Is the fee for paying the ATO by card deductible?

What the ATO has said

Card fees on ATO payments are charged by the card provider, not the ATO, and they are not part of your tax debt. The ATO's guidance on the fee says only that it may be deductible depending on your circumstances. The detail comes from an ATO interpretative decision from 2010 that is still current. It looked at a salary earner paying personal income tax by credit card and concluded the fee was not deductible under any of the usual provisions. The reasoning was that using a credit card is borrowing, and the law that allows a deduction for the cost of managing tax affairs expressly excludes the cost of borrowing money to pay tax.

The same provision is the one that stopped GIC being deductible from 1 July 2025, so the ATO applies it consistently: costs of financing a tax debt are on you.

Individuals versus businesses

For an employee or investor paying their own income tax, treat the fee as not deductible unless your accountant tells you otherwise for your specific situation. For a business paying GST, PAYG withholding or a company tax liability, a merchant or card surcharge is generally treated like any other bank fee incurred in running the business. That is the position most accountants take, but it is not something the ATO has spelled out on its website, so confirm it with a registered tax agent rather than relying on this page.

Debit card fees sit in a grey area. There is no borrowing involved, so the borrowing exclusion does not obviously apply, but the ATO has not published a view. Keep the receipt and ask.

The bigger cost is the interest

The card fee is a fraction of a percent. Card interest is often 20% or more, none of it deductible for an individual, and it runs until the card is cleared. Compare that with the ATO's general interest charge of 11.43%, also non deductible, but which can sometimes be remitted. Putting a tax debt on a card can make sense to meet a hard deadline, such as the 21 days on a director penalty notice, or if you can clear the card quickly. It rarely makes sense as a long term home for the debt.

Before reaching for the card, look at an ATO payment plan, which can be set up online for debts up to $200,000, and read can I pay the ATO with a credit card for the trade offs.

What to do next

1. Keep the card receipt showing the fee separately from the tax paid.
2. Ask your accountant whether the fee is deductible for your entity and the type of tax you paid.
3. If you are considering a card because you cannot pay, compare the card's interest rate with a payment plan first.

More questions: 15 ATO interest and penalties questions answered · Full guide: GIC remission