Latest / The Front / Why the ATO is declaring war on credit cards

Transcript

Why the ATO is declaring war on credit cards · The Front

• 0:01
  Speaker 1: From The Australian, here's what's on the front. I'm Claire Harvey.
• 0:04
  Speaker 1: It's Thursday, October 22, 2026. Points junkies. They're the people
• 0:12
  Speaker 1: for whom every purchase is a tactical opportunity. They're slapping
• 0:16
  Speaker 1: the Amex on this and the Mastercard on that to
• 0:19
  Speaker 1: accumulate rewards and frequent flyer points that fund holidays and splurges.
• 0:25
  Speaker 1: And they're at the centre of one of the big
• 0:27
  Speaker 1: political stories of the moment, the federal government's botched attempt
• 0:31
  Speaker 1: to ban credit card surcharges. Today, the frequent flyer hacks,
• 0:36
  Speaker 1: supercharging the tax officer's war on plastic. Businesses will no
• 0:51
  Speaker 1: longer be able to charge customers a direct fee for
• 0:54
  Speaker 1: paying my card. Claims the Treasurer reportedly knew about the
• 0:58
  Speaker 1: ATO's looming ban on credit card payments three months before
• 1:02
  Speaker 1: it was officially announced. Australians hate paying these charges.
• 1:05
  Speaker 2: Let's be blunt about it.
• 1:07
  Speaker 3: So your government knew about this for three months?
• 1:11
  Speaker 1: Thomas Henry is a reporter with The Australian and along
• 1:14
  Speaker 1: with the rest of our Canberra Bureau, he's been covering
• 1:16
  Speaker 1: the hot political barney that's going on right now.
• 1:19
  Speaker 3: It's huge heat coming.
• 1:21
  Speaker 1: From the small business community about what seems like a
• 1:24
  Speaker 1: fairly kind of esoteric rule change that the Australian Tax
• 1:27
  Speaker 1: Office brought in.
• 1:29
  Speaker 3: Tom, this is about whether.
• 1:30
  Speaker 1: Or not you can pay your tax bill, your BAS
• 1:33
  Speaker 1: or your annual tax return with a credit card. the
• 1:37
  Speaker 1: ATO has suddenly announced that no, you can't. But this
• 1:41
  Speaker 1: wasn't actually the ATO's decision to make, was it? Where
• 1:44
  Speaker 1: does this decision actually come from?
• 1:46
  Speaker 2: Yeah, so, I mean, take us back to late 2024.
• 1:49
  Speaker 2: The Albanese government flags that they're willing to look at
• 1:54
  Speaker 2: this ban on surcharging.
• 1:56
  Speaker 3: The responsibility actually lies with the Reserve Bank.
• 2:00
  Speaker 2: So the Reserve Bank does a lot of work, and
• 2:02
  Speaker 2: then in March of this year, it comes to the
• 2:05
  Speaker 2: finding that it's in the public interest to ban surcharging
• 2:10
  Speaker 2: for merchants that accept credit and debit cards.
• 2:13
  Speaker 3: The government saw this as a pretty easy political win, right?
• 2:17
  Speaker 2: You get to trot out the line that the price
• 2:19
  Speaker 2: that you see on the menu is the price that
• 2:20
  Speaker 2: you pay. I don't think they quite foresaw the sort
• 2:25
  Speaker 2: of anchor that this would strike within the business community
• 2:29
  Speaker 2: who will have to weather these costs, either absorb them
• 2:32
  Speaker 2: or pass them on to their consumers through price rises.
• 2:36
  Speaker 1: Yeah, it really came from Jim Chalmers' promise to address
• 2:40
  Speaker 1: the cost of living, didn't it? The RBA decided that
• 2:43
  Speaker 1: credit card surcharges were going to be something it ruled out.
• 2:45
  Speaker 1: And through this sort of complex series of manoeuvres, it
• 2:48
  Speaker 1: now means that the ATO has told customers they can't
• 2:51
  Speaker 1: pay by card anymore. When you first hear that, you think, well,
• 2:54
  Speaker 1: who's paying their tax bill with a credit card? But actually,
• 2:57
  Speaker 1: what business is saying is this is a critical way
• 3:00
  Speaker 1: that they manage their cash flow. They have a line
• 3:02
  Speaker 1: of credit with their credit card and They're not draining
• 3:05
  Speaker 1: the bank account every time a BAS needs to be.
• 3:07
  Speaker 3: Paid, right?
• 3:09
  Speaker 2: Yeah, it's certainly what we've heard from business groups who
• 3:12
  Speaker 2: are kind of leading the charge on this that BAS
• 3:15
  Speaker 2: Credit card payments for tax are a key way that
• 3:19
  Speaker 2: businesses manage their cash flow. And certainly now when business
• 3:24
  Speaker 2: conditions are pretty dire and rising costs for small businesses
• 3:29
  Speaker 2: that are putting pressure on cash flow, I think businesses
• 3:33
  Speaker 2: are pointing to credit cards as a key way they
• 3:36
  Speaker 2: can manage cash flow issues.
• 3:38
  Speaker 1: You can understand why it's very difficult as a small
• 3:41
  Speaker 1: business person to know when your invoice is going to
• 3:43
  Speaker 1: be paid or when the clients are going to stump
• 3:45
  Speaker 1: up with the money or how your sales are going
• 3:47
  Speaker 1: to be in March.
• 3:48
  Speaker 3: For example.
• 3:53
  Speaker 1: There's a really interesting disparity in the numbers here. So
• 3:57
  Speaker 1: the ATO says that 2% to 3% of taxpayers are
• 4:00
  Speaker 1: paying their tax with a credit card. They say that
• 4:03
  Speaker 1: that means that taxpayers pay if this change didn't come through,
• 4:06
  Speaker 1: would be footing the bill for $ 200 million in fees
• 4:09
  Speaker 1: and surcharges that they shouldn't have to pay for anymore. Now,
• 4:13
  Speaker 1: for me, those numbers don't really kind of match the
• 4:15
  Speaker 1: level of anger that we're seeing from the small business community.
• 4:19
  Speaker 1: And there's this other element that I don't think many
• 4:21
  Speaker 1: people are talking about. So if you pay your any
• 4:24
  Speaker 1: government fee with a credit card, Amex or Visa or
• 4:27
  Speaker 1: MasterCard either will give you no points at all or
• 4:30
  Speaker 1: they'll really put a hard cap on the point. So
• 4:32
  Speaker 1: you can't earn those frequent flyer points that you used
• 4:35
  Speaker 1: to go on your holiday. But there is a whole
• 4:37
  Speaker 1: cottage industry of little businesses that have arisen to deal
• 4:40
  Speaker 1: with this. Businesses like pay.com.au, B2B Pay, Snip, Reward Pay.
• 4:47
  Speaker 1: And their whole business model is kind of rooting tax
• 4:50
  Speaker 1: payments around this points issue. So you pay them on
• 4:54
  Speaker 1: a credit card, they pay the tax office and you
• 4:57
  Speaker 1: still get the points because on Amex's end, it doesn't
• 5:00
  Speaker 1: look like a government payment. So I wonder, are they actually,
• 5:04
  Speaker 1: is this the hidden number here? And is this why
• 5:07
  Speaker 1: we're getting this level of anger? Because actually there's a
• 5:09
  Speaker 1: huge industry of people doing it that the ATO can't
• 5:12
  Speaker 1: actually see.
• 5:13
  Speaker 2: It's certainly a I would imagine that's why you have
• 5:17
  Speaker 2: such a vast gap between the ATO's estimates and what
• 5:21
  Speaker 2: businesses are estimating in terms of the number of affected businesses.
• 5:25
  Speaker 2: It would make sense that those numbers wouldn't come up
• 5:29
  Speaker 2: in the ATO's estimates.
• 5:31
  Speaker 3: I think.
• 5:32
  Speaker 2: They estimate around 5% of small businesses will be affected
• 5:35
  Speaker 2: by the changes, which ends up being 2% of total
• 5:38
  Speaker 2: individual taxpayers. But I think ACCI puts the figure somewhere
• 5:44
  Speaker 2: around 250,000 businesses affected. So it would make sense that
• 5:48
  Speaker 2: that would be an explanation for the gap between those
• 5:51
  Speaker 2: two estimates.
• 5:52
  Speaker 3: It raises a question for me, though.
• 5:53
  Speaker 1: Are we talking about people who are kind of hacking
• 5:55
  Speaker 1: their points and doing the smart thing, which you would do?
• 5:58
  Speaker 3: It was perfectly legal. maximize your points?
• 6:02
  Speaker 1: Or are we talking about real businesses who are really,
• 6:05
  Speaker 1: really struggling and will go under if they can't pay
• 6:07
  Speaker 1: with a credit card?
• 6:08
  Speaker 2: I think certainly the vibe that we've gotten from business
• 6:12
  Speaker 2: groups is that this is about cash-strapped small businesses.
• 6:17
  Speaker 3: I don't think it's a mystery to anyone.
• 6:18
  Speaker 2: That business conditions have deteriorated pretty significantly over the last
• 6:24
  Speaker 2: two or so years. Inflation, high interest rates, consumer confidence,
• 6:30
  Speaker 2: these are all figures that are pretty dire for the
• 6:33
  Speaker 2: business sector at the moment. Certainly, the feedback we've gotten
• 6:37
  Speaker 2: from bodies like Cosbowa, Aki and the BCA have been
• 6:42
  Speaker 2: about the ability for businesses to be able to use
• 6:46
  Speaker 2: their credit cards to pay their tax bill in a
• 6:48
  Speaker 2: way that doesn't impact their cash flow.
• 6:53
  Speaker 1: Along the way, the government has created a one-time only
• 6:56
  Speaker 1: opportunity for the points junkies. The ATO has banned credit
• 7:00
  Speaker 1: card payments, but the change won't come into effect until mid-2027.
• 7:05
  Speaker 1: That's because the government responded to the business backlash by
• 7:09
  Speaker 1: delaying the change. In the meantime, the feds, that is
• 7:12
  Speaker 1: the taxpayers, will pay card surcharges for the next year.
• 7:16
  Speaker 1: So now it kind of makes sense to pay on
• 7:18
  Speaker 1: card when previously maybe it didn't. The credit card companies
• 7:22
  Speaker 1: like Amex and Visa put caps on the amount of
• 7:25
  Speaker 1: points you could earn when paying the tax office. So
• 7:28
  Speaker 1: often the surcharge of a couple of percent would cancel
• 7:32
  Speaker 1: out the value of any points you'd get. So you'd
• 7:35
  Speaker 1: either use a third party like the ones we discussed earlier,
• 7:38
  Speaker 1: or you wouldn't pay on card at all.
• 7:40
  Speaker 3: Now, with the taxpayer.
• 7:41
  Speaker 1: Paying that surcharge, it kind of makes sense to pay
• 7:44
  Speaker 1: your tax on plastic, because even a small number of
• 7:48
  Speaker 1: points are better than nothing, right? And you won't be
• 7:50
  Speaker 1: paying the surcharge because that's taken care of by taxpayers. OK,
• 7:57
  Speaker 1: so now let's talk about who knew what when. We've
• 7:59
  Speaker 1: seen the Prime Minister, the Treasurer and the Assistant Treasurer,
• 8:03
  Speaker 1: Daniel Molino, out trying to explain how this has all
• 8:07
  Speaker 1: gone so badly wrong for them.
• 8:10
  Speaker 3: By Friday morning, we had an announcement.
• 8:14
  Speaker 1: Now.
• 8:15
  Speaker 2: He's saying the credit card surcharge is all me and
• 8:18
  Speaker 2: neglecting to mention the Treasurer. There's always something else that
• 8:21
  Speaker 2: is there that's acknowledged, which is engagement.
• 8:25
  Speaker 3: My door is always open. Were you rolled by the PA? No,
• 8:29
  Speaker 3: not at all.
• 8:30
  Speaker 2: And it is true that there were discussions.
• 8:34
  Speaker 1: One of the really interesting things I noticed was that
• 8:36
  Speaker 1: Daniel Molino says that he and Jim Chalmers knew in
• 8:39
  Speaker 1: July that this change was coming. We then saw the
• 8:43
  Speaker 1: Prime Minister appear to kind of roll Jim Chalmers on
• 8:46
  Speaker 1: this publicly.
• 8:47
  Speaker 3: Can you take us through that?
• 8:48
  Speaker 1: What is going on?
• 8:50
  Speaker 3: It's been fascinating to watch. You had a week of.
• 8:54
  Speaker 2: Labor frontbenchers giving very conflicting messages on this. As you say,
• 8:59
  Speaker 2: you then had Anthony Albanese at an ACCI event in
• 9:03
  Speaker 2: Parliament appear to take personal credit for the decision before
• 9:07
  Speaker 2: he sort of walked back those comments the day after.
• 9:09
  Speaker 2: You had Jim Chalmers on morning radio making sure everyone
• 9:12
  Speaker 2: knew that he was involved from the start. And then,
• 9:16
  Speaker 2: of course, you had Daniel Molino saying that the government
• 9:18
  Speaker 2: knew about this for three months. He then confirmed that
• 9:23
  Speaker 2: the final decision was made sometime in late September, which
• 9:26
  Speaker 2: broadly fits with what Jim Chalmers was saying last week.
• 9:30
  Speaker 3: You also had industry minister Tim Ayres.
• 9:33
  Speaker 2: Saying he didn't know until October when his cabinet colleagues
• 9:38
  Speaker 2: and himself were informed. So it's uncharacteristically messy, the handling
• 9:44
  Speaker 2: of this. It seems as though Daniel Molino and Jim
• 9:48
  Speaker 2: Chalmers knew well in advance that the ATO was considering
• 9:52
  Speaker 2: this kind of measure after the RBA made clear that
• 9:55
  Speaker 2: they were going to ban surcharging.
• 9:57
  Speaker 1: They've already been through five months. of sort of political
• 10:01
  Speaker 1: nightmare and angry business backlash over the federal budget changes.
• 10:05
  Speaker 1: Homeowners are also raging at the government. Why then was
• 10:10
  Speaker 1: it so difficult to anticipate that this would cause a
• 10:13
  Speaker 1: massive stink? Now they've delayed the implementation of this change
• 10:16
  Speaker 1: until June 2027.
• 10:19
  Speaker 3: Does that just make them look weak? I think they
• 10:22
  Speaker 3: saw this as an easy political win.
• 10:25
  Speaker 2: You can tell consumers they're going to be spending $ 1. 6
• 10:28
  Speaker 2: billion less in credit card surcharges. You can sort of
• 10:32
  Speaker 2: lump it in with this idea of cutting red tape,
• 10:35
  Speaker 2: making things more efficient. I don't think that they foresaw
• 10:39
  Speaker 2: the anger that this would spark in the business sector, which,
• 10:42
  Speaker 2: as you say, had already weathered some pretty significant budget
• 10:45
  Speaker 2: tax changes and weathering some pretty dire business conditions generally.
• 10:51
  Speaker 2: I don't think that's something that they considered.
• 10:54
  Speaker 1: Do you think we're going to see this kind of
• 10:56
  Speaker 1: still burning at the next federal election or do you
• 10:59
  Speaker 1: think it'll come in in June 2027, there'll be a
• 11:02
  Speaker 1: bit of pain in the short term and then we'll
• 11:04
  Speaker 1: all move on?
• 11:05
  Speaker 3: Yeah, I think.
• 11:06
  Speaker 2: that Angus Taylor and Pauline Hance will make a keen
• 11:09
  Speaker 2: point to keep this in the media cycle, to keep
• 11:13
  Speaker 2: hammering away at the government, at this idea that they
• 11:16
  Speaker 2: are waging war on small business. It's certainly a politically
• 11:20
  Speaker 2: potent point of attack for both the coalition and One Nation.
• 11:24
  Speaker 2: I mean, there's growing discontent among the Labor caucus about
• 11:29
  Speaker 2: the reception of the budget, now their handling.
• 11:32
  Speaker 3: Of this ATO ban.
• 11:33
  Speaker 2: There's, of course, speculation about The Treasurer's position, whether it
• 11:38
  Speaker 2: would be feasible for him to be moved on in
• 11:41
  Speaker 2: a Cabinet reshuffle, this saga only adds to that speculation.
• 11:46
  Speaker 1: Well, Tom Henry, I look forward to the stories continuing
• 11:48
  Speaker 1: to break. Thank you so much.
• 11:49
  Speaker 3: You're welcome.
• 11:58
  Speaker 1: Thomas Henry is a reporter with The Australian. You can
• 12:01
  Speaker 1: check out all our journalism anytime at theaustralian.com.au.