The tips and tricks to pay your tax bill with your credit card
If you know your way around the system and get your figures right, charging this year’s ATO bill to your credit card could be a convenient and potentially rewarding way to fix up your tax. Read on to learn how you can pay your tax bill with your credit card and which cards will offer you the most rewards.
How can I pay my tax bill with my credit card?
If you’re looking to pay your tax bill with your credit card, make sure to have the following handy:
- A Visa, MasterCard or American Express card
- Your payment reference number (PRN) or electronic funds transfer (EFT) code. This number can be found above the bar code on your payment slip or debt notice, or retrieved online via myGov.
When paying the ATO with your credit card, a card payment fee applies at 0.42% for Visa and MasterCard, and 1.45% for American Express. This fee is exempt from the goods and service tax or GST, and is equivalent to the fee that the ATO incurs from its banker. You will be informed of the fee and total transaction amounts before finalising your payment.
You can either pay your ATO bill with your credit card online or over the phone.
If your myGov account is linked to the ATO, you can easily pay through myGov:
- Log in to your MyGov account.
- Select the ‘Australian Taxation Office’ link.
- Click on the ‘Tax’ column, select ‘Payments’ and then ‘Payment Options’.
- Select the card payment option and follow the prompts to complete the payment.
The Government EasyPay website
You can also use the Government EasyPay website, which is a secure online payment service provided by the ATO and the Reserve Bank of Australia.
- Make sure you have a secure Internet connection and a compatible web: Windows IE 8 or later, Mozilla Firefox 4 or later, Google Chrome 4 or later.
- Select ‘Make a payment’ on the EasyPay website, which will link you to a secure payment page.
- Enter your PRN or EFT code, and key in your payment details including your credit card number, expiry and security code, as well as the amount payable.
- Take note of the credit card fee, which should ideally be less than the value of the reward points you are earning.
- Select ‘continue’ to complete the transaction.
Pay by phone
For tax payments between $10 and $50,000, call 1300 898 089 for the Government EasyPay self-help telephone service and follow the prompts.
Do note that all payments must be received by the Tax Office on or before the deadline. Transactions done outside regular office hours on weekends or public holidays, or after 6:00 PM weekdays Sydney time are processed the following business day. Take these into consideration when paying especially if you’re running close to the deadline, because late payments may be penalised with fees.
Why pay my tax bill with my credit card?
Including earning rewards points, building up your credit history and convenience, there are many reasons you might want to pay your tax bill with your credit card.
Compared to using BPAY, direct debit, direct credit or the good old-fashioned cheque, paying your tax bill with your credit card could earn you rewards points for every dollar you spend. Unfortunately, the list can be an ideal way of accumulating a generous amount of frequent flyer points. Unfortunately, the list of banks and credit cards that award points for this transaction has shrunk by far, leaving only a handful of options at this stage. American Express is currently one of the few companies who openly provides information about earning points on tax payments in their card’s terms and conditions.
The perks of using my credit card to pay my tax bill
- Earn rewards. Depending on the card you use, you might be able to earn rewards points when you use your credit card to pay your tax bill. Unfortunately though, the list of credit cards that let you do this is limited. You can see a full list of the cards that let you earn rewards points on ATO payments here.
To determine whether a card that earns ATO points is worth it though, consider the surcharge and whether it’ll outweigh the value of the points. For example, using your American Express card for ATO payments will attract a 1.45% fee which could outweigh the benefits of the rewards.
- Build credit history. Payments like these, if promptly repaid, can help establish a healthy credit history over time, which in turn helps with getting your future credit or loan applications approved. See more ways to improve your credit rating.
- Ease cash flow. Charging a large lump sum payment like your tax bill to your credit card can help with cash flow, but be careful about incurring interest fees on your account that can bite back later.
- Earn interest on early tax. On the flipside, the ATO will pay you interest on your tax payment if you pay it more than 14 days before the due date. You are eligible to claim this interest amount back as a credit on your tax return. See the ATO website for more about calculating interest on early payments and overpayments of tax.
- Claim back credit card fee as a tax deduction. It is also possible in some circumstances to claim the credit card payment fee as a tax deduction. In general, it is deductible in connection with business tax liabilities and not personal income tax liabilities or penalties. Find out more specific details on the ATO website when filing for a tax deduction.
While tax time isn’t the merriest of occasions, being able to get something back while paying your dues may be of comfort. Remember to do your sums before deciding how to pay to make sure that you get the most value from however you decide to pay your tax.
Compare credit cards you can use to pay your tax bill
Rates last updated July 28th, 2016.
- American Express Platinum Business Card
The 150,000 Membership Reward Points has been replaced by the 100,000 offer until 1 August 2016.
May 31st, 2016
- American Express Platinum Card
Offer end date has been exteded to 1 August 2016.
May 31st, 2016
- American Express Essential Credit Card
$50 credit + 0% p.a. for 12 mos. on balance transfers w/ a one-off 1% credit plan establishment fee
July 5th, 2016