ATO delays start of credit card fee ban after backlash

The tax office will delay the start of its credit card ban after a backlash from small businesses.

Treasurer Jim Chalmers is expected to announce extra funding on Friday for the Australian Taxation Office to push back the deadline from its initial date of November 30.

The tax office surprised businesses by dropping the news that it would no longer accept the payment method on October 1, the day that a ban on card surcharges came into effect.

At the time, ATO commissioner Rob Heferen said merchant fees were expected to cost the tax office almost $200 million annually, which it could not absorb as it would result in less funds available for government services.

"Meeting the cost of surcharges through additional public funding for the ATO would have the same ultimate outcome," he said.

But Dr Chalmers bowed to pressure and handed the tax office extra funding to delay the credit card ban for a longer transition period.

Shadow Treasurer Tim Wilson said Labor was at fault for the ATO decision because they triggered the surcharge ban.

"They didn't think through the consequences of it, and there's a massive double standard," he told News24.

"The prime minister, (Anthony Albanese), clearly he likes to humiliate his treasurer, but the prime minister has clearly forced Jim Chalmer's hand again because he wouldn't listen to the community and the consequences of decisions."