Surcharge Ban Squeezes Self-Employed Borrowers' Cash Flow
The card surcharge ban and ATO credit card changes are tightening cash flow for small business owners — here's what it means for your home loan.
Since 1 October 2026, Australian businesses can no longer pass on a surcharge when customers pay by eftpos, Visa, Mastercard, or American Express. Card fees still exist — they always did — but businesses now have to absorb them or build them into their prices. For most operators, neither option is painless.
For mortgage holders who are also self-employed or running a small business, this is one more cost pressure arriving at a difficult moment. It comes alongside a cash rate at a 15-year high of 4.6%, and a household spending environment that has already stalled. Understanding how the surcharge ban affects your cash flow — and by extension your borrowing position — is worth doing now.
The ATO Credit Card Saga: What Changed and Why It Matters
The card surcharge ban created an immediate complication for the Australian Taxation Office. When businesses can no longer pass on card costs, and when legislation prevents the ATO from adjusting tax liabilities to cover those costs, the tax office faced a simple choice: absorb the fees or stop accepting credit cards.
It chose the latter, announcing it would stop accepting credit card payments from 30 November 2026. Credit card payments made up 2.3% of total ATO collections in the 2024–25 tax year — a small percentage, but representing an estimated $2 billion in payments, according to MPA Australia's reporting on Treasurer Jim Chalmers' intervention.
Following pushback from small business groups and the Coalition, Treasurer Jim Chalmers stepped in with additional government funding to allow the ATO to keep accepting credit card tax payments until 30 June 2027. "This decision is about putting small business first," Chalmers said.
The Council of Small Business Organisations Australia (COSBOA) welcomed the extension. COSBOA chair Matthew Addison called it "an important acknowledgement of the significant impact removing this payment option would have on small businesses," noting that credit cards are a critical cash flow management tool for small operators. But Addison was also clear the extension doesn't solve the underlying problem: banning surcharges "simply shifts those costs onto businesses already operating on tight margins."
Sydney mortgage broker Joseph Daoud, founder of It's Simple Finance, who has been inundated with calls from small business clients since the ban took effect, put it plainly: "They made the surcharge illegal and the cost unavoidable. Only in Canberra could you call that a saving."
How Cash Flow Pressure Affects Your Borrowing Power
For self-employed borrowers, cash flow is one of the first things a lender examines.
When you apply for a home loan or refinance as a sole trader or small business owner, lenders assess your net income using your most recent tax returns and business activity statements. If your business has absorbed new costs — without a corresponding lift in revenue — that flows through to the figures a lender uses to calculate serviceability. Tighter margins on paper mean reduced borrowing capacity, even when your underlying business remains sound.
Australian Bureau of Statistics data cited in the Stop The Ambition Tax campaign shows 375,331 businesses closed in 2025–26, up from 370,500 the previous year. A rising business closure rate, even a modest one, signals sector-wide stress that lenders are aware of when assessing self-employed applications.
Belinda Raso, co-founder of TaxInvest Accounting and co-campaigner with Daoud, captured the frustration many small business owners are feeling: "The ATO's nine-month band-aid just isn't good enough. Small businesses use credit cards to manage cash flow and pay their tax on time. They need certainty, not a stay of execution."
If you're a self-employed borrower planning to refinance or buy in the next 12 months, the advice is to get ahead of this. Talk to your broker before your financial position changes on paper, and document clearly how any new costs are being managed. The timing of your application relative to your most recent tax return can make a material difference to the outcome.
Practical Steps for Self-Employed Borrowers
The surcharge ban is not something you can opt out of. But you can manage how it interacts with your mortgage position.
First, check your current rate. With the cash rate at 4.6%, self-employed borrowers who haven't reviewed their loan recently may be paying above-market rates. The refinance home loans comparison shows what's currently available, and the refinance savings calculator lets you quantify the difference your rate is making.
Second, understand your borrowing capacity in today's environment. The borrowing power calculator gives you a current read on how your income and outgoings translate into a loan amount at today's rates — useful for planning whether to move now or wait.
For self-employed first home buyers navigating both new costs and higher borrowing rates, the first home buyer loans page covers the options available, including government schemes that can apply to self-employed applicants meeting the relevant criteria.
The overlap between business cash flow and personal borrowing capacity is real and worth managing deliberately. In an environment where both costs and rates are elevated, the borrowers who get ahead of their paperwork and their position are the ones who keep their options open.