Credit cards for ATO payments

Want to earn rewards points when paying the Australian Tax Office? Compare credit cards for ATO payments here.

By   |   Verified by David Boyd   |   Updated 19th May 2022

Comparing credit cards for ATO payments

NAB Low Rate Card

On NAB's website

Balance transfer

32 months at 0% p.a.

Purchase rate

12.99% p.a. ongoing

Annual fee

$0.00 for 1st year

Highlights

  • Enjoy 0% p.a. on balance transfers for 32 months with no balance transfer fee. Reverts to cash advance rate of 21.74% p.a. after the promotional period.
  • $0 first-year annual card fee ($59 p.a. thereafter).
  • Get a response in 60 seconds.

Pros

  • 0% p.a. on balance transfers for 32 months.
  • No balance transfer fee.
  • The waived annual fee for the first year.
  • Additional credit card is free.

Cons

  • No rewards program for this card.
  • No insurance coverage.
American Express David Jones Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$99.00 p.a. ongoing

Highlights

  • Earn $200 back when you apply online by 29 June 2022, are approved and spend $1,500 at locations excluding David Jones on your new Card within the first three months. Available to new David Jones American Express Card Members only.
  • Earn up to 3 Reward Points per $1 spent at major supermarkets and petrol stations; 2 Reward Points per $1 spent at David Jones; 1 Reward Point per $1 spent elsewhere.
  • Enjoy invitations to exclusive Card Member sales previews, shopping nights and events.

Pros

  • Earn $200 back when you meet the criteria.
  • Enjoy invitations to exclusive Card Member sales previews, shopping nights and events.
  • Choose the rewards program that suits you best, Membership Rewards or Qantas Frequent Flyer.

Cons

  • Additional cards come with an annual fee, which can quickly add up.
  • You won't earn points when paying government bodies, e.g. tax at the ATO.
  • Doesn't come with access to a concierge service.
NAB Qantas Rewards Signature Card

On NAB's website

Balance transfer

12 months at 0% p.a.

Purchase rate

19.99% p.a. ongoing

Annual fee

$295.00 for 1st year

Highlights

  • Earn up to 120,000 bonus Qantas Points. Receive 90,000 bonus points when you spend $3,000 in the first 60 days from account approval date and 30,000 bonus points when you keep your card open for over 12 months. Terms and conditions apply.
  • Enjoy 0% on balance transfers for 12 months with 3% Balance Transfer Fee.
  • Reduced first-year annual fee of $295 p.a. instead of $395 p.a. (saving you $100).

Pros

  • Complimentary Qantas Frequent Flyer membership fee valued at $99.50.
  • Six complimentary insurances when you make an eligible purchase.
  • Earn 1 Qantas Point per $1 spent on everyday purchases up to $5,000 per statement period then 0.05 pts per $1 spent thereafter (capped at $20,000).

Cons

  • Annual fee of $395 p.a. is quite high.
American Express David Jones Platinum Credit Card

On American Express' website

Apply by 29 June 2022

American Express David Jones Platinum Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$295.00 p.a. ongoing

Highlights

  • Earn $450 back when you apply online by 29 June 2022, are approved and spend $1,500 at locations excluding David Jones on your new card within the first three months. Available to new American Express David Jones Platinum Credit Card Members only.
  • Earn 4 Reward Points per $1 spent on purchases made at David Jones and 3 Reward Points per $1 spent at major supermarkets and petrol stations.
  • Receive two complimentary entries per year to the American Express Lounge at Sydney International Airport or Melbourne International Airport

Pros

  • Earn $450 back when you meet the criteria.
  • Choose the rewards program that suits you best, Membership Rewards or Qantas Frequent Flyer.
  • Includes complimentary travel insurance.
  • Receive two complimentary entries per year to the American Express Lounge at Sydney International Airport or Melbourne International Airport.

Cons

  • The annual fee of $295 p.a.
NAB Low Fee Platinum Card

Balance transfer

12 months at 0% p.a.

Purchase rate

19.74% p.a. ongoing

Annual fee

$90.00 p.a. ongoing

Highlights

  • 24 hour, 7 day Platinum Concierge Service.
  • 12 months at 0% p.a. on balance transfers (3% balance transfer fee applies). Reverts to cash advance rate of 21.74% p.a.
  • Access to six complimentary insurances when you make an eligible purchase.

Pros

  • 12 months at 0% p.a. on balance transfers (3% balance transfer fee applies). Reverts to cash advance rate of 21.74% p.a.
  • Low ongoing $90 annual fee.
  • Complimentary insurances including international travel insurance.
  • Access to the 24 /7 NAB Concierge Service.

Cons

  • There's a 3% fee on balance transfers.
  • You can't earn rewards points with this card.
  • Up to 44 days interest-free, which is shorter than the 55 days on many other cards.
American Express Business Explorer Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

6 months at 3.99% p.a.

Annual fee

$0.00 for 1st year

Highlights

  • Receive 120,000 bonus Membership Rewards points when you apply by 2 June 2022, are approved and spend $3,000 on your card within the first 3 months. New American Express Card Members only.
  • $0 first-year annual card fee ($149 p.a. thereafter).
  • Enjoy a low interest rate of 3.99% p.a. on new purchases for the first 6 months of Card Membership (reverts to 19.99% p.a. thereafter).

Pros

  • Receive 120,000 bonus Membership Rewards points when you apply by 2 June 2022, are approved and spend $3,000 on your card within the first 3 months. New American Express Card Members only.
  • $0 first-year annual card fee ($149 p.a. thereafter).
  • Enjoy a low interest rate of 3.99% p.a. on new purchases for the first 6 months of Card Membership (reverts to 19.99% p.a. thereafter).

Cons

  • There is no balance transfer offer for this card.
  • Cash advances are blocked, which might be inconvenient for some.
American Express Qantas Ultimate Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$450.00 p.a. ongoing

Highlights

  • Receive 100,000 bonus Qantas Points when you apply online, are approved and spend $3,000 on your new Card within the first 3 months. Available to new Card Members only
  • Earn 1.25 Qantas Points for every $1 spent on card purchases, except spend at government bodies in Australia where you will earn 0.5 Qantas Points per $1 spent.
  • Get 2 complimentary Qantas Club lounge invitations each year.

Pros

  • The 100,000 bonus Qantas Points when you meet the criteria.
  • Excellent earn rates on everyday spend. Earns points on payments to the ATO.
  • Access to the American Express Lounge Sydney and Melbourne airport after your first card spend on the card for Qantas products and services each anniversary year.
  • 2 complimentary Qantas Club lounge invitations each year.
  • $450 Qantas Travel Credit each year (conditions apply).
  • Add cards for up to four family and friends at no cost.

Cons

  • The annual fee of $450.
  • There is no concierge service, even though it's a high end card.
  • Balance transfers are not possible.
  • Transactions in a foreign currency attract a fee.
American Express Explorer Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$395.00 p.a. ongoing

Highlights

  • Receive 100,000 Bonus Membership Rewards Points when you apply online, are approved and spend $4,000 on your new Card within the first 3 months. T&Cs apply. New Card Members only.
  • Receive a $400 Travel Credit each year towards any flights, hotels and car hire when you book online with this card.
  • Earn 2 Membership Rewards points per $1 spent on purchases except government bodies in Australia where you will earn 1 point per $1 spent (uncapped).

Pros

  • The 100,000 bonus Membership Rewards Points when approved and reach spend requirement within the first 3 months.
  • $400 travel credit every year.
  • Get 2 complimentary airport lounge passes per year.

Cons

  • The $395 p.a. annual fee.
American Express Platinum Edge Credit Card

On American Express' website

Offer extendedApply by 31 May 2022

American Express Platinum Edge Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$0.00 for 1st year

Highlights

  • Enjoy $0 Annual Card Fee (usually $195) in the first year when you apply by 31 May 2022 and are approved. T&Cs apply. New Card Members only.*
  • Earn 3 Membership Rewards points per $1 spent at major supermarkets and petrol stations.
  • Enjoy $200 to spend on travel each year that can be used on eligible flights, hotels, or car hire when booked through American Express Travel.

Pros

  • $0 annual fee in the first year.
  • Receive $200 to spend on eligible domestic and international flights, hotels, or car hire with American Express Travel.
  • Smartphone Screen Cover for smartphone screen repairs up to $500.

Cons

  • The standard purchase rate of 20.74%
American Express Gold Business Card

On American Express' website

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$169.00 p.a. ongoing

Highlights

  • Receive 100,000 bonus Membership Rewards points when you apply by 29 June 2022, are approved and spend $1,000 on your card within the first 2 months. New American Express Card Members only.
  • Earn up to 1.5 Membership Rewards point for every $1 spent.
  • No pre-set spending limit means more flexibility.

Pros

  • Receive 100,000 bonus Membership Rewards points when you meet the criteria.
  • Earn up to 1.5 Membership Rewards point for every $1 spent.
  • No cap on how many points you can earn.
  • No pre-set spending limit means more flexibility.
  • Membership Rewards points can be transferred to a number of airlines, giving you options when booking travel.

Cons

  • The $119 fee for every additional card added.
  • Doesn't offer airport lounge access.
  • No access to concierge services.
American Express Platinum Business Card

On American Express' website

New offerApply by 27 July 2022

American Express Platinum Business Card

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$875.00 for 1st year

Highlights

  • Receive 300,000 bonus Membership Rewards points when you apply by 27 July 2022, are approved and spend $12,000 on your card within the first 3 months. New American Express Card Members only.
  • Reduced annual fee of $875 on the first year (Reverts to $1,750 p.a.thereafter).
  • Earn up to 2.25 pts per $1 spent.
  • Get exclusive Platinum travel, experience, and dining privileges.

Pros

  • The 300,000 bonus Membership Rewards points and the half annual fee in the first year when you meet the criteria.
  • Earn up to 2.25 pts per $1 spent and 1 point per $1 spent at the ATO.
  • Access to more than 1,200 lounges globally, including The Centurion® Lounge.
  • Gold status match at Marriott Bonvoy, Hilton Honors, and Radisson Hotel Group.
  • 24/7 access to the Platinum Concierge from anywhere in the world.

Cons

  • The annual fee reverts to $1,750 p.a. after the initial year.
  • Since this is a charge card, the balance must be cleared every statement.
  • No balance transfer facility.
American Express Qantas Business Rewards Card

On American Express' website

New offerApply by 10 August 2022

American Express Qantas Business Rewards Card

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$450.00 p.a. ongoing

Highlights

  • Receive 150,000 bonus Qantas Points plus a $450 Qantas Flight Voucher when you apply by 10 August 2022, are approved, and meet the minimum spend criteria of $3,000 in the first 2 months. New American Express Card Members only.
  • Earn triple Qantas Points for your business when employees fly on eligible Qantas flights and pay using their American Express Qantas Business Rewards Card.
  • Two complimentary passes for the Qantas Club lounge every year.

Pros

  • Earn 150,000 bonus Qantas Points + $450 Qantas Flight Voucher when you meet the criteria.
  • Earn triple Qantas Points for your business when employees fly on eligible Qantas flights and pay using their American Express Qantas Business Rewards Card.
  • Earn up to 1.25 points per $1 on everyday spend and 1 point per $1 spent with the ATO.
  • Two complimentary passes for the Qantas Club lounge every year.
  • Flexible Payment Option available to spread cost over time for a portion of your balance.

Cons

  • The $450 p.a. annual fee.
  • Balance must be repaid in full each month.
  • No concierge service.
  • Lounge passes are valid for Qantas Club and not the international business lounges.
American Express Qantas Premium Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$249.00 p.a. ongoing

Highlights

  • Receive 70,000 bonus Qantas Points when you apply online, are approved and spend $3,000 in 3 months. New Card Members only.
  • Relax with 2 complimentary Qantas Club invitations every year (conditions apply).
  • Complimentary domestic and international travel insurance.

Pros

  • 70,000 bonus Qantas points for signing up and hitting the spending target.
  • Earn points on your everyday spend. Also earns points at a reduced rate on government spend.
  • Give up to 4 of your friends and family a card — at no extra cost — to earn more points.
  • $450 Qantas Travel Credit, which is fairly easy to trigger with your first Qantas purchase each year.
  • Comes with complimentary card purchase cover and travel insurance.

Cons

  • There is an annual fee of $249.
  • The purchase rate is quite high, but can be avoided with responsible use.
  • No balance transfer facility.
NAB Low Fee Card

NAB Low Fee Card

Balance transfer

12 months at 0% p.a.

Purchase rate

19.74% p.a. ongoing

Annual fee

$30.00 p.a. ongoing

Highlights

  • Low $30 p.a. ongoing annual fee.
  • 12 months at 0% p.a. on balance transfers (3% balance transfer fee applies). Reverts to cash advance rate of 21.74% p.a.
  • Apply for an additional cardholder at no extra cost.
Qantas American Express Discovery Credit Card

On American Express' website

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$0.00 p.a. ongoing

Highlights

  • Earn 0.75 Qantas Point for every $1 spent on Card purchases, except spend at government bodies in Australia where you will earn 0.5 Qantas Points per $1 spent.
  • Pay no annual card fee.
  • Up to 4 Additional Cards for family members or friends with no extra fee.

Pros

  • Ongoing $0 annual fee, a rarity among rewards credit cards.
  • Earn 0.75 Qantas points per $1 spent and 0.5 Qantas points per $1 for government spend.
  • No cap on the number of points you can earn.
  • Add up to 4 additional cards for family members or friends with no extra fee.
  • Complimentary Card Purchase Cover and Card Refund Cover.

Cons

  • There is a 3% foreign transaction fee.
  • Lacks complimentary travel insurance.
  • There is no access to a concierge service.
NAB Qantas Rewards Premium Card

On NAB's website

NAB Qantas Rewards Premium Card

Balance transfer

12 months at 0% p.a.

Purchase rate

19.99% p.a. ongoing

Annual fee

$250.00 p.a. ongoing

Highlights

  • Get 65,000 bonus Qantas Points when you spend $2,500 in 60 days.
  • Earn 1 Qantas Point per $1 spent on everyday purchases up to $3,000 per statement period then 0.05 pts per $1 spent thereafter (capped at $6,000).
  • Access to six complimentary insurances when you make an eligible purchase.

Pros

  • The 65,000 bonus Qantas Points.
  • Free Qantas Frequent Flyer membership (a saving of $99.50).
  • Six complimentary insurances when you make an eligible purchase.

Cons

  • Points earning capped at $6,000 spend per statement period.

Overview

It might seem like an odd distinction to have a category of suitable credit cards for tax payments. But many individuals and almost all businesses need to make payments to the ATO, which, like all government bodies, charges a fee for the privilege of using credit cards for paying tax. So you need to know how to minimise that fee.

And many rewards points and frequent flyer credit cards exclude ATO payments from points earning, or only allow points to be earned at a very low rate (usually at half the rate for standard purchases, sometimes less). So what will also be discussed here is how to earn points on tax payments for minimum cost when using a credit card.

The surcharge percentages quoted in the following discussion were correct at the time of writing, but are subject to change. Please consult your accountant if you need confirmation that surcharges will be tax-deductible for your business.

Paying the ATO directly using a credit card

If you have a credit card that allows points to be earned on ATO payments, it is possible to earn rewards and frequent flyer points when you pay your ATO bill, whether it’s for personal or business income tax, PAYG, BAS payments or a HECS debt.

There are two ways to make the credit card payment directly to the ATO: EasyPay and through your MyGov account

EasyPay

The ATO website offers a service known as EasyPay, which allows you to pay your tax bill using a credit card. This option is available to every kind of taxpayer, including incorporated businesses.

To pay your tax bill with EasyPay, you need to provide either your EFT (electronic funds transfer) code or your PRN (payment reference number) and your credit card details. The minimum payment amount is $10 and the maximum $20 million. (Congratulations are in order if you have a credit card with a limit which will accommodate the maximum amount.)

Depending on whether your credit card allows points earning on government payments, you'll earn either no points by paying the ATO this way, or earn points at half the rate applicable to normal purchases (sometimes less). And you'll pay a transaction surcharge of 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express.

MyGov

Individuals and sole traders can also access the ATO’s payment options (including credit card payments) by logging in to their MyGov account and clicking on the ATO option in the ‘Your services’ section.

To pay through the MyGov/ATO portal you will need to select the tax account to which the payment is to be directed (e.g. Income Tax, or Activity Statement) and then enter the credit card details and payment amount.

The same disadvantages apply here as with EasyPay – zero points or points earned at half the normal rate or less, plus the credit card surcharges already mentioned.

Paying the ATO using a credit card and a payment processor

There are a limited number of cards that earn points when you use them to pay the ATO directly, and of those that do, many will not earn points at the full rate.

If you do not have one of these, you can still earn points when paying the ATO by using a payment processor. These services function as an intermediary. You can use your card to pay them and they pay the ATO on your behalf. This gets classed by the bank as a regular credit card purchase, so you earn points at the full rate. However, there is a fee to pay.

RewardPay and B2Bpay are popular examples of payment processors, although others such as Pay.com.au, Sniip, and YakPay can also be used for the same thing. Fees vary not only by service, but also depending on the type of card being used. Fees charged to process payments funded with an American Express credit card are generally higher than those for Mastercard and Visa.

RewardPay

RewardPay is a business-to-business payment service which facilitates the earning of credit card points when paying business expenses — including rent — with an American Express card. Both the payer and the payee need to have an ABN, so it can be used by sole traders and small businesses when paying the ATO, as well as by larger companies. RewardPay’s revenue source is the 2.15% (including GST) surcharge it makes on transactions up to $20,000. The percentage charged declines on a sliding scale, down to 1.65% for payments over $2M, and the fees should be tax-deductible for businesses in most cases.

Because the credit card payment is made to RewardPay (who then pay the ATO by bank transfer), there are two significant benefits. The first is that, since you are not paying the ATO directly with your American Express card, you will not need to pay the government's surcharge for credit card payments (although you will, of course, need to pay RewardPay's surcharge).

But the second and most important benefit is that you will earn points at your card's rate for normal transactions, because it doesn't count as a payment to the government but as a payment to RewardPay. So the card's points earning rate for government payments is effectively at least doubled – sometimes more – depending on the card. For example, a card which earns 2.0 Membership Rewards points/1.0 frequent flyer points for non-government spending and 1.0 Membership Rewards points/0.5 frequent flyer points for government spending, would still earn 2.0 Membership Rewards points/1.0 frequent flyer points for a payment ultimately going to the ATO.

B2Bpay

B2Bpay works in a similar way to RewardPay, in that it makes payments to the ATO on behalf of businesses, using EFT or BPAY. Fees are charged based on the type of card used to send the payment to B2Bpay, starting at a 1.2% surcharge for using a standard Visa or Mastercard (1.55% for premium and corporate cards), and rising to 2.2% for Amex cards and 2.4% for Diners Club. As with RewardPay, points are earned at the normal rate, not the government rate, for credit card payments, the government's surcharge is avoided, and the B2B surcharge is usually tax-deductible for businesses.

But B2Bpay has two additional advantages. The first major advantage is has over RewardPay is that it accepts all major credit cards, not just American Express. And the second benefit is that, in addition to the points earned from your credit card provider, B2Bpay will also itself reward you with 1.0 Qantas Points for every $100 paid and up to 3.0 Qantas Points per $1.50 paid to B2Bpay bonus billers (e.g. Dell, Hewlett Packard, Lexmark, Endeavour Energy, Betta Electrical, Toll IPEC, Tasmanian Revenue Office, CSIRO, and hundreds of SMEs, but not the ATO, sadly). So, you'll earn 1.0 Qantas Points per $100 paid to the ATO – not much, but better than nothing.

Paying the ATO using a credit card and BPAY

You may be able to pay the ATO with a credit card and BPAY. However, banks usually classify credit card BPAY payments as cash advances. This means you would be charged the cash advance interest rate and a one-off fee (typically a percentage of the amount paid). In addition, you would earn no points.

If you would still like to pay with BPAY and your credit card, follow these steps:

  1. Log in to your credit card's mobile or online banking.
  2. Select the option to pay with BPAY.
  3. Complete the form, making sure to enter the correct biller code and ATO reference number.
  4. Submit the form and complete your payment.

Is it worth using credit cards to earn rewards on tax payments?

Work out how much a rewards point or frequent flyer point is worth to you. This will largely depend on how you plan to redeem them, but as a rule of thumb, most reward points are worth 0.5 cents each if exchanged for retail gift vouchers and most frequent flyer points should be worth at least 1.3 cents each if exchanged for long-haul flights, and much more for business class seats.

If the cost of the ATO or RewardPay surcharge exceeds the value of the points earned, it would make more sense to pay by BPAY, or bank transfer, or using a debit card (although there is a small ATO surcharge, and definitely no points, for using a debit card). In the case of B2Bpay there are additional Qantas points to offset the cost of the surcharge – not too many admittedly, at the standard rate of 1 point per $100 (unless you have a huge tax bill).

Also, if your card has a monthly or annual points cap, make sure that the payment you're making will not see you exceeding the cap, otherwise you may receive significantly fewer points than you expected.

ATO payments tend to have a specific due date, but if there is any flexibility, leverage the benefit by timing the payment to occur at the beginning of your billing cycle, thus maximising the interest-free days.

For a more detailed explanation of points value vs surcharge cost, see the question 'When does it not make sense to use a rewards card for ATO payments?' in our FAQs section on this page.

ATO credit card payment pros and cons

As with most financial decisions, there are pros and cons to paying your tax with a credit card. If in doubt, talk with your accountant or tax adviser for help choosing the right credit card.

Pros

  • Get some benefit when paying tax by using a credit card that earn points.
  • Paying by card improves your cash flow because you can pay your tax bill and use your card's interest-free period on purchases before having to pay it off.
  • Avoid incurring fines or interest for late payment, which saves you money.
  • Credit card fees and surcharges may be tax deductible, but you should consult your accountant or a tax adviser to confirm.

Cons

  • You probably won't earn points at the full rate when paying directly with EasyPay and MyGov.
  • There are fees for paying with a credit card that could be avoided with alternative payment methods.
  • Paying the ATO via a payment processor means incurring a fee, which is typically a percentage of the amount paid.
  • You may get charged interest on your spend if you can't clear the balance, which could get costly and cause cash flow problems.

How to pay the ATO and avoid a surcharge

It is not, of course, compulsory to use a credit card to pay the ATO, although it may be one of the most convenient, and and also a good way to delay payment of your tax bill without paying interest (provided you can afford to repay your card balance in full on or before the payment due date).

Other, cheaper ways to pay include an online bank transfer (no fee for most bank accounts, no ATO surcharge), BPAY (no fee for most bank accounts, no ATO surcharge) and debit card (ATO surcharge of 0.18% for Mastercard, 0.38% for Visa), over the counter at Australia Post or with a cheque in the mail. But none of these methods earns rewards or frequent flyer points.

More about earning rewards on ATO payments

Find out how you can get rewards points for paying your taxes.

  • FAQs

  • Tips

Are credit card fees and surcharges tax deductible?

Yes, credit card fees and surcharges from payment processors are tax deductible depending on your situation. It may be possible to claim fees and surcharges, for example, if you are a business paying business-related taxes, but you should check with your accountant or tax adviser in advance.

Are credit card rewards points taxable?

Credit card rewards points are not currently taxable whether earned on business or personal spend. However, should you redeem points, perhaps for an employee to fly in business class instead of paying them their normal salary, this could be subject to tax. It's a complicated area of law though, so check with an accountant or tax adviser first.

Are there surcharges on ATO credit card payments?

The ATO levies a surcharge for making payments through EasyPay or MyGov using a credit card. Currently these charges are 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express. The ATO says that these charges are identical to the charges made by its own bank for processing the transactions, so the ATO is not making a profit on transactions.

The ATO credit card surcharge is not subject to GST and is likely to be tax deductible for businesses (so this should include Activity Statement payments for anyone with an ABN) but not for an individual’s income tax payments.

Can I earn points by using my credit card to pay the ATO via BPAY?

It's very unlikely, because even if your credit card allows points to be earned on government payments, many cards exclude BPAY payments from points earning.

Do all rewards credit cards allow points to be earned on ATO payments?

No. Many rewards cards specifically exclude government payments from points earning, so the points earned on ATO payments will be zero. Most American Express cards, however, state that they do earn points on government payments, even though at a much lower rate, typically about 50% of the rate for standard purchases. Read your card's terms and conditions to find out if points can be earned on government payments.

If my card does allow points to be earned on payments to the ATO, will it be at the same rate as other transactions?

Most unlikely. The cards that permit points to be earned on ATO payments usually allocate a much lower earning rate to any transactions with government bodies – usually about half the earning rate for normal purchases.

What credit card payment methods are available when paying the ATO?

Payments can be made through EasyPay (via the ATO website), through an individual taxpayer’s MyGov account, or through rewards credit card payment services RewardPay and B2Bpay. Surcharges are levied on all these payments, but the last two methods allow rewards or frequent flyer points to be earned at the card's normal rate for non-government transactions.

When does it not make sense to use a rewards card for ATO payments?

Assuming that you are satisfied with the rewards points return you are getting on normal transactions when offset against your card’s annual fee and any other benefits, the additional cost of ATO rewards points lies in the surcharge levied on card payments by the ATO or RewardPay or B2Bpay. The surcharge rates are:

  • ATO (via EasyPay or MyGov). 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express
  • RewardPay. 2.15% for payments up to $20,000, less for higher payments
  • B2Bpay. 1.2% for standard Visa/Mastercard, 1.55% for premium Visa/Mastercard, 2.2% for Amex cards

So the question you need to ask yourself is: Does the surcharge cost per ATO payment reward point exceed the value of an ATO payment reward point?

In fact, the value to you of any reward point depends not on the type of payment you are making, but the type of redemption you choose. Long-haul flights and business class seats usually offer the best value redemptions, while retail gift cards are amongst the most popular. Exchanging points for merchandise is the least cost-effective, so if this is your chosen redemption method, don't use a credit card to pay the ATO.

A Qantas Economy return flight to the UK, if booked well ahead, currently costs around $1,460 for a base fare (i.e. excluding taxes) or 110,400 Qantas Frequent Flyer points. This puts a value of about 1.3 cents on each QFF point. You could extract a value of up to 4.5 points per dollar, or even more in some cases, by flying Business Class long-haul. (You can find more ideas for redeeming your points in this article.)

A $100 retail gift card costs 20,000 American Express Membership Rewards points, valuing each point at around 0.5 cents. It could be possible get a better return by exchanging rewards points for frequent flyer points if your card offers a good exchange rate.

But, generally speaking, frequent flyer points need to cost less than 1.3 cents each in surcharges to be worthwhile, and rewards points need to cost less than 0.5 cents, before the cost exceeds the value.

Let's say you have a tax bill of $1,000. Your surcharge costs would be:

  • EasyPay/MyGov using Mastercard. $7.30 pre-tax, $5.11 post tax
  • EasyPay/MyGov using Visa. $7.80 pre-tax, $5.46 post tax
  • EasyPay/MyGov using Amex. $14.50 pre-tax, $10.15 post tax
  • RewardPay using Amex. $21.50 pre-tax, $15.05 post tax
  • B2Bpay using standard Visa/Mastercard. $12.00 pre-tax, $8.40 post tax
  • B2Bpay using premium Visa/Mastercard. $15.50 pre-tax, $10.85 post tax
  • B2Bpay using Amex. $22.00 pre-tax, $15.40 post tax

You can work out the earning rate your card needs to have by dividing the value of 1000 points ($13 for frequent flyer points, $5 for rewards points) by the above costs for a $1,000 payment. For business credit cards, use the post tax cost because the net cost to you is reduced by its likely tax-deductibility.

For frequent flyer points cards the required earning rates to make it worthwhile are as follows:

  • EasyPay/MyGov using Mastercard. 0.6 points per dollar for personal card, 0.4 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Visa. 0.6 points per dollar for personal card, 0.5 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Amex. 1.2 points per dollar for personal card, 0.8 points per dollar for business card (for government payments in both cases)
  • RewardPay using Amex. 1.7 points per dollar for personal card, 1.2 points per dollar for business card (for standard purchases)
  • B2Bpay using standard Visa/Mastercard. 1.0 points per dollar for personal card, 0.7 points per dollar for business card (for standard purchases)
  • B2Bpay using premium Visa/Mastercard. 1.2 points per dollar for personal card, 0.9 points per dollar for business card (for standard purchases)
  • B2Bpay using Amex. 1.7 points per dollar for personal card, 1.2 points per dollar for business card (for standard purchases)

It would be difficult to find a Mastercard or Visa offering frequent flyer points at more than 0.5 cents per dollar for government payments, or an Amex card offering more than 1.0 points per dollar for government payments. So EasyPay/MyGov payments are probably ruled out for personal cards (unless you're getting a great value per point by flying long-haul Business Class), but could be OK for business cards. For RewardPay and B2Bpay, you'll need to compare your card's earning rate for standard purchases to see if it meets the above requirements. Using Amex cards with B2Bpay is the least likely to make the cut.

For rewards points cards the required earning rates to make it worthwhile (if exchanging points for retail gift cards) are as follows:

  • EasyPay/MyGov using Mastercard. 1.5 points per dollar for personal card, 1.1 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Visa. 1.6 points per dollar for personal card, 1.1 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Amex. 2.9 points per dollar for personal card, 2.1 points per dollar for business card (for government payments in both cases)
  • RewardPay using Amex. 4.3 points per dollar for personal card, 3.1 points per dollar for business card (for standard purchases)
  • B2Bpay using standard Visa/Mastercard. 2.4 points per dollar for personal card, 1.7 points per dollar for business card (for standard purchases)
  • B2Bpay using premium Visa/Mastercard. 3.1 points per dollar for personal card, 2.2 points per dollar for business card (for standard purchases)
  • B2Bpay using Amex. 4.4 points per dollar for personal card, 3.1 points per dollar for business card (for standard purchases)

Once again, you'll need to consult your card's points earning rates. Both EasyPay/MyGov And RewardPay payments are definitely ruled out if you're exchanging for gift cards, but B2Bpay payments might just make it if you use a Visa or Mastercard.

Why is the earn rate lower for ATO payments?

Banks recognise that ATO and other government payments are among the largest payments an individual or business is likely to make where a credit card is accepted and can be used without any significant penalty (such as reduced ability to negotiate a favourable price, which might happen with a car purchase, for example). This would certainly erode the banks’ overall profit on credit card transactions if they allocated points at the same rate as for standard, lower-value payments. Rather than apply more restrictive points caps (which would reduce a card’s general appeal) banks target government payments by either offering a lower earning rate or excluding them altogether.

An introductory interest rate on purchases or balance transfers could give you time to pay your tax bill

There are two situations where it could be really worthwhile paying a large tax bill with a credit card.

The first is where you have a new rewards credit card with an introductory 0% interest rate on purchases, which may last for between six and 18 months. You could pay your tax bill with your card, earn rewards points (you'll need to use RewardPay or B2Bpay if government purchases are excluded from points earning) and give yourself plenty of time to clear your debt before it starts incurring interest charges.

The second option is a new balance transfer credit card. Pay your tax bill using your old rewards credit card, earning points (by using RewardPay or B2Bpay if necessary), then transfer your balance to a new credit card with a long zero interest offer on balance transfers.

Avoid using a personal rewards card to pay business tax

It's best to use a business credit card if you expect to make large credit card payments to the ATO for business tax. Some banks place a limit on business transactions channelled through a personal rewards points or frequent flyer credit card, viewing it as an unreasonable use of the personal rewards points program.

Check that you won't run into a points cap

Before deciding to pay a large tax bill with a rewards points credit card, make sure that your points earning rate won't drop because you've exceeded a points threshold, or fall to zero because you've run into a cap.

Don't pay tax with a rewards card if you'll end up paying interest

Paying interest charges on a rewards credit card simply isn't worth it. Rewards and frequent flyer points credit cards almost always have the highest interest rates, and the interest you'll pay for carrying a balance beyond the interest-free period far exceeds the value of the points you'll earn. So don't put your tax bill on a credit card unless you can either pay it off at the end of the month, or there's an introductory interest rate on purchases.

Work out your value per point and surcharge cost per point

Before deciding to pay your tax bill with a rewards credit card, you need to work out whether the surcharge for the payment method you choose exceeds the anticipated value of the points you'll earn. This depends on:

  • Your card's points earning rate
  • How you redeem your points (e.g. for flights, gift cards or merchandise)
  • The payment method you choose (e.g. ATO EasyPay, MyGov, RewardPay, B2Bpay)
  • The surcharge you'll incur for the type of card you use (Visa, or Mastercard or Amex)
  • Whether you're using a personal card or a business card (assuming the surcharge is tax-deductible for your business)

For a detailed explanation of the above factors, and a guide to the points earning rate your card will need, see the question 'When does it not make sense to use a rewards card for ATO payments?' in our FAQs section on this page.