia’s ban on merchant surcharges for credit and debit cards that took effect on October 1. The announcement to halt card payments triggered widespread dissatisfaction among business owners who often rely on credit cards for managing cash flow. The government responded by providing funding to cover these surcharge costs, effectively removing the fee that had previously made card payments less appealing.

Under this arrangement, the government will cover surcharges of up to 1.5 percent, which restores the incentive for cardholders to use credit cards for tax payments. However, reward points experts caution that only select cards—namely American Express, Commonwealth Bank of Australia (CBA), and National Australia Bank (NAB) business cards—offer points on ATO transactions. While American Express cardholders make up a significant portion of card users nationwide and account for more than 22 percent of total card spending, points accrued on tax-related payments generally amount to about half of those earned on regular purchases.

According to ATO assistant commissioner Anita Challen, it is uncertain whether the availability of card payments will result in a significant increase in credit card use for tax bills this financial year. Meanwhile, data shows a rise in the average tax refund amount, increasing from $2,760 to $2,850.

In addition to direct ATO payments, a growing number of businesses are using third-party payment platforms, such as Pay.com.au, B2Bpay, Snijip, and Payment Logic, to settle tax bills while earning full reward points. These services typically charge a fee for processing payments, which has led to increased uptake since the October 1 surcharge ban.

Despite the ongoing acceptance of credit card payments, the ATO reported that only 2.3 percent of tax payments were made by credit card during the 2024-25 financial year, with about 5 percent of small businesses using this method. The ATO maintained that discontinuing card payments originally aimed to prevent the wider community from bearing the cost of merchant fees.

Separately, the ATO has raised concerns about a rise in tax returns prepared by unregistered agents, including individuals and entities barred from acting as tax agents. Challen noted that the office has flagged more than 10,000 suspicious tax returns this year, involving over $170 million in questionable deduction claims. These unregistered preparers often entice taxpayers with promises of quick and large refunds, encouraging inflated claims that can result in penalties for the taxpayers involved. The ATO reminded taxpayers that using registered professionals provides important protections that are lost when engaging unregistered preparers.