‘Deplorable’: ATO’s bargain breakdown shifts red dot on business cash flow

“It’s just another thing that small businesses are lumbered with, because at the moment it’s literally death by a 1,000 cuts,” Tripolino said.

Cash flow pressures

CreditorWatch’s August Business Risk Index found that first-time insolvencies have risen to 1,834, with a heavy concentration of these in the residential building sector.

Further, based on CreditorWatch’s September 2026 Business Sentiment Survey, 49 per cent of respondents said that they had enough liquid cash reserves to cover operating expenses for less than six months.

“You’re already in an environment where businesses are struggling, and insolvencies are through the roof,” Tripolino said.

“There’s already been changes levelled across small businesses which already eat into cash flow. The obvious one is Payday Super.”

“People may have genuinely entered into payment arrangements on the basis that they could try to mitigate some of the burden, with [paying with credit card] as an option.”

ATO funding

When it announced the ban on credit cards on 1 October 2026, the ATO explained in a statement that the decision arose after it determined it was not appropriate for the cost of credit card merchant fees to be transferred to the community.

However, the focus on the community shifted when a statement by the Commissioner of Taxation Rob Heferen, the following day, said: “It is not tenable for the ATO to absorb the costs associated with accepting credit cards on an ongoing basis”.

Heferen said that the ATO would have preferred to continue to accept credit cards if it weren’t for a declined negotiation of surcharge rates.

“To try and reduce the cost, we approached credit card companies; however, they declined to offer a sufficiently low rate,” Heferen said.

The general public impacts

Heferen said that the cost of credit card merchant fees will result in less revenue being collected by the Tax Office, and flow-on effects to government services funding.

“I don’t believe this to be the case where the general public would have seen this as an issue,” Tripolino said.

“The whole thing is just very hypocritical, and if I were to be perfectly honest, it’s deplorable,” he added.

Tripolino stressed that credit card payments are a “form of everyday life”.

“You’ve just made it harder again for a really hard environment, and it’s unnecessary; it’s totally unnecessary,” Tripolino said.

“It’s clearly accepted that it is entrenched in our community as a means of paying for things.”

“If it wasn’t, then you wouldn’t have this very policy that we’re talking about in terms of surcharging, etc.”

Taxpayers have a transition period of two months to consider alternative payment options until the ban is enacted on 30 November 2026.

Tripolino said that this is not enough time, especially for businesses and taxpayers currently on payment plans.

Merchant fees for credit cards are estimated at nearly $200 million per annum and are predicted to continue to rise.

Following the ban, taxpayers will have access to payment by debit card, BPAY, and direct deposit, and through Australia Post and international money remitters.