Small businesses have been abruptly told by the Australian Taxation Office they could no longer pay their bills by credit card in the wake of Labor’s card surcharge ban.

The Albanese government announced the ban earlier this year to rid Australian shoppers of surcharges on credit or debit card purchases, which took effect on Thursday.

The change, however, prompted the ATO to announce it will no longer accept credit cards as a payment method from November 30, insisting it would “not be appropriate” for the merchant fees to be burdened onto taxpayers.

Australian Chamber of Commerce and Industry boss Andrew McKellar said the ATO’s decision to stop accepting credit card payments was unfair and contradictory for small businesses.

He accused Labor of forcing businesses to absorb card payment costs because they can no longer pass on surcharges to customers, while at the same time, the ATO was refusing to absorb those same costs itself.

Mr McKellar described it as “complete hypocrisy” as many small businesses rely on credit cards to manage cash flow.

“It’s extraordinary. You’ve got government telling small business ‘no, you have to absorb this’. On the other hand, we have the tax office coming out and saying ‘we’re not going to wear it’,” he told News24.

While Treasurer Jim Chalmers said the changes were designed to help Australians with the cost-of-living, Mr McKellar argued business would just have to pass it on in the cost of products and services.

Speaking in Queensland on Thursday, Dr Chalmers said the Small Business Ombudsman would help small businesses adapt to the new arrangements.

He said the ban would save consumers $1.6 billion in card surcharges and save businesses $910 million each year, while also downplaying the number of businesses who use surcharges.

“I think something like 84 per cent of businesses don’t charge credit or debit card surcharges. So, we’re talking about 16 per cent of businesses,” he said.

“We’ll make sure that everybody’s doing the right thing. The ACCC has got an important role to play in that regard.

“But if small businesses put up their prices, they’ll need to put that on the menu.

“People hate these pesky surcharges because they can be surprised by them.

“They think something is going to cost a certain amount. When they get to tap and go, it’s a different price.

“That has been very frustrating for a lot of people and today it ends.”

Nor Dr Chalmers or Prime Minister Anthony Albanese were directly asked about the decision by the ATO during their press conference on Thursday.

Opposition leader Angus Taylor said the decision illustrated that Labor was “completely out of their depths” in understanding business in Australia.

“The hypocrisy and the insensitivity of this Government knows no bounds,” Mr Taylor told News24.

“The day they’re imposing the surcharge costs on small businesses, they’re saying you cannot use your credit card to pay the ATO if you’re a small business. I mean seriously?

“It does tell you. That they are completely out of their depths. None of them have worked in business.”

The ATO received hundreds of comments in backlash to the move when they posted a brief statement to their social media following on Thursday morning.

“After 30 November 2026, you will no longer be able to use a credit card to make payments to us. Other payment methods will remain available. This follows broader changes to credit card payment fees in Australia,” the agency stated.

Mr McKellar said it just added to the pile of issues small businesses were already facing, including pressure from higher energy costs, rising interest rates and compliance burdens.

“We know small business are being hammered from every direction,” he said.

“So, to come out at this point and say that it’s one standard for us and another standard for you for small business, it’s just extraordinary.”

Mr McKellar said he hoped “some common sense will prevail” when asked if the Tax Commissioner or the Treasurer should intervene and overturn it.