ATO (tax office) payments by credit card

[Duffa]

100% right So the see
Paypal *MrsEggs and PayPal *Eggs PTY LTD (I could have been more Imagative with the name of my Corporate Benaficary!)

Oh dear, Eggs. You didn't spend enough time on here. I lost my merchant facility and all cards about 5 years ago and could have saved you the trouble!!

 

[get me outta here]

Needs verifying, but a quick look seems to show that BankWest World card may be 1:1. I just got my 50K sign on bonus on the platinum and am currently getting .75 of a point per $.

if they allow me to now I hope to upgrade to the World card, and get ATO at 1:1. The annual fee is $160 which grates.

. I am forced to use the FF Woolies card, 2500 @ 1:1 then 0.5:1. Annoying, damn annoying but what do you do..BPAY or EFT and get nothing.
Does Jetstar pay ?? My understanding is NO and I don't use it.
Even Jetstar is a pain, no points once you reach $100K in the same year.

 

[Jacques Vert]

Latest thinking is you need around $2 million to retire at 65 in a major Australian city.

$2 million would be a lot more than most would need, and particularly if they own their own home.

I think that a couple outside a capital city could live quite comfortably on $1.5m if they own their own home and pay for their annual o/s holiday with frequent flyer points and make good use of hotel loyalty schemes along the way!

Of course that assumes the little Aussie battler manages to stay above US.75 (or in my case .675 Euro).

 

[albyd]

With politicians wanting to win elections & not being frank about needed govt belt tightening & an increasing call on remaining taxpayers to make a contribution, I wonder whether we might have our own version of Greece lite in the future. Current exchange rate might represent a good time to prepay future holidays.

 

[New Chump]

I recall we concluded up-thread that putting your card into credit, then paying the ATO from the credit balance, would mean that the credit card processing fee would be tax deductible for the ordinary taxpayer.

I haven't tried this before, but would like to do so at the end of July with my CBA Diamond card, for a chunky quarterly PAYG instalment.

Has anyone tried this with a CBA card? If so did the points post normally?

Many thanks

NC

 

[Eggsbenedict]

I recall we concluded up-thread that putting your card into credit, then paying the ATO from the credit balance, would mean that the credit card processing fee would be tax deductible for the ordinary taxpayer.

I haven't tried this before, but would like to do so at the end of July with my CBA Diamond card, for a chunky quarterly PAYG instalment.

Has anyone tried this with a CBA card? If so did the points post normally?

Many thanks

NC

Would very much like the answer to this question myself for CBA Diamond and ANZ Black. Thanks

 

[Scr77]

Would very much like the answer to this question myself for CBA Diamond and ANZ Black. Thanks

I Cant confirm for these cards, but works with HSbC and Bank Of Melb.

 

[Kangol]

I recall we concluded up-thread that putting your card into credit, then paying the ATO from the credit balance, would mean that the credit card processing fee would be tax deductible for the ordinary taxpayer.

I haven't tried this before, but would like to do so at the end of July with my CBA Diamond card, for a chunky quarterly PAYG instalment.

Has anyone tried this with a CBA card? If so did the points post normally?

Many thanks

NC

The credit card processing fee is normally deductible anyway? Not sure why you need to put it into credit first..?

 

[Korda]

Does anybody know if Macquarie Visa Platinum Qantas is currently paying out for ATO payments?

Recent experience would be very much appreciated.

 

[ComeFlyWithMe]

The credit card processing fee is normally deductible anyway? Not sure why you need to put it into credit first..?

Actually it is only deductible if it is business related. See here:
https://www.ato.gov.au/Individuals/...it-card-payment-fee-deductibility-guidelines/

This seems to have changed, as previously there was mention of whether or not you "borrowed" the money to pay the tax liability.

 

[knasty]

Actually it is only deductible if it is business related. See here:
https://www.ato.gov.au/Individuals/...it-card-payment-fee-deductibility-guidelines/

This seems to have changed, as previously there was mention of whether or not you "borrowed" the money to pay the tax liability.

Note that's the ato's guidance; it's not necessarily the legal position. There can be a vast difference between the two.

 

[Mark3000]

Oh dear, Eggs. You didn't spend enough time on here. I lost my merchant facility and all cards about 5 years ago and could have saved you the trouble!!

Wow that's terrible. So does that mean you can never bank with that particular bank ever again?

Is it then possible to get a facility with another bank?
What happened in your case?

Surely the bank could give a warning and give you a chance to say sorry I will never do it again. That's very harsh

 

[cove]

At the office I might choose to pay minor purchases on our credit card machine but they would be for a staff purchase or a staff expense. Putting through a $50,000 contra or something like that could create a red flag in the banking system so it should be avoided as the bank has the option of switching your facility off.

 

[burmans]

Note that's the ato's guidance; it's not necessarily the legal position. There can be a vast difference between the two.

This is true. But

a) ATO have in the past been prepared to throw considerable money in the way of proving their position in court. Does anyone really want to take them on in this.

b) While this has yet to be tested in court there is plenty of case law to suggest the ATO's position is correct. The ATO's essential position on this is that a fee or interest takes on the nature of the underlying transaction. So for example interest incurred on paying business related tax is deductable (because tax is regarded as an expense against earning business income) whereas interest incurred on paying personal tax isnt (because tax is NOT deductable against personal income). Again, I'm not a tax lawyer and we are talking fees here rather than interest, but my understanding is that ATO have run a few cases very similar to this on the deductability of interest and fees and the court has agreed with their position. Not this particular fee sure, but Id be wanting some pretty strong legal advice before seeking to challenge this guidance.

 

[Ghostdunks]

Actually it is only deductible if it is business related. See here:
https://www.ato.gov.au/Individuals/...it-card-payment-fee-deductibility-guidelines/

This seems to have changed, as previously there was mention of whether or not you "borrowed" the money to pay the tax liability.

Yah, that has definitely just recently changed. I had just done my last year's tax return a few weeks ago, and my accountant had queried what that particular CPF expense was for. I explained how if I paid my taxes by credit card, I would get charged a CPF, and to make sure I wasn't using "borrowed" money as per the ATO guidelines on CPF deductibility so I could then claim it as an expense later, I had always preloaded the card with cash first before making the payment. He went through the link, read all the stuff about it being borrowed money or not, etc and approved my expense as tax deductible. So there definitely was reference to "borrowed money from the bank" in that link a couple weeks ago, and now its gone. Oh well, at least its pretty much black and white now that the CPF for personal tax liability isn't deductible regardless if you preload the credit card or not first, at least according to my interpretation of that link now.

 

[Kangol]

Actually it is only deductible if it is business related. See here:
https://www.ato.gov.au/Individuals/...it-card-payment-fee-deductibility-guidelines/

This seems to have changed, as previously there was mention of whether or not you "borrowed" the money to pay the tax liability.

Oh whoops, thought this was for business discussion (mainly).

 

[New Chump]

Yah, that has definitely just recently changed. I had just done my last year's tax return a few weeks ago, and my accountant had queried what that particular CPF expense was for. I explained how if I paid my taxes by credit card, I would get charged a CPF, and to make sure I wasn't using "borrowed" money as per the ATO guidelines on CPF deductibility so I could then claim it as an expense later, I had always preloaded the card with cash first before making the payment. He went through the link, read all the stuff about it being borrowed money or not, etc and approved my expense as tax deductible. So there definitely was reference to "borrowed money from the bank" in that link a couple weeks ago, and now its gone. Oh well, at least its pretty much black and white now that the CPF for personal tax liability isn't deductible regardless if you preload the credit card or not first, at least according to my interpretation of that link now.

While the "guidelines" on the ATO website seem to have changed recently, the ATO hasn't withdrawn the 3 Interpretative Decisions they issued a few years ago (I linked them in post no.312 in this thread http://www.australianfrequentflyer.c...-17109-32.html (ATO (tax office) payments by credit card) . On the basis of ATO ID 2010/160 in particular, I think nothing has changed and the fee remains deductible if you pre-load your card to pay.

NC

 

[serfty]

Here's some pertinent posts from a few years ago:

...

I don't find the guidelines easy to follow, but I think they are saying (at least in the case of those who are self employed, or partners in a partnership, paying quarterly PAYG instalments): unless the tax liability you are paying with your credit card is itself deductible (which the PAYG instalment liability normally isn't), then the card payment fee isn't deductible 1.

1 I am in no way shape or form qualified to give tax advice.

IANAL, but looking at the deductability definitions, most card payments fees could/should easily be 'deductable':

The CPF is deductible to the extent that:

• you incurred it as a result of paying an income tax liability and you did not borrow money from your card provider to make the payment
• you incurred it as a result of paying a goods and services tax, fringe benefits tax, luxury car tax or wine equalisation tax liability, and that liability arose in the course of gaining or producing your assessable income, or in the course of carrying on your business for the purposes of gaining or producing assessable income
• you incurred it as a result of making PAYG withholding payments where you can claim a deduction for the wages and salaries that gave rise to the withholding obligation
• you incurred it as a result of repaying your student assistance loans and then only to the extent that the expenses you paid using the student assistance loans were themselves deductible
• you incurred it as a result of repaying your employee’s student assistance loan, the repayment is a fringe benefit, and the employee’s wages are also deductible.

​

The ATO have released three IDs (interpretative decisions setting out their POV) on this issue:

ATO ID 2010/159 - Deductibility of card payment fee incurred in paying income tax liability under section 8-1 of the ITAA 1997
ATO ID 2010/160 - Deductibility of card payment fee incurred in paying income tax liability under section 25-5 of the ITAA 1997
ATO ID 2010/161 - Deductibility of card payment fee incurred in paying income tax liability under section 25-25 of the ITAA 1997

Each deals with a different section under which you might get a deduction for the CC fees being s8-1, 25-5 and 25-25.

So far they have only ruled on wage and salary earners. These IDs are not legally binding but you can take it that the ATO will administer the Acts on the assumption that they are correct.

When it comes to 8-1 deductibility, sole traders and companies may be in a different position because the ATO view has always been that interest a sole trader or company pays when borrowing to pay tax is deductible under s8-1 as a business expense:

ATO ID 2006/269 - Deductions and Expenses: interest incurred on moneys borrowed by a sole trader to pay income tax

By analogy their CC fees when paying tax may well be deductible under s8-1.

I also note that the ATO say on their website that:

The CPF is deductible to the extent that:

you incurred it as a result of paying an income tax liability and you did not borrow money from your card provider to make the payment

If this is the ATO view an easy way to get within this exception may be to put your card in credit before you make the payment. This exception seems to be based on the view in 2010/160 that the reason you aren't entitled to a s25-5 deduction is that the CC fee is a cost which falls within the exclusion for "expenditure incurred...in borrowing money". If the transaction doesnt include a borrowing that ID seems to say that the CC fee is deductible under 25-5.

DISCLAIMER: This isn't legal or tax advice, just some interesting points put up for discussion.

 

[Eggsbenedict]

I might not be taking the hint here but there is there any reason that I can't get an answer to whether CBA and ANZ pay points if your in credit.

 

[cove]

No one has reported missing out EB.
Is that ANZ Black and CBA Diamond??