ATO (tax office) payments by credit card

[Jacques Vert]

Just been reading about Qantas Cash Card and wondering if anyone has used this card to pay ATO bill. Maximum load is $20000 per day, up to $100000 per annum. Load the money through bpay and then pay bill like a credit card.

1 point per dollar until june 20, but I won't be using it

And a maximum spend of $15,000 per 24 hours.

 

[Jack_OC]

My experience has been no problems putting a card into credit. However, the maximum payment is only up to the amount of the credit limit, regardless of how far into credit.



Pretty sure I've done that, each payment still limited to the amount of the credit limit.

My experience has been different - I've paid the ATO's maximum of $50k in one go despite having a credit limit of less than half that amount (with Westpac).

 

[cove]

Just opened the mail and two more tax bills from the fiscal fiend. Which card to use is not a real dilemma.

 

[prozac]

Bear in mind if it's a personal tax bill, you may not be entitled to claim the cc fee as a tax deduction unless you put the card in credit first. Obviously I'm not giving tax advice etc etc but something worth looking into if relevant to your situation.

Not sure I am catching your drift Jack. I have a 6 figure bill to pay. With a credit limit of $40k odd if I choose to pay in 6 or so payments, are you saying I am not able to claim the 1.42% amex fee if I pay to my limit and then top up same day, paying the same again when funds hit the account and so on until the bill is paid off?

 

[cove]

I chose a 0.42% card this time to go a point a dollar on these 2 new bills.

 

[prozac]

I chose a 0.42% card this time to go a point a dollar on these 2 new bills.

Sorry Cove, don't have the same luxury as you. My Westpac Black Amex will cost me 1.42% for a return of 1.5pts/$.

 

[Jack_OC]

Not sure I am catching your drift Jack. I have a 6 figure bill to pay. With a credit limit of $40k odd if I choose to pay in 6 or so payments, are you saying I am not able to claim the 1.42% amex fee if I pay to my limit and then top up same day, paying the same again when funds hit the account and so on until the bill is paid off?

The issue is - with a personal bill, the cc fee is only tax deductible if you are not borrowing money when you pay the fee. Who knows why, but it's explained on the ATO website - sorry don't have link to hand as I'm on my phone atm.

The general consensus seems to be that you are borrowing money when using a credit card, unless you have pre loaded your card with the entire amount you plan to pay. But as I said, I'm not a tax advisor, so take advice from a pro if you're unsure.

 

[Bundy Bear]

With the Qantas double points offer would it be a good time to load on the Qantas cash card, the 3 business days isn't the most friendliest option though.

 

[burmans]

The issue is - with a personal bill, the cc fee is only tax deductible if you are not borrowing money when you pay the fee. Who knows why, but it's explained on the ATO website - sorry don't have link to hand as I'm on my phone atm.

The general consensus seems to be that you are borrowing money when using a credit card, unless you have pre loaded your card with the entire amount you plan to pay. But as I said, I'm not a tax advisor, so take advice from a pro if you're unsure.

Here is the ATO guidelines on this

https://www.ato.gov.au/Business/Ded...it-card-payment-fee-deductibility-guidelines/

 

[prozac]

The issue is - with a personal bill, the cc fee is only tax deductible if you are not borrowing money when you pay the fee. Who knows why, but it's explained on the ATO website - sorry don't have link to hand as I'm on my phone atm.

The general consensus seems to be that you are borrowing money when using a credit card, unless you have pre loaded your card with the entire amount you plan to pay. But as I said, I'm not a tax advisor, so take advice from a pro if you're unsure.

Then I won't have any issues as I will be using the CC only as a conduit for points transfer. All transactions will be within any payment period and paid in full.

 

[Jack_OC]

Then I won't have any issues as I will be using the CC only as a conduit for points transfer. All transactions will be within any payment period and paid in full.

If you mean you'll be paying off your bill at the end of your cycle - I don't think that covers it - my understanding is that still counts as borrowing money (albeit without incurring interest).

 

[burmans]

If you mean you'll be paying off your bill at the end of your cycle - I don't think that covers it - my understanding is that still counts as borrowing money (albeit without incurring interest).

Yep that's still borrowing, you owe them money. The fact that they allow a period before charging interest does not change that.

 

[Beta4Me]

Yep that's still borrowing, you owe them money. The fact that they allow a period before charging interest does not change that.

Personally, I can't be bothered and would just roll the dice on the interpretation. Not worth the time and effort paying the card into credit.

 

[medhead]

Personally, I can't be bothered and would just roll the dice on the interpretation. Not worth the time and effort paying the card into credit.

The ATO advice linked above is pretty clear. Not even I could spin the interpretation enough. But at the end of the day it'll only be a problem if audited. But don't blame us if things go pair shaped because we are definitely not giving tax advice.

 

[Beta4Me]

The ATO advice linked above is pretty clear. Not even I could spin the interpretation enough. But at the end of the day it'll only be a problem if audited. But don't blame us if things go pair shaped because we are definitely not giving tax advice.

Oh, don't you worry. I could spin it alright. I have never paid personal tax so far (only ever have refunds) so it's hypothetical really.

 

[Ghostdunks]

Just doing some quick analysis of using a CBA Platinum awards card to pay ATO tax, and noticed this in the T&C's(https://www.commbank.com.au/content...wnload-printed-forms/CommonwealthAwards.pdf):

Clause 5- "The Bank reserves the right to refuse to award points: to the extent that any transaction is debited against credit funds in the Member’s account"

Just something to bear in mind for those who were pre-loading the card into credit first, then paying ATO with the credit funds so that the credit card surcharge was deductible in the case of personal tax.

 

[cove]

Prozac that rate is 1.45% but you can earn 1.5 points per dollar on some of the co-branded Big 4 Bank Amex cards so the effective cost per point earned is a tad under a cent per point in these circumstances.
I used to be a tax agent/CPA in a previous business life so I am now only half a lifetime out of giving out appropriate tax advice. Your particular tax position is pretty much your own and yes do read the ATO tax rulings.
Now if your risk appetite for investing funds is higher than that of having a Big 4 bank term deposit you could talk to your licensed financial adviser about listed Big 4 hybrid securities that earn about 6% before franking of 30% compared with about 3.8%.
ASIC is warning investors about risks so do read their updates and not all hybrid securities offer the same security.
The nice part of a hybrid security is you can usually sell it and get the funds in 3 days or a little more to pay the ATO by the due date seeing they are stock exchange listed.

 

[legroom]

Personally, I can't be bothered and would just roll the dice on the interpretation. Not worth the time and effort paying the card into credit.

My take is that the card does not have to be in credit per se i.e. in positive balance.

If you preload X amount in before you pay out the same amount (X), the card could still be in debit with your pre-existing purchases in between those two transactions.

Card remains in debit but no fund was borrowed, only a mechanism for fund transfer.

 

[Beta4Me]

My take is that the card does not have to be in credit per se i.e. in positive balance.

If you preload X amount in before you pay out the same amount (X), the card could still be in debit with your pre-existing purchases in between those two transactions.

Card remains in debit but no fund was borrowed, only a mechanism for fund transfer.

That's my thinking also. But I'm pretty sure I could also justify a precious payment as being the money for the tax payment etc. and not prepay at all or something. Easy to just BPAY the tax amount to the card the day before payment though.

 

[MelUser]

I think that the NAB have dealt with this fairly - they say they will only pay/award QF points on the first $100,000 of "purchases" in any statement period. THis means that you can't artificially preload/credit/whatever the account beyond $100K per statement period.