Unfortunately, not all reward credit cards allow you to earn points on government transactions (such as ATO bills), and some exclude these transactions from the definition of an “eligible purchase”.
Here we’ll discuss some of the cards that currently allow you to earn points on ATO transactions and highlight some of the traps you’ll need to look out for when comparing your options.
Which cards earn points on ATO transactions?
At the moment, you’ll find that American Express is one of the only card issuers in Australia that allows you to earn points on ATO transactions. This applies across its personal credit cards and its business credit cards. If you have an Amex card issued by another bank, you may also be able to earn points by using it to pay the ATO.
But even if your card does earn points on these transactions, government charges often collect fewer points per $1 spent than other transactions. For example, at the time of writing, the American Express Platinum Edge credit card offers 1 Membership Rewards point per $1 spent on eligible purchases but 0.5 points per $1 spent on government transactions. However, if you’re already using your card to pay for other purchases, collecting points on your tax bill could still prove rewarding even if it’s at a lower earn rate.
You may find the ability to earn points on ATO transactions more common among business credit cards. For example, at the time of writing, the ANZ Business Black card currently rewards cardholders with 0.5 ANZ Rewards per $1 spent on taxation payments. Similarly, the St.George Business Amplify card also earns 0.5 Amplify Points per $1 spent on government transactions like ATO bills.
These are just a few examples, but you can compare a complete list of the credit cards that can earn points on ATO transactions on finder.
What about card payment fees?
When you make an ATO transaction with your credit card, a card payment fee usually applies. This fee is a percentage of the payment that you’re making and the percentage will vary depending on the card you’re using. The current rates for Australian credit cards are:
Visa payments: 0.78%
Mastercard payments: 0.40%
American Express payments: 1.45%
A higher surcharge applies if you use a credit card issued overseas, while lower surcharges apply for debit card payments to the ATO. The full details are available on the ATO website and are also shown when you start the payment process.
ATO payment fees are exempt from the goods and services tax, or GST, and are equivalent to the fees that the ATO incurs from its banker. With this in mind, you should consider whether the monetary value of the reward points that you’ll earn will outweigh these fees before you decide whether it’s worth paying with plastic.
The cards that do earn points on ATO transactions are usually either platinum, high-tier cards or business cards. As such, you may notice that they have higher annual fees and purchase interest rates. You should consider these fees as well when comparing credit cards. Using your card to pay your tax bill will also only be worth it if you can afford to pay off your card balance by the end of the statement period to avoid interest. Otherwise these costs could easily offset the value of your rewards.
As well as a credit card, you can also pay your tax bill via BPAY, online, with your debit card or over the phone. You can visit the ATO website for a step-by-step guide on how to pay your tax bill for more information.
While paying your tax isn’t the most exciting task, earning rewards along the way could make this annual chore that little bit more rewarding. But before you start paying on plastic, remember to do your sums to ensure you’re getting the most value for your money.