ATO (tax office) payments by credit card
- Thread starter js
- Start date
Hey guys,
Had a mate lined up to get his $11K tax bill BUT have discovered that he has DEBT and will not be able to pay ME back within 55days.
Have told him to get a credit card and then transfer the debt onto low interest card.
Can someone tell me can you transfer OVERDRAFT Debt onto a credit card with LOW interest rate??
EDIT: Worked it out....Credit card---> Cash advance to pay overdraft via credit card---->Low rate\O% Balance transfer the DEBT on credit card 1-----> 0% balance transfer card 2!
Futher 6months of interest free debt! Transfer the tax bill on card 1 to card 2
Had a mate lined up to get his $11K tax bill BUT have discovered that he has DEBT and will not be able to pay ME back within 55days.
Have told him to get a credit card and then transfer the debt onto low interest card.
Can someone tell me can you transfer OVERDRAFT Debt onto a credit card with LOW interest rate??
EDIT: Worked it out....Credit card---> Cash advance to pay overdraft via credit card---->Low rate\O% Balance transfer the DEBT on credit card 1-----> 0% balance transfer card 2!
Futher 6months of interest free debt! Transfer the tax bill on card 1 to card 2
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Well, after a couple of months of card "optimisation" (new cards, limit increases, arranging to make some prepayments, etc) I've managed to put just shy of $380,000 of tax through CCs in the past few days. Pretty happy with that given all I managed the last time end-of-quarter tax bills arrived was around $100,000, simply due to not having sufficient capacity / CC limits.
The point of this post isn't to brag though - rather, I wanted to share some calculations I did which serve to demonstrate just how cheap earning points through tax payments actually is, after you take into account CC surcharge tax deductibility and the benefits of holding onto the money for an extra 30-55 days (YMMV depending on the cards used and their billing cycles):
---
As I said above, I've put around $380k of tax through CCs in the past few days. About $125k of that was on Amex, and $255k on Visa/MC, so the total raw surcharges added up to ~$2,785.
The $2,785 raw cost is then reduced by:
- tax savings due to deductibility of surcharges
- mortgage interest savings by holding onto about $210k of the $380k for ~30 extra days (average across all cards) - no interest saving on the other $170k as it was pre-paid onto one of the cards (cycling money through the card) to enable more tax to be paid via CC.
After taking into account the above "savings" the $2,785 "raw cost" is reduced to only ~$250! In return for which I've earned:
- ~430k CitiRewards points redeemable for ~286k KrisFlyer miles, ~286k Velocity points or ~215k AsiaMiles
- ~66k CitiRewards points redeemable for ~66k QFF points, ~44k KrisFlyer miles or ~44k Velocity points
- ~103k Amex Membership Rewards points redeemable into lots of programs at 1:1
- ~55k QFF points
Translating that into "base currencies" of QFF points and KF miles you could say that's roughly 121,000 QFF points and 389,000 KF miles for $245 :!::shock:
The even more startling thing I calculated was that if you paid the above tax bills through only Visa/MC and could hold the full amount for an additional ~30 days in a mortgage offset account (i.e. no prepayments / card cycling) you would gain somewhere in the region of $1,000 in return for all those points.
---
Anyway, hope these calculations are interesting / useful - it's easy to forget how much of a different the tax deductions / benefits of holding onto your money longer can make to the already-low cost of "buying" points through tax payments on CC.
The point of this post isn't to brag though - rather, I wanted to share some calculations I did which serve to demonstrate just how cheap earning points through tax payments actually is, after you take into account CC surcharge tax deductibility and the benefits of holding onto the money for an extra 30-55 days (YMMV depending on the cards used and their billing cycles):
---
As I said above, I've put around $380k of tax through CCs in the past few days. About $125k of that was on Amex, and $255k on Visa/MC, so the total raw surcharges added up to ~$2,785.
The $2,785 raw cost is then reduced by:
- tax savings due to deductibility of surcharges
- mortgage interest savings by holding onto about $210k of the $380k for ~30 extra days (average across all cards) - no interest saving on the other $170k as it was pre-paid onto one of the cards (cycling money through the card) to enable more tax to be paid via CC.
After taking into account the above "savings" the $2,785 "raw cost" is reduced to only ~$250! In return for which I've earned:
- ~430k CitiRewards points redeemable for ~286k KrisFlyer miles, ~286k Velocity points or ~215k AsiaMiles
- ~66k CitiRewards points redeemable for ~66k QFF points, ~44k KrisFlyer miles or ~44k Velocity points
- ~103k Amex Membership Rewards points redeemable into lots of programs at 1:1
- ~55k QFF points
Translating that into "base currencies" of QFF points and KF miles you could say that's roughly 121,000 QFF points and 389,000 KF miles for $245 :!::shock:
The even more startling thing I calculated was that if you paid the above tax bills through only Visa/MC and could hold the full amount for an additional ~30 days in a mortgage offset account (i.e. no prepayments / card cycling) you would gain somewhere in the region of $1,000 in return for all those points.
---
Anyway, hope these calculations are interesting / useful - it's easy to forget how much of a different the tax deductions / benefits of holding onto your money longer can make to the already-low cost of "buying" points through tax payments on CC.
Wafliron may need to take adoption applications shortly.....
Amex is currently the most expensive but yes those point and a half cards are handy despite points costing 0.83cents each when you are chasing a total to get you on board that plane in J or better.
There are now multiple Visa and MasterCards that earn points cheaper than Amex but before you dump your Amex cards remember to stay flexible to cover off any future changes to points earning on ATO payments.
Amex is currently the most expensive but yes those point and a half cards are handy despite points costing 0.83cents each when you are chasing a total to get you on board that plane in J or better.
There are now multiple Visa and MasterCards that earn points cheaper than Amex but before you dump your Amex cards remember to stay flexible to cover off any future changes to points earning on ATO payments.
D
Deleted User
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Cove, I think you opened the door to adding the "cheapest" point earners to this thread...!
Looking forward to your next post he he
If we were to start with a $10k budget only paying fees that are tax deductible and using the best Visa card you could make a retail travel value that would knock your socks off.
If you have been watching Letters and Numbers on SBS you will have honed your maths skills to be able to see just how much it can turn into based on your marginal tax rate.
It is just a game everyone!
If you have been watching Letters and Numbers on SBS you will have honed your maths skills to be able to see just how much it can turn into based on your marginal tax rate.
It is just a game everyone!
D
Deleted User
Guest
I only watch to check out to see what Lily Serna is wearing 
But saying this, I have learnt that even a random selection of letters can be slightly uncomfortable Letters and Members - YouTube
Mods, Please edit if uncomfortable with my post :!:
But saying this, I have learnt that even a random selection of letters can be slightly uncomfortable Letters and Members - YouTube
Mods, Please edit if uncomfortable with my post :!:
Duffa
Established Member
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- Aug 18, 2011
- Posts
- 1,662
I only watch to check out to see what Lily Serna is wearing
But saying this, I have learnt that even a random selection of letters can be slightly uncomfortable Letters and Members - YouTube
Mods, Please edit if uncomfortable with my post :!:
Don't even need to click on the link!! Consonant, vowel, consonant consonant, etc etc if I remember correctly. LOL Brilliant
Oops, sorry! The one I'm thinking of was much worse than yours. The UK verison of the show!!
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aaahhh. my favourite thread and my favourite show! All merged into one. my brother-in-law came 3rd last year i think and coming back nextmonth for the Grand Masters. I'll be away enjoying the fruits of paying my hard earned taxes. doing April PAYG tomorrow as flying to Europe on Thursday and need to get it all over and done with.
I assume you mean the uncapped 1.5 pts/$1 Amex cards - e.g. Qantas or Virgin direct-earn? I do have a Plat Charge + complementary Plat Reserve (more on why below), but apart from those just about any Amex card just don't make sense for me[SUP]*[/SUP].
Why? Because I've also got a Select card which earns 1.33 KrisFlyer points per $1 with no points cap. 1.33 KF points are worth more than 1.5 QF/VA points and the surcharge on Select is less than half what it would be on a 1.5pt/$1 Amex card - so I'd much rather pump the $$ through Select than a 1.5 pt/$1 Amex card, and I'd rather increase my Select credit limit than "use up limit" on a 1.5pt/$1 Amex card. I'd view this differently if I had no other way of earning QFF points (as they're useful for domestic travel), but I have a CitiBusiness Gold + WOW EDR + work-issued 0.75pt/$1 card to earn enough QFF points. YMMV of course
There are a couple of 1.5 KrisFlyer points per $1 bank-issued Amex cards around that I could consider, but I don't think the extra 0.17 KF pts/$1 is worth the hefty surcharge difference compared to Select.
Finally, as noted above I do have an Amex Plat Charge (plus complementary Plat Reserve) but that's all to do with limit - no way could I get the limit I have on the Plat on a non-charge card, especially on top of the limits of all the other cards in my current portfolio. And it's worth my while paying the Amex surcharge to put $$ through this card (despite the fact it only earns 1 MR pt/$1 - already run out of bonus points) because once I take tax deductions and account holding onto the money for an extra ~30 days into account it actually works out significantly cheaper than prepaying/cycling these same $$ through the Select, despite Select having a much lower surcharge. Not to mention the flexibility of MR points is nice.
[SUP]*[/SUP] I actually do have a CBA Diamonds Awards Amex card (fee-free for first year) that currently earns 2 QFF pts/$1 because of a bonus they offered me (normally 1.5pts/$1), but it's going in the bin once the bonus runs out unless they completely waive the upcoming annual fee.
I think you'll have to finish processing all of yours first!!
+1 for flexibility - not just in case of earning changes.
I thought I'd done myself out of 130k KrisFlyer points when a bunch of BPay payments from Friday didn't show up on my Select online account on Monday, which would have prevented me from paying the last lot of tax payments on it (and I'd left myself no spare cards / limit). Luckily, it turns out the money had arrived, online statement was just slow catching up! I'll definitely leave myself a spare day or two next time around.
Cove, I think you opened the door to adding the "cheapest" point earners to this thread...!
Hey, you calling me cheap?! I prefer "financially prudent"
But definitely - I'd already been making some tax payments on CC long before I found this thread, but reading this thread and some very helpful advice / support from cove (thanks cove!) were instrumental in me taking it "to the next level".
Duffa
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- Posts
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Way to go Wafliron.
On the points thing, my order of business, once I've maxed the select card, is:
1. Pay on signature card and get 40-50 days interest free
2. Reload the select card and pay again without interest free
3. Pay on Amex
The 1.25% v 0.48% surcharge more than cancels out the interest "earned"on mortgage on my calculations. I have a fairly complex spreadsheet for this but will have to review it, given your post!!!
On the points thing, my order of business, once I've maxed the select card, is:
1. Pay on signature card and get 40-50 days interest free
2. Reload the select card and pay again without interest free
3. Pay on Amex
The 1.25% v 0.48% surcharge more than cancels out the interest "earned"on mortgage on my calculations. I have a fairly complex spreadsheet for this but will have to review it, given your post!!!
Glad I'm not the only one cough enough to use giant spreadsheets to figure all of this out ;-)
I just had another quick look at my spreadsheet given what you said above. By my calculations, assuming the surcharge is deductible for you (at 30% company tax rate):
Visa w/ prepayment/cycling (no holding onto the money): 0.21 cents per $1
Amex, holding money in a 6.63% mortgage for 30 days: 0.33 cents per $1
So based on a 30-day-holding with Amex the Visa pre-payment option is cheaper, but things change rapidly if you can hold onto the money for a bit longer with Amex:
Amex, holding money in 6.63% mortgage for 35 days: 0.24 cents per $1
Amex, holding money in 6.63% mortgage for 40 days: 0.15 cents per $1
40 days is quite doable if you "optimise" your billing cycle dates - e.g. in my case most of the tax I'm paying on Amex is BAS/Company Tax, which is always due on the 28th, so I've got my Amex billing cycle ending on the 26th of each month (equals around 40 days between charge and repayment) . Note that the sums will also change as mortgage rates change - e.g. 6.63% is my mortgage rate currently, but it will drop shortly (after RBA rate change) which will make the Amex + hold option slightly more expensive.
Finally, make sure to factor any unique circumstances you might have into the above calculations: in my case there's a couple of intricacies which actually make Amex + hold even cheaper than the above, so I'm in front using Amex once I hold the money for ~27 days.
OK how many points can I earn using the following parameters??
$10,000 to use
47.5 % tax deduction on every fee on Citi Select. Yes I am an optimist with Wayne Swan's budget!
Kris Flyer points earn rate 1.333 per every dollar including the ATO fee.
Is there a LILLY Mark 2 out there because I ran out of fingers when it ran into millions!
$10,000 to use
47.5 % tax deduction on every fee on Citi Select. Yes I am an optimist with Wayne Swan's budget!
Kris Flyer points earn rate 1.333 per every dollar including the ATO fee.
Is there a LILLY Mark 2 out there because I ran out of fingers when it ran into millions!
I make that somewhere around 5,300,000 KF points for $10,000
If you didn't need to make pre-payments on the card (so store money in either an offset account or a high-interest savings account) then you'd make infinity points... you'd actually be making money on every $1 of tax put through the card.
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