Paying the ATO After Credit Cards End: A Cash Plan for Builders

5 days ago

5 min read

Plenty of builders and solar installers have paid a BAS on the company credit card at some point. A big progress claim is late, the BAS is due on the 28th, and the card buys you 40 or 50 days.

That option has an end date. On 9 October 2026 the ATO confirmed it will keep taking credit card payments until 30 June 2027. After that, you can't pay the ATO directly by credit card. Other payment methods stay available.

If the card has been your safety valve, you have about eight months to replace it. Here's what it costs to pay late, what the ATO offers instead, and how to build a buffer so you don't need either.

What has changed

The ATO had planned to stop taking cards earlier. On 9 October 2026 the Government announced transitional funding so the ATO can keep accepting them until 30 June 2027. The release said card companies hadn't offered fees low enough for the ATO to keep taking cards long term, and that small businesses had said the original timeframe was too short.

From 1 July 2027:

You can't pay the ATO directly by credit card.
Debit card and bank transfer stay available.
The Government's release says third-party providers will still accept credit card payments to the ATO. If you go that way, check the provider's fees and how long the payment takes to reach the ATO, because the due date doesn't move.

What paying late really costs

If a BAS isn't paid by the due date, the general interest charge (GIC) starts. For October to December 2026 the GIC rate is 11.51% a year, worked out daily and compounding.

Two examples at that rate:

A $50,000 BAS left unpaid for 90 days costs about $1,439 in GIC.
An $80,000 BAS left unpaid for 60 days costs about $1,528.

The bigger change is on the tax side. GIC and shortfall interest charge incurred on or after 1 July 2025 are no longer tax deductible. That's now law. So $1,500 of GIC costs you $1,500, with no tax saving to soften it.

Your options if a quarter looks tight

Self-serve payment plans

The ATO says a business that owes $200,000 or less may be able to set up a payment plan itself in Online services for business, under Accounts and payments. Above that, you need to phone the ATO.

You can only set up one plan at a time online, and you'll need to phone if you've defaulted on or cancelled 2 or more plans in the last 12 months, or had firmer recovery or legal action warnings in the last 6 months.

A payment plan stops the debt from escalating, but it isn't free money. The ATO says tax debts on a payment plan keep accruing GIC, compounding daily. Pay it off as fast as the plan allows.

Interest-free plans for activity statement debt

Smaller businesses can sometimes get an interest-free plan for overdue activity statement amounts. The ATO's criteria are that the business:

has annual turnover under $2 million
owes $50,000 or less from recent activity statements, overdue for up to 12 months
has no more than one payment plan default in the last 12 months and no outstanding activity statement lodgments
can't get finance through normal business channels
can show it's still viable
pays the amount by direct debit within 12 months

Many of the construction and EPC businesses we work with are over the $2 million turnover line, so check this before you count on it.

Talk to the ATO early

Whatever the option, the ATO is easier to deal with before a due date than after it. Lodge on time even if you can't pay in full. A lodged BAS with a plan behind it is a very different conversation from a missing one.

Build a BAS buffer instead

The real fix is to stop the BAS being a surprise. A few habits do most of the work.

Set aside GST when you're paid, not when the BAS is due. Each time a progress claim lands, move the GST component (one eleventh of a GST inclusive amount) into a separate account. Do the same for PAYG withholding when you run payroll.

Watch the timing on large claims. If you account for GST on an accruals basis, GST on a claim you've invoiced is generally payable for that period even if the client hasn't paid yet. A slow paying principal can leave you funding the GST yourself. Know which big invoices are still outstanding as the quarter closes.

Put tax dates in your cash forecast. BAS, PAYG instalments and super payments belong in your 13-week rolling cash flow next to wages and supplier runs. With payday super now in place, super goes out with every pay run, so it has to be in the forecast as well. Our post on payday super mistakes covers the timing.

Count retention you hold as someone else's money. If you hold subcontractor retention in a trust account, it can't pay your BAS. Our guide to retention trust rules by state explains why.

Review the BAS before it's due. A quick review a week out catches errors and shows you the number early. Our Q1 BAS checklist is a good starting point. The quarter 1 (July to September) activity statement is due on 28 October 2026 if you lodge it yourself.

A quick check for this week

Look at the last four quarters. How many BAS payments went on a credit card?
Work out what your next BAS is likely to be, and where the money is coming from.
Open a separate tax account and start moving GST and PAYG withholding into it with each payment received and each pay run.
If you're behind now, check whether you fit the ATO's interest-free or self-serve plan criteria before the debt grows.
Add every tax due date between now and 30 June 2027 to your cash forecast.

Talk to a CPA

TechEdge is a CPA-led outsourced finance team for Australian construction, EPC, solar and renewables businesses. We set up tax holding accounts, BAS reviews and 13-week cash flow forecasting as part of our Finance Manager (from $2,750 a month), Financial Controller (from $4,950 a month) and Head of Finance (from $8,500 a month) engagements.

Book a free 30-minute call with a CPA, email info@techedgeaccounting.com.au or call +61 468 634 973.

This article is general information only and is not financial, tax or legal advice. It is based on information from the ATO website and the Treasury Ministers' media release of 9 October 2026, as at 16 October 2026. GIC rates change every quarter and payment plan criteria can change, so check the ATO website or speak to your adviser about your own position.