Paying your Australian Tax Office (ATO) tax bills can be a daunting task, but did you know that you can actually maximise your credit card rewards points in the process? If done correctly, you can gain valuable rewards points, offsetting some of the costs associated with tax payments. In this guide, we’ll explore the benefits of using credit cards for tax payments, discuss eligible cards, and reveal strategies on how to pay ATO tax bills and earn credit card rewards points.
Maximising Credit Card Rewards Points on ATO Tax Payments
When it comes to paying your tax bill, you might be surprised to learn that your credit card can earn you valuable rewards points.
However, it’s essential to compare credit cards and payment methods to find the best option for your needs. Let’s take a closer look at the types of credit cards that allow you to earn points on ATO payments and the advantages of various payment methods.
Eligible Credit Cards
Visa credit card, Mastercard, and American Express credit cards are all accepted for ATO payments.
RewardPay partners with Amex because there’s more in it for you. Of all the cards available in Australia, American Express cards offer the highest points earn rate. For example, if you choose an American Express Membership Platinum Card you can earn 2.25 membership rewards points for every $1 you spend, and with RewardPay you get 2.25 membership rewards points per $1 for ATO payments as well ( normally 1 point per $ if you pay ATO direct).
Direct vs. Indirect Payment Methods
Direct payment methods for ATO tax bills include:
- EasyPay
- MyGov
- Online bank transfer
- Debit card payments
These methods often come with their own set of fees and restrictions.
On the other hand, indirect payment methods involve using payment processors such as RewardPay to facilitate the ATO payment on your behalf. These processors typically charge a fee but enable users to earn full credit card rewards points for government payments.
The choice between direct and indirect payment methods ultimately depends on the value of rewards points earned and the fees associated with each option.
Advantages of Paying ATO Tax Bills with Credit Cards
Paying your ATO tax bills with a credit card comes with several advantages, such as improved cash flow, tax-deductible fees, and improved credit history. These benefits can help ease the financial burden of tax payments and provide added value for individuals and businesses alike
Improved Cash Flow
One of the key advantages of using a credit card for ATO tax payments is the potential to improve your cash flow. By paying your tax bill with a credit card, you can delay the outflow of cash from your bank account, providing increased flexibility in managing your cash flow.
This is particularly beneficial during interest-free periods, as the credit card bill can be paid off without incurring interest charges.
Tax-Deductible Fees
In some cases, the fees associated with using a credit card for ATO tax payments may be tax-deductible, reducing your overall tax liability and improving your cash flow. However, the deductibility of these fees depends on individual circumstances, so it’s essential to consult a tax professional or refer to the ATO website for more information.
Enhanced Credit History
Timely credit card bill payments can have a positive influence on your credit record. By using a credit card to pay your ATO tax bills and ensuring that you pay off the credit card bill before the due date, you can establish a positive credit history and potentially improve your credit score.
Making timely payments is an important part of managing your credit record and can help you to build a credit score.
Utilising Payment Processors for ATO Tax Payments
Payment processors play a crucial role in processing credit card payments and maximising credit card rewards points when paying ATO tax bills. These processors facilitate ATO payments and enable users to earn rewards points on their credit card transactions.
RewardPay works by acting as an intermediary between your business and whoever you’re paying. RewardPay accepts your credit card payment (with a small service fee), and then pays the receiving party directly via EFT, usually in just 1-2 business days
Keep in mind that the cost of RewardPay’s service may be tax deductible, so you could effectively pay as little as 1.61% to use the service.
Once you sign up for RewardPay (remember, it’s free to sign-up and you’re only charged when you actually use the service), you’ll have access to a dashboard that lets you add in suppliers, businesses and anyone else you need to pay.
Sign up for RewardPay here.
How many points could you earn?
Let’s say you run a small business with $20,000 of business expenses per month. Paired with the right points earning card, you could either earn up to 40,000 frequent flyer points in a single month, or almost 400,000 points annually.
With those earnings, you could travel in business class from Sydney to Hong Kong on three return trips, and have enough points left over for a return business class trip between Sydney and Melbourne also.
In the example above, using the effective cost of 1.61% for RewardPay’s fees, you would’ve spent $3864 to acquire the points, but pulled out over $8,000 of value in flights after also paying the applicable taxes, fees and surcharges when making those reward bookings.
Strategies for Maximising Credit Card Rewards Points on ATO Payments
There are several strategies you can employ to maximise your credit card rewards points on ATO payments. These include leveraging interest-free days, avoiding monthly caps, and selecting the right card for your needs..
Let’s delve into these strategies in more detail.
Leveraging Interest-Free Days
One effective strategy to maximise your credit card rewards points on ATO payments is to take advantage of interest-free days. By paying off your credit card bill in full before the due date, you can avoid incurring interest charges on your ATO tax payments.
This can help you conserve funds and enhance your cash flow, while still maximising your rewards points earnings.
Avoiding Monthly Caps
Another strategy to maximise credit card rewards points on ATO payments is to avoid exceeding monthly caps on rewards points earnings, as well as focusing on earning bonus points. Monthly caps refer to the maximum number of rewards points that can be earned in a given month.
By managing your spending and redeeming rewards points before they expire, you can ensure that you’re maximising your points earnings without exceeding monthly caps.
Selecting the Right Card
Finally, choosing the right credit card for your ATO tax payments is essential for maximising your rewards points earnings. When comparing credit cards, consider factors such as the number of points offered, the type of rewards provided, and any additional fees or surcharges associated with the card.
RewardPay partners with Amex because there’s more in it for you. Of all the cards available in Australia, American Express cards offer the highest points earn rate.
Summary
In conclusion, paying your ATO tax bills with a credit card can provide numerous benefits, including improved cash flow, tax-deductible fees, and enhanced credit history. By leveraging payment processors, taking advantage of interest-free days, and selecting the right card, you can maximise your credit card rewards points earnings on ATO payments. So, the next time you face a tax bill, remember that you have the power to turn it into a rewarding experience.
Frequently Asked Questions
Is it worth using a credit card to pay ATO?
It may be worth using a credit card to pay the ATO, as you can take advantage of rewards programs offered by third-party payment processors and use cash flow strategies like interest-free periods.
How do you pay tax and earn points?
Earning points on your ATO payments is now possible by using third-party payment processors like RewardPay.
Once you sign up for RewardPay (remember, it’s free to sign-up and you’re only charged when you actually use the service), you’ll have access to a dashboard that lets you add in suppliers, businesses and anyone else you need to pay.
Are there any fees associated with using a credit card for ATO tax payments?
Yes, there are fees associated with using a credit card for ATO tax payments. It’s important to compare credit cards in order to find the best option that suits your needs.
By doing so, you can ensure that you are getting the best deal and avoiding any unnecessary fees.
What are the advantages of using payment processors like RewardPay for ATO tax payments?
RewardPay makes ATO tax payments easier, allowing you to pay with a credit card and accumulate rewards points in the process.
No more worrying about having enough funds in your bank account to make the payment on time. With RewarPay, you can pay with a credit card and get the job done quickly and easily.