One of the questions often considered by anyone who has to pay tax bills to the ATO is ‘how do I earn the most points on this transaction?’.
There isn’t a set answer — cards keep changing. We’ve attempted to compile a list of cards that allow points to be earned when paying your tax bill.
Many banks explicitly prohibit earning points on these types of transactions, and this is a trend that’s becoming increasingly common.
In this guide, we cover off the current list of cards, their notable terms and restrictions, and a small number of points-earning alternative payment options.
Caveats and disclaimers with this guide
- Do your own research by reading the credit card and rewards program PDS documents, asking the relevant bank and comparing your research with other online sources.
- We have tried to make this list as complete and as accurate as possible. If we do miss a card, have an error in our calculations or made a mistake in the research, please let us know in the comments.
- There are legitimate reasons for having to pay the ATO as either a personal entity or as a business entity. Many banks prohibit unreasonable amounts of business transactions on personal cards. We have tried to note the relevant terms and conditions of different bank rewards programs below.
- We recommend considering a specific business credit card that explicitly permits points earn at the ATO if you have a high volume of business-related transactions.
- Any advice in this guide is general advice only and does not consider any of your personal circumstances and existing banking relationships/products.
- Things can change — check the date at the top of this guide to see when it was last updated.
Which rewards cards earn points at the Australian Tax Office (ATO)?
|Credit Card||Points earned per $ spent||Effective cost per frequent flyer point earned when paying surcharge||Points cap||Notes|
|Most American Express-issued cards|
e.g. Explorer, Essential, Platinum Charge
|1 Membership Rewards points||1.45c per MR point||Varies by card—some none; some capped||Check the individual guides for each card in our cards table|
|CommBank Business Platinum Awards|
Notes ↓ | Guide →
|1 CommBank Awards point||0.7c per CommBank Awards point||300,000 CommBank Awards points per year||CommBank Awards terms explicitly permit points earned at the ATO and for Business Transactions up to the points cap—see notes below|
|NAB Qantas Business Signature Visa|
Notes ↓ | Guide →
|0.66 Qantas Points||1.2c per Qantas Point||33,000 Qantas points per month||NAB states that payments you make to the Australian Taxation Office will earn you Qantas Points at the same rate as regular everyday business purchases|
|Bankwest Qantas World Mastercard|
Notes ↓ | Guide →
|1 Qantas Point up to $5,000/statement period, then 0.5 Qantas Points thereafter||1.9c per Qantas Point up to $5,000/statement period, then 0.95 Qantas Points||Uncapped||These cards' terms exclude points earn on 'government charges' other than GST payable to the ATO and 'business related expenses'—see notes below
|Bankwest Qantas Platinum Mastercard|
Notes ↓ | Guide →
|0.75 Qantas Points up to $2,500/statement period, then 0.3 Qantas Points thereafter||1.4 Qantas Point up to $5,000/statement period, then 0.5 Qantas Points||200,000 Qantas Points per year|
About this table
- There is no ranking or endorsement of a specific credit card implied in the above table
- Cards/banks that do not allow points earn for ATO transactions include but are not limited to:
- ANZ Rewards & Frequent Flyer, Bank of Melbourne, BankSA, Citi (and Citi-managed cards, including Virgin Money, CUA and Diners), CommBank (personal cards), HSBC, Jetstar Mastercard, Macquarie Platinum/Hilton, NAB (personal cards), Qudos Bank, St.George and Woolworths Money — and most others.
How to pay the ATO with a credit card
The primary way to make a payment by credit card is to head to the ATO EasyPay Portal and input the reference number given to you by your accountant or the ATO for your payment.
ATO credit card payment fees
When paying the ATO directly using a credit card, you’ll incur a surcharge on the transaction. There is no way to avoid this without sacrificing the ability to earn rewards points.
|Visa/Mastercard international payments||2.70%|
The surcharge amount is often a tax-deductible expense for a business, but double-check with your accountant or tax advisor for your own circumstances.
Your personal choices might dictate that payment via bank transfer or BPAY makes more sense than incurring a surcharge, so bear that in mind.
Is the ATO credit card surcharge is worth paying?
This is a key part of figuring out whether to use a points-earning credit card for ATO payments.
The first thing to consider is the value you place on your points. You can check out our list of rewards points values, which might help you.
Once you have a handle on how much you value a point, you can then place a value on the total number of points earned by paying the ATO with a credit card surcharge. Here is a simplified example.
Example 1: Where it makes sense to pay the surcharge
Say your card earns 1 point per dollar spent, and you value the points earned at 1.4c per point. If the tax bill you have to pay is $2,000, then you’ll earn 2,000 points, which have a value to you of $28.
With the ATO’s surcharge of 0.7% on Mastercard payments, you are paying $14 to earn the 2,000 points. That’s half the $28 you value the points earned, so in this case, you might consider paying using this credit card.
Example 2: Where it doesn’t make sense to pay the surcharge
As an alternative example, let’s consider an American Express card which earns also 1 point per dollar. You’d still get the same 2,000 points on the ATO bill, valued at $28 to you.
The surcharge of 1.45% means that you are paying $29 to earn the 2,000 points — a bit more than what you valued it at. In this case, you might not consider paying using this credit card.
So three things you need to consider before you decide whether a surcharge is worth paying:
- The value you place on points you earn with your credit card
- How many points the credit card you are planning to use will earn per dollar spent at the ATO
- The surcharge incurred for using your chosen payment method by the ATO
However, this analysis does not take into account:
- Any tax-deductibility of the ATO payment fee
- The cost of ownership of the credit card, such as its annual fee
- The cost of any interest incurred for balances you are carrying on the card — the assumption in this guide is that no interest will be paid for your ATO payment. If you are planning on carrying the ATO balance on a card and incurring interest on this balance, then the interest incurred will likely be far higher in cost than the value of the points earned.
A detailed look at the card terms and conditions
CommBank Business Platinum Awards Mastercard
The only CommBank card that expressly permits points to be earned at the ATO is the Business Platinum Awards credit card, whose PDS gives a points cap of 300,000 CommBank Awards Points on per year as well as:
The following transactions are excluded from earning points: …payments to the Australian Taxation Office unless made using a Business Awards card …
NAB Qantas Business Signature Visa
NAB explicitly states that:
Payments you make to the Australian Taxation Office will earn you Qantas Points at the same rate as regular everyday business purchases.
Bankwest Qantas World and Platinum Mastercards
The Bankwest Qantas Rewards PDS states:
Qantas Points are earned on all purchases made using the Card Account except: … Government charges (other than GST payable in connection with the purchase of goods or services on which you earn Qantas Points) … [and] … Business Related Expenses
There is no definition of ‘Government charges’ in the document, so it’s unclear if Bankwest does consider a personal transaction to the ATO as a government charge.
However, it’s evident the card should not be used for business-related expenses. The bank can also decide that any transaction they feel like can be excluded from points earning.
Using RewardPay and B2BPay to make ATO payments
Rather than making a credit card payment directly to the ATO, you can earn the full rate of credit card points by paying a surcharge to services like RewardPay and B2BPay and having them make the payment to the ATO on your behalf. You’ll also earn Qantas Points on these transactions.
In short, RewardPay and B2BPay are business-to-business payment services that allow its members to use American Express cards, with a surcharge.
(As of July 2020, B2BPay charge 2.2% + GST and RewardPay charge from 1.75% to 2.15% + GST for American Express cards, depending on transaction volume).
Assuming you have a card that is okay for business-related transactions, paying those surcharges may make sense if your Amex earns at least 1.5 frequent flyer points per $1 spent.
There are several American Express options that earn the equivalent of at least 1.5 frequent flyer points per dollar—we’ve explored the options available for highest points earning cards with RewardPay in a separate guide.
American Express terms and conditions for most personal cards do not specify that business-related transactions would be excluded from earning points. Indeed, using personal cards for business purposes is definitely permitted by American Express.
If you have an American Express that you can use with RewardPay or B2BPay, paying the ATO is just like paying another supplier. Find the ATO’s ABN and address details from the ATO website.
For more questions about this, you would be best to contact them directly.
Other options for paying the ATO and earning points
Another option for making payments to the ATO is to jump on prepaid debit Mastercard or Visa deals that can initially be purchased using a points-earning credit card.
Usually, the cost of acquisition of these cards is too high but there can be short-term offers for which you can keep an eye out for and then apply the same maths as above to figure out the cost of payment method vs points earned.
There are also other hazards in using prepaid cards to pay the ATO. Depending on the amount of money that can be loaded onto the card at the point of purchase, you could be running many cards through the ATO payment portal.
Each payment and its surcharge would need to be accounted for independently if it’s being made on behalf of a business.
There’s no ‘best option’ amongst this list as the permitted transactions, points earned with each card and associated cost (and return in points) of payment to the ATO vary greatly from card to card.
We also cannot recommend specific cards to use for your circumstances, so dig through the few remaining cards in the table and the list of considerations above.
Try to find an option that works for your own valuation of points and whether it is worth paying the ATO surcharge to earn them. Their surcharges will change over time, of course.
Earning points from transactions to the ATO — once you have a card that offers this option — can be a very simple way to build your points balances from payments you had to make anyway.
It could also be a costly mistake if you overvalue the points earned or pay using a card that you thought earned points with ATO transactions but does not.
There is no doubt this is a complex and ever-changing landscape, and we will continue to update this list on changes being made by the banks to keep you updated.
There are still a number of points-earning credit cards for spend with the ATO and our general advice is to try to read and understand the terms of each card as much as possible and try and find the right fit for your own circumstances and preferences.
Frequently Asked Questions
There are numerous ways to pay an ATO bill. BPAY is recommended for those who don’t want to pay any extra transaction fees, but reward points are not normally earned in this case.
Credit cards will incur a set fee depending on the card type. You could also process payments through a third party such as B2BPay and RewardPay, which would help earn rewards points.
No, not usually. Most banks and rewards credit cards do not consider BPAY transactions as eligible to earn rewards points.
According to the ATO website, card payment fees are not subject to goods and services tax (GST). However, it may be a deductible expense depending on your circumstances.
Yes, you can use an American Express card to pay the ATO. However, this normally incurs a higher payment fee compared to using an Australian-issued Visa or Mastercard.
Originally published by Matt Moffitt