Assistant Treasurer Daniel Mulino Concedes Government Knew of ATO Credit Card Ban Plans in July

SYDNEY - Assistant Treasurer Daniel Mulino has acknowledged that the federal government was aware as early as July that the Australian Taxation Office was considering banning credit card payments for tax obligations, months before the decision became public and triggered a strong backlash from small business.

Speaking on ABC's Insiders program on Sunday, Mulino said he and Treasurer Jim Chalmers were informed in July of the ATO's preference to stop accepting credit cards following the Reserve Bank of Australia's decision to scrap merchant surcharges from 1 October.

"In July, the government became aware that the ATO was looking at options and that at that point their preference was to not accept credit cards," Mulino said. "The indication we gave to the ATO was that they should continue to engage with the credit card companies, and that there should be a transition period."

The admission follows reporting that the ATO had privately briefed the government on its plans and presented options well before the late-September announcement that credit card payments would cease from 1 December. Small businesses were notified on 30 September, only one day before the decision was made public, and given a two-month grace period.

That original timeline sparked widespread criticism from the business community. Peak bodies argued that the short notice left many firms unable to adjust payment systems or cash-flow arrangements in time. The Australian Chamber of Commerce and Industry described the process as deficient and said it appeared small business had been taken for granted.

The controversy ultimately forced a government intervention. After receiving direct representations, including a text message from ACCI chief executive Andrew McKellar to the prime minister, the government announced it would provide transitional funding so the ATO could continue accepting credit cards until 30 June 2027. The cost of the extension will be finalised in the Mid-Year Economic and Fiscal Outlook.

Mulino defended the government's handling of the issue, saying indefinite acceptance of credit card payments would have carried "very serious fiscal ramifications for the budget." The ATO had estimated the annual cost of absorbing merchant fees at around $200 million, money that would otherwise reduce revenue available for government services.
He said the government had directed the ATO to keep negotiating with credit card companies for lower fees and to build in a transition period. Those discussions continued but did not produce a rate low enough for the ATO to maintain the service on a permanent basis at that stage.

"We've changed our position. So I've listened to stakeholder feedback, as has the PM and the treasurer," Mulino said. "So, obviously we've changed tack and we've listened to feedback. And that's a sign of a government that is putting in place important big reforms."
He rejected suggestions that the government had taken a hands-off approach, while acknowledging ministers had not involved themselves in every operational detail. The Reserve Bank's surcharge ban, announced in March, was framed by the government as a long-overdue consumer reform that removed an estimated $1.6 billion a year in costs from card users.

The episode has also highlighted underlying questions about coordination between the prime minister and the treasurer. Anthony Albanese publicly confirmed he intervened after McKellar's text, stating his door was always open and that an announcement followed within a day. Chalmers has denied being overruled, saying the pair had discussed the issue and held the same view. Industry Minister Tim Ayres described the government as collegial and stable.

Business groups have welcomed the delay but continue to press for a longer-term solution. McKellar said ACCI wanted a permanent outcome that would not leave small businesses carrying the cost, and noted that further reductions in card fees would help.
The ATO had originally argued that absorbing the merchant fees was not tenable and would reduce funds available for public services. Taxation commissioner Rob Heferen said the agency would have preferred to keep accepting cards if a sufficiently low rate had been available.

For many small businesses, credit cards have served as a practical cash-flow tool, allowing them to time tax payments against incoming revenue. The sudden prospect of losing that option, combined with the short notice, intensified the reaction once the ban was announced.

Mulino maintained that the government's rapid response once stakeholder feedback became clear demonstrated a willingness to adjust. The extended transition to mid-2027 gives the ATO and card companies more time to explore ongoing arrangements, while also allowing businesses additional months to adapt.

The sequence of events — from the RBA's March announcement, through the government's July awareness, the ATO's September decision, the business outcry, and the subsequent political intervention — has become a case study in the practical challenges of implementing large-scale payment reforms. It has also underscored the political sensitivity of measures that affect small business cash flow at a time when many firms are already managing higher costs and tighter margins.

As negotiations between the ATO and card providers continue, the government has signalled that further options will be examined before the extended deadline. Whether a permanent, fiscally sustainable solution can be found remains the central unresolved question. For now, the intervention has bought time, calmed immediate business concerns, and exposed the earlier timeline of government knowledge that Mulino publicly confirmed on Sunday.